SPRINGFIELD, Ill. – State auditors are again battling with Illinois’ health care agency over money management, weeks after a scathing rebuke of how the agency oversees payments to Medicaid providers.

Auditor General William Holland’s audit released Wednesday found 15 problems with the Department of Healthcare and Family Services. That’s up from 10 problems he found in the last agency audit.

Holland points this time to slow and incomplete money statements that cause complications as the state puts together an analysis of its overall financial books.

“The picture that is painted here is not a pretty picture,” Holland said.

The agency shot back that Holland’s criticisms were largely out of its hands.

“I am surprised and disappointed that your report mischaracterizes our intent to be thorough in providing information,” DHFS Director Barry Maram wrote in a letter sent Wednesday to Holland.

Holland harshly criticized DHFS for long delays in reporting its financial numbers to his auditors and for problems contained in the reports when they finally received them.

DHFS didn’t provide complete financial statements to Holland’s office until March 2008, even though the budget year ended last June. Once submitted, the statements included an overstatement of general tax revenue by nearly $600 million, Holland said.

“The Department’s actions resulted in significant delays in the financial reporting process, were dilatory and were a disservice to the users of the state’s financial reports,” Holland states in the audit.

The two sides butted heads about a month ago, when a special audit requested by lawmakers found serious flaws in how DHFS gets Medicaid payments to providers. The agency said lack of funding by lawmakers caused many of those problems.

Holland’s new report scolds DHFS for not making $1.2 billion in hospital improvement access payments until last September, although they should have been paid in four payments from March through May.

Auditors also said the department inappropriately made nearly $20 million in payments for worker’s compensation claims out of funds set aside by state lawmakers for health care coverage.

The agency agreed with most of Holland’s recommendations but disputed it was to blame for the two major delays he cited.

Lawmakers in recent years have turned to a “hospital assessment program,” where hospitals pay an extra tax into the Medicaid fund and Illinois gets back federal money to boost hospital spending.

Last year, DHFS expected to receive $2.4 billion from that program but only got authority from lawmakers to spend half that amount. Spending authority for the other half didn’t come until August, when Gov. Rod Blagojevich signed a measure allowing it. Those payments were made in September.

That wait postponed the agency’s financial statements and its hospital improvement payments, DHFS said in response to the audit.

Maram insisted in his letter that the department provided all its financial statements except for hospital providers by December, rather than March as Holland reported, and said the delay for hospitals was necessary to ensure “accurate financial reporting.”

Holland said DHFS was aware of how to handle the hospital tax delay as early as last December when Comptroller Dan Hynes made recommendations but waited until May 27 to agree with his recommendation. In the meantime, he said, DHFS spent “untold thousands of dollars” on advisers to end up “right where we were.”

The auditor general also noted the governor received the measure authorizing the second half of the hospital tax money to be spent by mid-June but didn’t approve it until mid-August. That measure included pay raises for lawmakers and top officials, including Maram.

That measure was “apparently good for the director’s salary but apparently not for the hospitals,” Holland said.

The department said auditors agreed to include more information in the financial reports based on its work with outside advisers and is troubled Holland wanted the agency to simply accept Hynes’ recommendation.