AUGUSTA (AP) – Gov. John Baldacci announced Tuesday that the state is contracting with an outside accountant to reconcile some financial transactions within the Department of Human Services that have come under scrutiny by Maine state Auditor Gail Chase.

Chase said last week her office was still seeking to track nearly $19 million that the state received over a period of years from the federal Temporary Assistance to Needy Families program.

Since then, Chase has said more than $29 million in DHS expenses were challenged by state auditors in the 2002 fiscal year.

Baldacci said Tuesday he has no reason to believe that funds in the department were misused, but that he wants to ensure that proper accounting controls are in place.

He also announced that former state Labor Commissioner Valerie Landry will head an advisory panel that will work on a merger of the Human Services Department and Maine’s mental health department, which is formally known as the Department of Behavioral and Developmental Services.

The merger has been a top priority of the governor and he said PriceWaterhouseCoopers, in addition to its work at the Human Services Department, would be available to advise the panel that Landry will lead.

Baldacci said an immediate concern was to pinpoint any internal DHS problems and lay them out in financial statements being prepared this month for Watt Street rating agencies.

As to the desirability of a separate legislative probe, he said: “Whatever the Legislature decides to do, we’re going to work with the Legislature.”

Outlining some of her questions concerning DHS for the Appropriations Committee last week, Chase said funds in question did not appear to have been misappropriated but “were not used entirely for the TANF grant.”

Chase also said there could be partially offsetting money in the DHS account network and that no decision had been reached yet on how strongly to treat the matter in an upcoming audit report.

Acting DHS Commissioner Peter Walsh said Tuesday he viewed the accounting reviews already under way as an opportunity to bolster internal financial controls.

“We need to make sure that the money that we have is appropriately spent,” he said.

Baldacci said administration officials able to draw on assistance from the outside accountants would seek to foster adequate financial controls throughout state government.

AP-ES-05-13-03 1744EDT

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