Media Statement

DHS takes full responsibility for the operations of the Department and is committed to fulfilling the DHS
mission which has a primary focus on those living in poverty, elderly and vulnerable adults and individuals with
disabilities. We strive to get it right with our customers and on behalf of taxpayers. In general, the Department
utilizes audits as a management tool and as a part of the continuous quality improvement process.
DHS operates a number of complex programs on behalf of the federal government. There are some challenges
due to the federal design or regulations. There are other items where we can and will improve. DHS disagreed
or agreed in part with the majority of the findings. However, we do agree with the findings related to VR
(Program income, MOE and Federal Reports) and DDS (Federal Report).
The Department is concerned by the implication that oversight has worsened since 2011. An assertion of this
nature suggests a lack of sufficient command of the disposition of the Department operations prior to 2011.
DHS has maintained a solution focused posture since 2011 when the Top to Bottom Review was conducted as
the first step. Since that time, by operating as a learning organization, DHS has either identified or learned of
historical problematic practices and addressed them accordingly and will continue to do so. Some of the items
raised in the report by State Audit came to their attention because DHS was actively addressing the issues.
It should be noted that no funds have been mishandled or misappropriated by the Department. The funds were
used for their intended purpose. The Department will continue on the course of working to provide quality
service to more than 2 million Tennessean children and vulnerable adults while working to ensure effective
fiscal stewardship on behalf of the taxpayers.
Background Information: Examples Related to the Above
The VR Fiscal issue dated back to at least the 90s and had not been identified by State Audit. We will be the
administration that resolved these issues that had gone unnoticed and unaddressed for many years. It should be
noted that in spite of this, the VR program employment outcomes for individuals with disabilities have nearly
doubled since 2011.
With regard to the childcare case management system, the Department was issued a desupport notice in 1999.
The database was no longer supported after 2003 and the operating system was no longer supported as of 2006.
It was not until 2011 that the Department took aggressive steps to address this issue. Today the system is less
vulnerable, has been stabilized, and is included in the Departments enterprise system modernization project.
To our knowledge, this issue is not noted in any of the state audit reports prior to 2014.
The Department has been using an antiquated cost allocation process and identified it as an opportunity for
improvement prior to the State single audit. The Department initiated a resolution to this issue in 2014.The
Department has identified a software solution and is currently implementing the solution. As it relates to cost
allocation, it should be noted that all charges were allowable.
With regard to the food program oversight, since 2011, the Department has increased its program integrity
efforts including increasing the number of positions in the Audit Services unit, required auditors to play an
integral role in the subrecipient monitoring process, established annual training requirements for audit services
staff, identified and implemented or is currently implementing various technology improvements. This is not an
exhaustive list of improvements, however, it clearly reflects the Departments commitment to improving
oversight. The Department has maintained a constant focus on increasing accountability and performance.
It is important to note that while State Audit has questioned costs in their findings, it does not mean that the
questioned costs are specifically the result of fraud, waste or abuse. Per guidance from our federal partner, when
State Audit identifies question costs, it is up to management to determine the actual amount to bill, if any. This
would require the federal partner and the Department to investigate the questioned costs and to look at
appropriate supporting documentation to determine the correct amount to bill. The important thing to ensure is
that the Department has a clear and documented audit trail which supports the billing amount. Additionally, if a
subrecipient does not adhere to administrative program requirements, there is no expectation to question costs
of all funds paid and assess an overclaim. Failure to adhere to administrative program requirements would be
noncompliance and an acceptable corrective action would be required. Numerous reports from the Government
Accountability Office (GAO), USDA Office of Inspector General, etc., indicate the USDAs recognition of the
programs material weaknesses that are inherently woven into the design of the program. It is important to

know that the number of meals served to Tennessee children has increased by approximately 150,000.