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Secretary of State Prepares for Cover Oregon Financial Audit

As required both by state law and federal regulations, the Secretary of State’s office will independently look over Cover Oregon’s books to assure that the exchange followed proper accounting methods. The work is planned to be conducted by a third-party accounting firm.
October 22, 2014

An outside financial audit should keep the light on Cover Oregon as the Secretary of State’s office carries out some of the oversights that were built into the law that created the insurance exchange.

The financial audit will be the first that an independent part of the state government has ordered, although Cover Oregon had asked a third-party to look over its books. “Cover Oregon voluntarily commissioned independent third-party financial audits for years 2011, 2012 and 2013,” said spokeswoman Ariane Holm Le Chevallier.

Like those audits, the one from the Secretary of State will be contracted out to a third party, most likely a certified public accounting firm. It’s currently out to bid, but the winning contract is expected to be announced next week.

“A financial audit is pretty straightforward,” said Tony Green, spokesman for Secretary of State Kate Brown. “It’s making sure the money being spent is properly accounted for.”

Green was clear to mention that this audit will simply make sure the exchange used proper accounting methods and not act as a performance audit -- Brown’s office will be required to produce that audit next year, if Cover Oregon sticks around.

“We routinely do financial audits of state agencies,” Green said. “Cover Oregon will have to pay for the audit.”

The audit is unrelated to any of Cover Oregon’s many troubles -- it’s both a federal requirement for states with their own exchange as well as state law.

Senate Bill 99 calls for the Secretary of State to conduct a financial audit each year and a performance audit every two years. However, it’s likely that Cover Oregon will cease to exist as an independent public corporation after the Legislature meets early next year. Politicians from both major political parties have called for the exchange’s duties to be rolled into a state agency -- either the Oregon Health Authority or the Insurance Division.

SB 99 spells out the rules for the audit:

(a) A review of the sources and uses of the moneys in the fund;

(b) A review of charges and fees imposed and collected

(c) A review of premiums collected and remitted.