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: The OEC follows all State of Connecticut guidelines, memorandums, rules, and laws related to funding and internal controls. All of our funding is tracked and managed through the State’s electronic accounting system known as Core-CT. There are systems and controls within Core-CT that provide for and regulate the segregation of duties and roles related to all avenues of the contracting and expenditure process. Our processes and expenditures are periodically reviewed by the State’s Auditors of Public Accounts (APA) for compliance with State and Federal regulations and to ensure that we are implementing our own policies and procedures effectively. The Office of Policy and Management (OPM) is consulted for approval regarding all new programs and the Office of the Attorney General (OAG) reviews and approves all contracts executed by the Lead Agency. Each contract and program has various monitoring schedules and procedures depending on the program ranging from subrecipient monitoring protocols to direct contract management. Our Program Managers, Grants and Contracts Unit, and Fiscal Department have regular meetings and discussions through email and Teams chats regarding contracts and procurement and allowable use of funds. 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: The OEC’s Fiscal Department maintains overall responsibility for the fiscal administration of the CCDF program and has worked with the CCDF team to establish comprehensive controls to direct and monitor vendor performance. The OEC’s Fiscal Department follows all federal and state rules, including those pertaining to CRRSA and ARPA funds, governing financial management and ensures compliance with state and federal audit requirements. The OEC’s Grants and Contracts Unit supports the CCDF team in monitoring all contracted entities for compliance. Vendors are required to meet the performance standards established in their contract. The OECs Fiscal Department utilizes management reports and audits to monitor compliance. Further, a monthly review of United Way's contract UCOA, in CORE, is performed in two steps to monitor and evaluate performance and make budget/programmatic adjustments. The initial review is conducted by OEC's Leadership, Fiscal, and Program staff and includes the financial reporting for each of individual programs' activities and all related expenses. This monthly review procedure is performed by analyzing each of the expenditure category reports, in CORE, and the corresponding amounts as compared to the approved budget. Each monthly report displays the pre- calculated formulas for Expenses % Total Budget and Balance % Total Budget as a guide to see which line items are over/under expenditure compared to cost expectations. This initial review provides the estimate of the yearly projected expenditure levels ensuring that expenses are within available funds as well as timing of the recommended programmatic activity throughout the SFY year. 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: All funds and expenditures are tracked and managed through the State of Connecticut’s financial accounting system, CORE-CT. Payments to providers are made through the ImpaCT system. The Lead Agency’s CCDF budget (Spend Plan) is reconciled quarterly, or monthly if needed, with program leads for each line item. For example, all expenditures related to Quality activities are reviewed and reconciled with the Division Director for Quality on a quarterly basis. Record is kept of any outstanding items or questions with a one week follow up. The CCR&R monthly review process includes meetings between United Way's Leadership, Program and Fiscal staff with OEC's review team to affirm fiscal expectations and review reported monthly expenditures by individual program activities. At this time, the OEC review team discusses with the United Way review team which program activities and specific expense line items are over or under expended based on a trend analysis. The UW provides their insight on how programmatic activities are impacting the timing and amount of incurred expenses. These discussions allow for agreement on the need to re-allocate funds in order to coincide with current programmatic activities and expenses compared to the approved budget. The initial budget and any budget revisions are performed in the similar collaborative manner described above. In addition, CT's Office of Policy Management (OPM) provides required Cost Effectiveness Evaluation (CEE) training for program managers overseeing POS and PSA contracts. Per Connecticut General Statutes (Section 4e-16) state agencies are required to complete a cost-effectiveness evaluation prior to entering into or renewing a privatization contract. OPM provides a flowchart and template for CEE's. These tools, as well as other CEE related materials, can also be found on the OPM website. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: OEC’s Fiscal Department is responsible for the federal and state reporting of the CCDF program. The federal ACF-696 financial report is completed quarterly and reports all program and administrative expenditures funded by the multiple CCDF funding streams. OEC uses a Crosswalk workbook that was created to align to the federal ACF-696 form, calculate the federal requirement amounts under the various categories, and record cumulative expenditures claimed. It is a multi-step process to update the Crosswalk with quarterly CCDF expenditures. First, the CCDF budget (Spend Plan) is reconciled against the Expenditure by Object Report and Voucher Report (from CORE-CT) and any variances between these two reports are researched. Second, the Cashbook is updated with direct service payments, manual issues, refunds and cancellations. The Cashbook data comes from various sources including Program staff reports, ImpaCT eligibility/expenditure system, CORE-CT, and United Way payment requests. The Cashbook totals are reconciled against bank statement