Texas Health and Human Services requests the OIG audit human resources contractor

NorthgateArinso, Inc. became the outsourced human resources and payroll contractor for the Texas Health and Human Services (HHS) on May 1, 2013. Under the contract, NGA provides human resource services; shared services; payroll and financial services; and service center and call center services. HHS paid NGA $11.9 million for 2019 and $13.3 million for 2020. The OIG conducted this audit at the request of HHSC. The audit objectives were to determine whether (a) the Retrospective Cost Settlement statements for the unaudited periods of the original contract, as amended, with HHS, contract years 2019 and 2020, were reasonably stated and (b) NGA was in compliance with a selected renewal contract requirement for information security.

NGA reported costs on the 2019 and 2020 Retrospective Cost Settlement statements that were unsupported and unallowable. However, the total incurred costs exceeded the fee ceiling for each contract year; therefore, no refund is due to HHS. The OIG identified $370,064 in 2019 and $543,690 in 2020 in overstated expenses on the RCS statements.

The OIG offered recommendations to NGA, which, if implemented, will (a) mitigate the risk of errors caused by manual report preparation, (b) ensure only actual allowable costs are reported on the Retrospective Cost Settlement statements and (c) prevent incurred costs from disallowance due to insufficient support. Click here for the full audit.