10.1 Effective Internal Controls

Lead Agencies must ensure the integrity of the use of CCDF funds through effective fiscal management and must ensure that financial practices are in place. Lead Agencies must have effective fiscal management practices in place for all CCDF expenditures. 10.1.1 Organizational structure to support integrity and internal controls Describe how the Lead Agency’s organizational structure ensures the oversight and implementation of effective internal controls that promote and support program integrity and accountability. Describe: Office of Early Childhood (OEC) has a stand-alone Quality Assurance Unit (QA) that is responsible for assessing, recommending, and revising policies and procedures. In addition, OEC leadership regularly meets to discuss situations in which policies and procedures were brought into question to assess whether revisions are needed. FSU conducts audits of randomly selected providers required to provide attendance records and sign-in/sign-out sheets to support their billing. These records are reviewed to ensure the records support the billing for childcare provided. If records do not reflect what was billed, providers may be provided technical assistance, may be reviewed further, and/or required to repay the funds to the state agency. The QA Unit makes recommendations for further action to the Assistant Commissioner and/or Director regarding facilities under special audit. After the audit has been conducted, QA Unit will submit the results to FSU. Office of Early Childhood QA Unit continuously assesses policies, procedures and provides recommendations to the CCDF Program Administrator and staff on changes and/or implementations to strengthen the operation of the program. OEC has a director of finance who monitors all expenditures of CCDF funds. Additionally, the Department of Education has a team to work on federal reporting and other federal requirements related to finance. OEC executes and maintains a written agreement with all CCDF sub-recipients. The written agreement includes our standard language, which indicates the terms of the agreement, the scope of services to be provided, requirements for payment, independence statement, prohibition for lobbying, confidentiality clause, record retention requirements, audit requirements, financial reporting requirements, as well as a termination and debarment clause to be utilized when any requirements of the agreement (including but not limited to those above) are not met or are violated. OEC segregates certain duties to other divisions who do not perform regular CCDF program administration. The QA Unit is not responsible for performing any eligibility determinations, they are responsible for reviewing the work of others. This segregation of duties assists with ensuring program integrity in the CCDF program. OEC uses the Finance Division for receipt of CCDF funding, making payments to CCDF providers, and for financial reporting to ACF. QA Unit collaborates with Assistant Commissioner and/or Assistant Directors to ensure the integrity of CCDF programs. Due to potential compliance concerns such as complaints made against the facility, billing summary reflects concerns such as: the facility not billing absentees, attendance records not matching the billing summary, compliance issues being determined by another OEC unit. Include the following elements in your description: 1. Assignment of authority and responsibilities related to program integrity. 2. Delegation of duties. 3. Coordination of activities. 4. Communication between fiscal and program staff. 5. Segregation of duties. 6. Establishment of checks and balances to identify potential fraud risks. 7. Other activities that support program integrity. 10.1.2 Fiscal management practices Describe how the Lead Agency ensures effective fiscal management practices for all CCDF expenditures, including: a. Fiscal oversight of CCDF funds, including grants and contracts. Describe: OEC has a director of finance who monitors all expenditures of CCDF funds. Additionally, the ADE has a finance team to work on federal reporting and other federal requirements related to finance. OEC executes and maintains a written agreement with all CCDF subrecipients. The written agreement includes our standard language, which indicates the terms of the agreement, the scope of services to be provided, requirements for payment, independence statement, prohibition for lobbying, confidentiality clause, record retention requirements, audit requirements, financial reporting requirements, as well as a termination and debarment clause to be utilized when any requirements of the agreement (including but not limited to those above) are not met or are violated. b. Tracking systems that ensure reasonable and allowable costs and allow for tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provision of this part. Describe: OEC's financial system allows for tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of CCDF requirements. Payments are currently being tracked through the State's financial system, AASIS. Our IT department are in the process of building a new system, due to be ready in October 2024, for providers to input information and for us to process payments. This system will also allow us to track payments from funds. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: The OEC finance team maintains a calendar of due dates for reports. The OEC finance team extracts the expenditure reports for the period and breaks out the data into the various reporting categories. After reviewing this information, and we discovery that corrections need to be made, this is noted, and the corrections are processed immediately. If the corrected date can be reported during the reporting period, it is done. If not, the changes will still be made in the current working period and reported in the next reporting period. d. Other. Describe: QA unit conducts special audits where providers are assigned to the QA Unit by Director and Assistant Directors. The facilities are required to provide attendance records and sign-in/ sign-out sheets to support their billing. These records are reviewed to ensure the records support their billing. These records are reviewed to ensure the records support the billing for childcare provided. After the audit has been conducted, QA Unit will submit the results to FSU. 10.1.3 Effectiveness