THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DENLINGER, GINGRICH, CUTLER, BAKER, BOYD, BROOKS, CALTAGIRONE, CLYMER, D. COSTA, DAVIDSON, EVERETT, FLECK, GEIST, GIBBONS, GILLEN, GRELL, GROVE, HARRIS, HESS, HICKERNELL, HUTCHINSON, KAUFFMAN, MAJOR, METCALFE, MILLARD, MILLER, MILNE, MOUL, MURT, PICKETT, PYLE, READSHAW, REICHLEY, ROAE, SAYLOR, SIMMONS, STERN, SWANGER, TALLMAN, TAYLOR, TOEPEL, VULAKOVICH, WAGNER AND WATSON, MAY 9, 2011

REFERRED TO COMMITTEE ON HEALTH, MAY 9, 2011  

AN ACT

Providing for a fraud examination of the Department of Public

Welfare.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Short title.

This act shall be known and may be cited as the Welfare

Efficiency Audit Act.

Section 2.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Asset misappropriation."  Any theft or misuse of taxpayer or

Commonwealth of Pennsylvania assets or funds.

"Auditor General."  The Auditor General of the Commonwealth.

"Corruption."  The use by an individual of personal influence

in a transaction to obtain an unauthorized benefit for a person

contrary to the individual's duty to the Department of Public

Welfare and to the Commonwealth.

"Department."  The Department of Public Welfare of the

Commonwealth.

"Fraud."  An act of either of the following:

(1)  Asset misappropriation.

(2)  Corruption.

"Fraud examination."  An examination of activity that

consists of gathering, verifying, processing, analyzing and

reporting on data in order to obtain facts or evidence in a

predefined context relating to fraud, misconduct or any other

violation of law and giving preventative advice. A fraud

examination shall be conducted in accordance with American

Institute of Certified Public Accountants guidelines for fraud

examinations.

"Misconduct."  Any violation of law, regulations, internal

policies or public expectation of ethical conduct, including

fraudulent reporting, asset misappropriation, obtaining revenue

or assets by fraudulent or illegal means, avoiding expenses or

liabilities by fraudulent or illegal acts, and incurring

expenses or liabilities for fraudulent or illegal acts.

Section 3.  Fraud examination.

(a)  Contract.--Within 60 days of the effective date of this

section, the Auditor General shall enter into a contract

pursuant to 62 Pa.C.S. § 518 (relating to competitive selection

procedures for certain services) with a certified public

accountant who is also certified as a certified forensic

accountant or in financial forensics or is a certified fraud

examiner for the purposes of conducting a fraud examination of

the department. The fraud examination shall be completed no

later than 120 days after the Auditor General has entered into a

contract under this subsection.

(b)  Duties of the Auditor General.--

(1)  The Auditor General shall ensure that the fraud

examination provides for all of the following:

(i)  An inspection and analysis of practices and

policies of the department.

(ii)  An inspection of the facts and evidence of

practices and policies of the department for any fraud or

misconduct.

(iii)  An analysis of the facts and evidence of

practices and policies of the department and

specifically, how those practices and policies affect the

potential for fraud or misconduct in the department.

(iv)  A statistically significant sampling of

recipient and provider data and information for any

evidence of fraud or misconduct.

(v)  Recommendations on changes to the practices and

policies of the department to increase operational

efficiencies.

(vi)  Recommendations on changes to practices and

policies of the department to deter fraud or misconduct.

(vii)  A report of the audit to the Auditor General

on the findings of the forensic audit, including the

information specified under subparagraphs (i), (ii),

(iii), (iv), (v) and (vi).

(2)  The Auditor General shall, upon receipt of the

report under paragraph (1), forward any findings of fraud or

misconduct to the appropriate legal authorities.

(3)  Within 10 days of receipt of the audit report by the

Auditor General under paragraph (1), the Auditor General

shall provide a copy of the audit report to the Majority

Leader of the Senate, the Minority Leader of the Senate, the

Majority Leader of the House of Representatives, the Minority

Leader of the House of Representatives, the chair and

minority chair of the Public Health and Welfare Committee of

the Senate and the chair and minority chair of the Health and

Human Services Committee of the House of Representatives.

Section 10.  Effective date.

This act shall take effect immediately.