senate Bill S2685A

Establishes audits of state agency expenditures to recover overpayments and lost discounts

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 28 / Jan / 2011
    • REFERRED TO FINANCE
  • 04 / Jan / 2012
    • REFERRED TO FINANCE
  • 17 / Jan / 2012
    • AMEND AND RECOMMIT TO FINANCE
  • 17 / Jan / 2012
    • PRINT NUMBER 2685A
  • 08 / May / 2012
    • 1ST REPORT CAL.723
  • 09 / May / 2012
    • 2ND REPORT CAL.
  • 14 / May / 2012
    • ADVANCED TO THIRD READING
  • 21 / Jun / 2012
    • COMMITTED TO RULES

Summary

Establishes audits of state agency expenditures to recover overpayments and lost discounts.

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Bill Details

See Assembly Version of this Bill:
A4029A
Versions:
S2685
S2685A
Legislative Cycle:
2011-2012
Current Committee:
Senate Rules
Law Section:
State Finance Law
Laws Affected:
Add Art 7-B ยงยง124 - 124-d, St Fin L
Versions Introduced in 2009-2010 Legislative Cycle:
S7384, A10614

Sponsor Memo

BILL NUMBER:S2685A

TITLE OF BILL:
An act
to amend the state finance law, in relation to establishing audits of
state agency expenditures to recover overpayments and lost discounts

PURPOSE OR GENERAL IDEA OF BILL:
Establishes audits of state agency
expenditures to recover overpayments and lost discounts.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1 - The state finance law is
amended by adding a new article 7-B to read as follows: Recovery of
Certain State Agency Overpayments.

Section 124-A. Contract consultants for recovery audits for certain
overpayments.

Section 124-B. State agencies subject to mandatory recovery audits.

Section 124-C. Payment to contractors.

Section 124-D. Forwarding reports.

JUSTIFICATION:
New York state government agencies, by virtue of their
size and complexity, have the potential of experiencing accounting
irregularities that may result in overpayments to vendors or
potentially allow for criminal mischief. To combat this problem,
state law allows for internal controls or external audits conducted
by the Comptroller's Office.
In budget areas that are significantly large, new state agencies are
created, the Office of Medicaid Inspector General being an example.
Devoting staff and resources to these functions costs taxpayers
millions of dollars every year, regardless of how much fraud or
mismanagement is recovered. This legislation would provide a process
by which the Comptroller's Office can recover improperly distributed
funds and also root out corruption and fraud without incurring costs
to the taxpayer. It outlines a procedure for the Comptroller to
follow in hiring private sector recovery audit firms as well as a
process by which the firms would conduct their audits. A report is
generated that outlines the specific courses of action the firms
would like to follow and requires approval before attempting
recovery. Once approved, the firms would take actions to recover the
funds and retain a previously agreed upon percentage of the amount
recovered as its fee for service. This process allows for the
recovery of funds without having to incur personnel and office
expenses.

The Comptroller would retain control over the process and reports
would be sent to the Governor, Speaker, President of the Senate and
Minority Leadership. The Office of Management and Budget estimated
the federal government, for fiscal year 2009, had improper payments
of $598 billion. President Obama signed an executive order allowing
for Recovery Audits in the divisions of Homeland Security,
Transportation, Commerce and NASA. In addition, Texas and Utah
utilize these firms for Medicaid Prescription Drug audits.

PRIOR LEGISLATIVE HISTORY:
2010 - S.7384/A.10614 -- FINANCE/Gov't Ops
2011 - S.2685 -- FINANCE

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
This act shall take effect immediately.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 2685--A

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                            January 28, 2011
                               ___________

Introduced  by  Sens. RANZENHOFER, GOLDEN, LARKIN, MAZIARZ -- read twice
  and ordered printed, and when printed to be committed to the Committee
  on Finance -- recommitted to the Committee on  Finance  in  accordance
  with  Senate  Rule  6,  sec.  8 -- committee discharged, bill amended,
  ordered reprinted as amended and recommitted to said committee

AN ACT to amend the state  finance  law,  in  relation  to  establishing
  audits  of  state agency expenditures to recover overpayments and lost
  discounts

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The  state finance law is amended by adding a new article
7-B to read as follows:

