A consulting group and state attorney general’s office reached very different conclusions regarding the potential misuse of Medicaid funds by several nonprofit agencies in New Mexico.

Findings from independent audits have resulted in the closure of 15 New Mexico-based nonprofit agencies that provided behavioral health services in that state, according to Nonprofit Quarterly… However, the New Mexico attorney general’s office has disposed of most of the cases and announced that it did not find a pattern of fraud in 10 nonprofits that had been part of PCG’s audits.

So what happened, and who is in the right? According to Art Stewart, two process steps crucial to the accurate completion of the audit were not followed through, which lead to the consulting group erroneously concluding that Medicaid funds were being misused.

The most telling issues arose during the later stages of the audit:

PCG (Public Consulting Group) and HSD (Human Services Division) did not share the audit’s findings with any of the 15 organizations whose Medicaid payments HSD froze. It also is unclear whether HSD did a systematic check itself to make sure claims that were flagged weren’t mistakenly identified as inappropriate. It is critical that auditors present findings to staff of audited organizations to give them an opportunity to refute findings or address misunderstandings. The damage that can be caused by a failure to do so is evident in this story.

This is a good reminder for all of us here in Audit Land to hew to the process and avoid the temptation of shortcuts. For better or (in this case) for worse, our work has real world consequences.

Want to know more? Check the article out here, or check out all that Ia Magazine has to offer here. Interested in checking out the original audit? Click here.