DePasquale said the agency's mismanagement of the transition led to financial and emotional hardship for as many as 20,000 disabled Pennsylvanians and roughly an equal number of the workers who earn from $8 to $15 an hour to care for them. Some even lost their homes, he said.
"DPW failed to provide adequate oversight and demand accountability of contracted payroll providers," the auditor general said at a news conference.
DePasquale also said that because of the confusion and fears about disruption to their care, at least 1,500 disabled people switched to higher-cost services that cost taxpayers at least $7 million in the last year.
DPW Secretary Bev Mackereth - who was named to the post by Gov. Corbett after Alexander's resignation in February - acknowledged that the rollout of the new payroll service was problematic, but said steps had been taken since the audit began eight months ago to correct the issues. She said the workers were now getting paid.
"Many problems have been resolved," Mackereth said after the news conference. "We do have to do a better job."
Leslie Haber, executive director of United Home Care Workers of Pennsylvania, said the union remained unconvinced the consolidation was the right thing to do.
"The Corbett administration made a big mistake by outsourcing fiscal management services to PPL from a system of providers that was functioning effectively for years," Haber said. "Not only did thousands of home-care workers - who make an average of $10 an hour - not receive a paycheck for months at a time; those they care for endured the added stress of not knowing if their care would continue."
Haber also said payment delays were continuing.
The audit recommended that the DPW conduct performance reviews of Public Partnerships to ensure it was complying with the contract, which expires at the end of next year.
DePasquale said he did not understand why there was such a long delay in workers being paid when the Boston company was paid $18 million before the transition occurred Jan. 1.
DPW officials said that the up-front money was recouped by the Commonwealth. DePasquale said workers' back pay was eventually restored.
Public Partnerships, which manages payrolls for similar services in other states, is being paid roughly $1 million a month by the Commonwealth to administer payroll services for about 20,000 workers who care for about 16,000 people, including the elderly and those with long-term disabilities, DePasquale said.
Representatives from Public Partnerships could not be reached Thursday.
The audit, which looked back to 2009, also revealed issues with DPW oversight of the multiple payroll contracts during the Rendell administration.
DePasquale said numerous instances of noncompliance with state and federal laws, regulations, and financial services standards by the state-based payroll providers before Corbett took office led to the decision to consolidate the services.