                               ARTICLE 7-B
              RECOVERY OF CERTAIN STATE AGENCY OVERPAYMENTS
SECTION 124. DEFINITIONS.
        124-A. CONTRACT CONSULTANTS  FOR  RECOVERY  AUDITS  FOR  CERTAIN
                 OVERPAYMENTS.
        124-B. STATE AGENCIES SUBJECT TO MANDATORY RECOVERY AUDITS.
        124-C. PAYMENT TO CONTRACTORS.
        124-D. FORWARDING REPORTS.
  S 124. DEFINITIONS. AS USED IN THIS ARTICLE:
  1.  OVERPAYMENT.  "OVERPAYMENT" INCLUDES A DUPLICATE PAYMENT MADE TO A
VENDOR FOR A SINGLE INVOICE AND A PAYMENT MADE TO A VENDOR:
  (A) WHEN AN AVAILABLE DISCOUNT FROM THE VENDOR WAS NOT APPLIED;
  (B) FOR A LATE PAYMENT PENALTY THAT  WAS  IMPROPERLY  APPLIED  BY  THE
VENDOR;
  (C)  FOR  SHIPPING COSTS THAT WERE COMPUTED INCORRECTLY OR INCORRECTLY
INCLUDED IN AN INVOICE;
  (D) FOR STATE SALES TAX; OR
  (E) FOR A GOOD OR SERVICE THE VENDOR DID NOT PROVIDE.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02426-02-2

S. 2685--A                          2

  2. STATE AGENCY. "STATE AGENCY" MEANS A DEPARTMENT, COMMISSION, BOARD,
OFFICE, OR OTHER AGENCY, INCLUDING A UNIVERSITY SYSTEM OR AN INSTITUTION
OF HIGHER EDUCATION THAT:
  (A) IS IN THE EXECUTIVE BRANCH OF STATE GOVERNMENT; AND
  (B) IS CREATED BY STATUTE.
  S 124-A. CONTRACT CONSULTANTS FOR RECOVERY AUDITS FOR CERTAIN OVERPAY-
MENTS. 1. THE COMPTROLLER SHALL CONTRACT WITH ONE OR MORE CONSULTANTS TO
CONDUCT  RECOVERY  AUDITS OF PAYMENTS MADE BY STATE AGENCIES TO VENDORS.
THE AUDITS MUST BE DESIGNATED TO DETECT AND RECOVER OVERPAYMENT  TO  THE
VENDORS AND TO RECOMMEND IMPROVED STATE AGENCY ACCOUNTING OPERATIONS.
  2. A CONTRACT UNDER THIS SECTION:
  (A)  MAY  PROVIDE  FOR  REASONABLE  COMPENSATION FOR SERVICES PROVIDED
UNDER THE CONTRACT, INCLUDING COMPENSATION DETERMINED BY THE APPLICATION
OF A SPECIFIED PERCENTAGE OF THE TOTAL AMOUNT RECOVERED BECAUSE  OF  THE
CONSULTANT'S AUDIT ACTIVITIES OR RECOMMENDATIONS AS A FEE FOR SERVICES;
  (B)  MAY  PERMIT OR REQUIRE THE CONSULTANT TO PURSUE A JUDICIAL ACTION
IN A COURT INSIDE OR OUTSIDE THIS STATE TO RECOVER AN  OVERPAID  AMOUNT;
AND
  (C) TO ALLOW TIME FOR THE PERFORMANCE OF EXISTING STATE PAYMENT AUDIT-
ING  PROCEDURES,  MAY NOT ALLOW A RECOVERY AUDIT OF A PAYMENT DURING THE
ONE HUNDRED EIGHTY DAY PERIOD AFTER THE DATE THE PAYMENT WAS MADE.
  3. THE COMPTROLLER OR A STATE AGENCY WHOSE PAYMENTS ARE BEING  AUDITED
MAY  PROVIDE A PERSON ACTING UNDER A CONTRACT AUTHORIZED BY THIS SECTION
WITH ANY CONFIDENTIAL INFORMATION IN THE CUSTODY OF THE  COMPTROLLER  OR
STATE  AGENCY  THAT IS NECESSARY FOR THE PERFORMANCE OF THE AUDIT OR THE
RECOVERY OF AN OVERPAYMENT, TO THE  EXTENT  THE  COMPTROLLER  AND  STATE
AGENCY  ARE  NOT PROHIBITED FROM SHARING THE INFORMATION UNDER AN AGREE-
MENT WITH ANOTHER STATE OR THE FEDERAL GOVERNMENT. A PERSON ACTING UNDER
A CONTRACT AUTHORIZED BY THIS SECTION, AND EACH EMPLOYEE OR AGENT OF THE
PERSON, IS SUBJECT TO ALL PROHIBITIONS AGAINST THE DISCLOSURE OF  CONFI-
DENTIAL  INFORMATION  OBTAINED  FROM  THE  STATE  IN CONNECTION WITH THE
CONTRACT THAT APPLY TO THE COMPTROLLER OR APPLICABLE STATE AGENCY OR  AN
EMPLOYEE  OF THE COMPTROLLER OR APPLICABLE STATE AGENCY. A PERSON ACTING
UNDER A CONTRACT AUTHORIZED BY THIS SECTION OR AN EMPLOYEE OR  AGENT  OF
THE  PERSON  WHO  DISCLOSES  CONFIDENTIAL  INFORMATION IN VIOLATION OF A
PROHIBITION MADE APPLICABLE TO THE  PERSON  UNDER  THIS  SUBDIVISION  IS
SUBJECT  TO  THE  SAME  SANCTIONS  AND PENALTIES THAT WOULD APPLY TO THE
COMPTROLLER OR APPLICABLE STATE AGENCY OR AN EMPLOYEE OF THE COMPTROLLER
OR APPLICABLE STATE AGENCY FOR THAT DISCLOSURE.
  S 124-B. STATE AGENCIES SUBJECT TO MANDATORY RECOVERY AUDITS.  1.  THE
COMPTROLLER  SHALL  REQUIRE  THAT  RECOVERY  AUDITS  BE PERFORMED ON THE
PAYMENTS TO VENDORS MADE BY EACH STATE AGENCY THAT  HAS  TOTAL  EXPENDI-
TURES  DURING  A  STATE  FISCAL  BIENNIUM  IN AN AMOUNT THAT EXCEEDS ONE
HUNDRED MILLION DOLLARS. EACH STATE AGENCY SHALL  PROVIDE  THE  RECOVERY
AUDIT CONSULTANT WITH ALL INFORMATION NECESSARY FOR THE AUDIT.
  2.  THE COMPTROLLER MAY EXEMPT FROM THE MANDATORY RECOVERY AUDIT PROC-
ESS A STATE AGENCY THAT HAS A LOW PROPORTION OF ITS EXPENDITURES MADE TO
VENDORS, ACCORDING TO CRITERIA THE  COMPTROLLER  ADOPTS  BY  RULE  AFTER
CONSIDERATION  OF  THE  LIKELY COSTS AND BENEFITS OF PERFORMING RECOVERY
AUDITS FOR AGENCIES THAT  MAKE  RELATIVELY  FEW  OR  SMALL  PAYMENTS  TO
VENDORS.
  S  124-C.  PAYMENT  TO  CONTRACTORS. 1. A STATE AGENCY SHALL PAY, FROM
RECOVERED MONEY  APPROPRIATED  FOR  THAT  PURPOSE,  THE  RECOVERY  AUDIT
CONSULTANT RESPONSIBLE FOR OBTAINING FOR THE AGENCY A REIMBURSEMENT FROM
A VENDOR.

