| Pursuant to the financial provision of the contract, Los Angeles County Department of Mental Health (DMH/Department) extends cash flow loans to private contractors for anticipated County and Medi-Cal services. County General Fund (CGF) cash flow loans are made available for the private contractors for the months of July through September of each fiscal year. Disbursement of the loan fund amounts to the private contractors is made 30 days in advance, i.e., on the first day of each month, except for the month of July where the loan is delayed for approximately two (2) weeks due to the Countywide budget approval process. Cash flow loans for expected Medi-Cal services are extended on the first day of each month during the fiscal year, except for the month of July. Again, the July loan disbursement is delayed because of the budget process.
For most organizations, salaries which usually comprise 60 percent to 75 percent of the total expenditures are paid to employees on the 15th and 30th of each month. The advancement of cash flow loans on the first day of each month allows a window period for the investment of funds. Contractors who manage funds progressively can earn interest by depositing the cash flow loan funds received immediately into interest bearing accounts.
Strabala, Ramirez & Associates, CPA, found in their 1994-95 monitoring review that several contractors failed to disclose in the monthly claims and in the Annual Cost Report interest earned that was attributable to funds received from DMH. The report did not address the situation where a contractor may be using non-interest bearing accounts.
|