of fiscal management practices Describe how the Lead Agency knows there are effective fiscal management practices in place for all CCDF expenditures, including: a. How the Lead Agency defines effective fiscal management practices. Describe: OEC has a director of finance who monitors all expenditures of CCDF funds. Additionally, Arkansas Department of Education will work on federal reporting and other federal requirements related to finance. OEC executes and maintains a written agreement with all CCDF subrecipients. The written agreement includes our standard language, which indicates the terms of the agreement, the scope of services to be provided, requirements for payment, independence statement, prohibition for lobbying, confidentiality clause, record retention requirements, audit requirements, financial reporting requirements, as well as a termination and debarment clause to be utilized when any requirements of the agreement (including but not limited to those above) are not met or are violated. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: We have established financial polices to help mitigate risks and to promote accountability, and to safeguard the funds. At the beginning of each year we build a budget to ensure activities are planned and incorporated for efficiently. weekly, monthly, and quarterly financial reports to ensure the fiscal decisions are being conducted according to plan. This allows us to make changes if they are necessary. We have established internal controls which are essential to the proper operation, ensure regulatory compliance, and promote accountability. In addition, we complete a risk assessment every two years to look at conditions that my cause different risks, and to improve the processes in place to mitigate these risks. c. How the results inform implementation. Describe: OEC performs random audits of CCDF sub-recipients annually where expenditures of CCDF funds are reviewed to ensure they are supported and allowable. A monthly audit where providers are randomly selected and required to provide attendance records and sign-in/sign-out sheets to support their billing. These records are reviewed to ensure the records support the billing for childcare provided. Audit results may warrant additional training and/or work with provider to get them back in compliance with the program. d. Other. Describe: QA Unit conducts a monthly audit where providers are randomly selected and required to provide attendance records and sign-in/sign-out sheets to support their billing. These records are reviewed to ensure the records support the billing for childcare provided. If records do not reflect what was billed, providers may be provided technical assistance, may be reviewed further, and/or required to repay the funds to the state agency. 10.1.4 Identifying risk Describe the processes the Lead Agency uses to identify risk in the CCDF program including: a. Each process used by the Lead Agency to identify risk (including entities responsible for implementing each process). Describe: OEC regularly assesses the risk of its policies and procedures. The QA unit assesses, recommends, and revises policies and procedures. In addition, OEC leadership meet to discuss situations in which policies and procedures were brought into question to assess whether revisions are needed. b. The frequency of each risk assessment. Describe: QA Unit conducts risk assessments monthly or as needed/directed. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: OEC randomly pulls case files to determine if eligibility is being determined properly. OEC verifies all information on application and DocuShare ensuring information in the Child Care Eligibility Database (CCE)matches, and all required documentation has been submitted. The QA Unit checks the income and/or education status for compliance. QA Unit reviews the case files, and the results are provided to the CCDF Program Administrator. OEC leadership meet to discuss situations in which policies and procedures were brought into question to assess whether revisions are needed. Evaluate the areas of risk in the program to minimize non-compliance and highlight areas of the program that need to be strengthen. The results are discussed with the Program Managers, and errors are identified and discussed. The Program Administrator and Program Managers will correct these errors by correcting procedures, if required, and identifying needed changes in our reporting process. This will serve as training for the Program Managers, who will use this information to train their team. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: QA Unit collaborates with the OEC Assistant Commissioner and/or Assistant Directors to ensure the integrity of CCDF programs. QA Unit does not perform any eligibility determinations but reviews the work of the FSS. OEC also segregates certain duties to other divisions who do not perform regular CCDF program administration. This segregation of duties assists with ensuring program integrity in the CCDF program. OEC collaborates with Finance for receipt of CCDF funding, making payments to CCDF providers, and for financial reporting to ACF. e. Other. Describe: 10.1.5 Processes to train about CCDF requirements and program integrity Describe the processes the Lead Agency uses to train staff of the Lead Agency and other agencies engaged in the administration of CCDF, and child care providers about program requirements and integrity. a. Describe how the Lead Agency ensures that all staff who administer the CCDF program (including through MOUs, grants, and contracts) are informed and trained regarding program requirements and integrity. i. Describe the training provided to staff members around CCDF program requirements and program integrity: The CCDF Program staff conducts training sessions on policy and procedures and how they are implemented. The scope and type of training selected is based on the needs of the staff member and is categorized into 3 principal areas: (1) new hires, (2) existing staff, and (3) other divisions within and other agencies. New hires to the CCDF Program are fully trained on all policies and procedures and how to use the various systems that are integral to operate the program. Existing staff are given policy, procedure, and systems training based on the needs of those staff and through ongoing monitoring of areas that need