S. 2685--A                          3

  2. A STATE AGENCY SHALL EXPEND OR RETURN TO THE FEDERAL GOVERNMENT ANY
FEDERAL MONEY THAT IS RECOVERED THROUGH A RECOVERY AUDIT CONDUCTED UNDER
SECTION  ONE  HUNDRED  TWENTY-FOUR-A  OF  THIS ARTICLE. THE STATE AGENCY
SHALL EXPEND OR RETURN THE FEDERAL MONEY IN ACCORDANCE WITH THE RULES OF
THE FEDERAL PROGRAM THROUGH WHICH THE AGENCY RECEIVED THE FEDERAL MONEY.
  S  124-D. FORWARDING REPORTS. 1. THE COMPTROLLER SHALL PROVIDE COPIES,
INCLUDING ELECTRONIC  FORM  COPIES,  OF  ANY  REPORTS  RECEIVED  FROM  A
CONSULTANT  CONTRACTING PURSUANT TO SECTION ONE HUNDRED TWENTY-FOUR-A OF
THIS ARTICLE TO:
  (A) THE GOVERNOR;
  (B) THE SPEAKER OF THE ASSEMBLY AND THE  TEMPORARY  PRESIDENT  OF  THE
SENATE; AND
  (C) THE MINORITY LEADERS OF THE SENATE AND THE ASSEMBLY.
  2.  THE  COMPTROLLER  SHALL PROVIDE THE COPIES REQUIRED BY SUBDIVISION
ONE OF THIS SECTION NOT LATER THAN THE SEVENTH DAY AFTER  THE  DATE  THE
COMPTROLLER RECEIVES THE CONSULTANT'S REPORT.
  3.  NOT  LATER  THAN AUGUST FIRST OF EACH ODD NUMBERED YEAR, THE COMP-
TROLLER SHALL ISSUE A REPORT TO THE LEGISLATURE SUMMARIZING THE CONTENTS
OF ALL REPORTS RECEIVED UNDER THIS ARTICLE DURING THE STATE FISCAL BIEN-
NIUM ENDING MARCH THIRTY-FIRST OF THE PREVIOUS YEAR.
  S 2. The comptroller shall adopt rules to administer the provisions of
article 7-B of the state finance law as added by section one of this act
not later than August 1, 2012.
  S 3. This act shall take effect immediately.

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