improvement. Existing staff also receive full training on any new policies, procedures, and/or systems and any changes to those items. Other divisions and other agencies are given policy, procedure, and systems training based on their needs and roles. The QA Unit also conducts updates, as needed, on policy and procedure clarification and best practices to ensure staff training needs are met promptly. This training helps staff identify signs of intentional or unintentional program violations. ii. Describe how staff training is evaluated for effectiveness: CCDF Program Coordinators are required to review Family Support Specialist (FSS) case records monthly to ensure accuracy in eligibility determination. CCDF Program Coordinators will follow up with the FSS on areas identified as needing improvement. In addition, the QA Unit also conducts random sample reviews to ensure case records are compliant with eligibility criteria. When areas are identified as needing improvement, the QA Unit meet with CCDF Program Managers to review and obtain corrective action. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: CCDF Program Coordinators are required to review Family Support Specialist (FSS) case records monthly to ensure accuracy in eligibility determination. CCDF Program Coordinators will follow up with the FSS on areas identified as needing improvement. CCDF Program Coordinator will use case review data to determine if additional training is needed. b. Describe how the Lead Agency ensures all providers for children receiving CCDF funds are informed and trained regarding CCDF program requirements and program integrity: i. Describe the training for providers around CCDF program requirements and program integrity: All CCDF providers in Arkansas are required to sign our CCDF Program Participant Agreement. OEC requires the provider and/or designee to complete a mandatory CCDF Program Participant Agreement online training and submit all required documentation for approval. After training completion, submission of all required documentation and approval, providers will be granted permission to accept CCDF funds. Annually, providers and/or designees are required to complete the online CCDF Program Participant Agreement refresher course once every twelve (12) months to ensure compliance and program integrity. ii. Describe how provider training is evaluated for effectiveness: OEC conducts regular monitoring of providers to ensure adherence to policies and procedures as well as applicable federal and state guidelines and regulations. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: Compliance audit results inform which areas providers need additional training in, as well as what can be changed in the CCDF Program Participant Agreement. Corrective Action Plans for program participants who are out of compliance ensure reduced future risk and continued education for facilities. 10.1.6 Evaluate internal control activities Describe how the Lead Agency uses the following to regularly evaluate the effectiveness of Lead Agency internal control activities for all CCDF expenditures. a. Error rate review triennial report results (if applicable). Describe who this information is shared with and how the Lead Agency uses the information to evaluate the effectiveness of its internal controls: OCE uses data from the Error Rate Review to evaluate the implementation of program requirements and the effectiveness of staff training. We use it to evaluate the effectiveness of our internal controls by providing additional training and take corrective action. It shared with the Commissioner, and all of OEC's leadership team. b. Audit results. Describe who this information is shared with and how the Lead Agency uses the information to evaluate the effectiveness of its internal controls: OEC utilizes the Office of Information Technology to run reports to identify providers and casehead who have indicators that suggest that an intentional or unintentional violation or administrative error may have occurred. The reports reflect potential violations/errors. Examples of the types of reports/data elements are noted in the bulleted list below: • System report identifying active cases with no authorizations; • System report identifying cases active over five years; • System report identifying cases over the new income limits; • System report identifying cases with no children; • System report identifying case managers; • System report identifying cases with an invalid address; • System report identifying the percentage of authorizations assigned to a provider approved by the same case manager; and • Comparison of the capacity of a child care provider to the number of children they bill for. All results are shared with the OEC leadership team as needed. Data is compared against previous cycle data to implement process improvement for all staff. The leadership team looks to see what did or did not work and prepare refresher training for staff. This information is shared with the Commissioner, and all of OEC's leadership team. c. Other. Describe who this information is shared with and how the Lead Agency uses the information to evaluate the effectiveness of its internal controls: OEC maintains an integrity hotline for all stakeholders, including the general public, to submit complaints. The information is published on the agency's website at: https://ardhslicensing.my.site.com/elicensing/s/complaint/submit- complaint?tab=CC&language=en_US . Upon receiving a complaint, OEC will work with the CCDF staff to investigate to determine if it's a program violation or administrative error has occurred, and if so, whether any funds are due back to the Lead Agency. If the complaint reflects intentional fraud or program violations, the Assistant Commissioner and/or Assistant Directors will assign the case to the QA Unit if necessary to conduct a special review of the program. 10.1.7 Identified weaknesses in internal controls Has the Lead Agency or other entity identified any weaknesses in its internal controls? a. [ ] No. If no, describe when and how it was most recently determined that there were no weaknesses in the Lead Agency’s internal controls. b. [x] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls? Improper billing by providers and errors in cases. Corrective actions plans were implemented. These corrective plans include training, monitoring, and re-reviews.