activity. Once the Spend Plan and Cashbook reconciliations are completed, the expenses are added to the quarterly Crosswalk for the appropriate Grant Year. The Crosswalk Expense tabs are verified by the person entering the expenses and also by a second reviewer/approver. The Expense tab expenditures automatically flow to the cumulative 696a form for the corresponding quarter, which is then used to enter the ACF-696 report into ACF’s electronic filing system, or Grant Solutions. In the ACF-696 Crosswalk, formulas and checks are added for reviewers to verify that the federal/MOE requirements are met, and that the expenditures claimed are not in excess of the awards received. The same CORE-CT reports mentioned above, in addition to other sources such as ImpaCT, eGMS, OF1/OF2 budget documents, are used to complete the state ARPA-CSFRF (Coronavirus State Fiscal Recovery Fund) reporting to the Office of Policy and Management (OPM). Obligation and expenditure information is obtained from these reports and entered into the appropriate column for current period and cumulative amounts. An additional state report that is completed quarterly is the Legislative Report which includes CCDF allocations, expenditures, and projections by funding source. We use CORE-CT appropriation and allotment data to enter the amounts available through the reporting period and what will be available for the SFY. We then update the expenditures and projections using the Spend Plan totals, which have been previously reconciled against CORE-CT and Cashbook. d. Other. Describe: 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: The OEC considers effective fiscal management practices to be the standard operating procedures developed to carry out our accounting, financial reporting, budgeting, and other activities related to managing the business of the agency. There are quarterly, or monthly if needed, meetings with Fiscal and Program Directors to review the program activities under their department along with the budget and expenditures for these activities. Any discrepancies discovered during these analysis meetings are updated and corrected as needed. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: Consistency and transparency in financial reporting is critical to consider when measuring the effectiveness of our procedures. In addition to the random sampling audits performed by the Office of the State Comptroller (OSC), we perform a monthly reconciliation of expenditures to ensure proper coding and allowable use of funds. Further, the Auditors of Public Accounts (APA) review all of our expenditures and business practices on a routine basis. All budgets and expenditures related to CCDF are tracked in our Spend Plan. The Spend Plan is updated monthly and contains historical expenditure information since 2019. Because we have been using this method to budget and track yearly expenditures, we can compare many variables and use that analysis to inform policy and decision-making conversations. Furthermore, the CCDF Administrator meets monthly and quarterly with the fiscal department and division directors and program managers to reconcile their portions of the budget through the Spend Plan. This allows us to have a clear vision of our CCDF Budget on a monthly basis so that we can make informed budgetary decisions moving forward. c. How the results inform implementation. Describe: If our monthly reconciliation or the external audits performed by our sister agencies yield any inconsistencies or errors, we analyze the findings to determine if there is a systemic issue or room to improve or grow in our policies and procedures. When necessary, we review and make changes to our procedures to ensure we have the most effective and practical methods in place. During monthly or quarterly meetings, the CCDF Administrator, fiscal department and division directors review each division's budget and spending. This process assists the OEC fiscal team to understand budget spending and make timely decisions if fund reallocation is needed. d. Other. Describe: 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: Each fiscal year, the Lead Agency works with the State Department of Education to annually update the Office of Policy and Management (OPM)’s Compliance Supplement, which informs auditors of the rules regulations surrounding each State funded major program. If a contractor or recipient is required to have an audit performed, the Compliance Supplement will help identify risks for the auditors. The audits are uploaded onto OPM’s Electronic Audit Reporting System (EARS). We also have contractors submit programmatic and fiscal reports on an applicable schedule with are review by Program Managers. Further, we perform monthly reconciliations of expenditures to ensure accuracy of payments and coding. For overseeing the UWC contract , we use the following Risk Assessment Steps: Identify the hazards, decide who might be harmed, evaluate risks and decide on precautions, implement findings, review assessment and update when/if necessary are built into our Active Contract Management Process as well as our monitoring of licensure requirements. In Active Contract Management, program managers and individuals assigned to oversee contracts review contract language with our Grants and Contracts division and the state’s Attorney General’s office looking for any risks or potential for harm to any stakeholder. Once contracts are approved and executed, active contract management consists of reviewing the requirement contractor weekly, monthly, quarterly programmatic, and fiscal reports applying the risk assessment framework. Weekly, monthly, and quarterly meetings are scheduled to review and discuss findings and adjust or draft amendments when necessary. During monitoring licensing visits, OEC licensing specialists apply the risk assessment model in their monitoring visits, observing practice, environment, reviewing files, etc. ensuring all practices and activities are aligned to our state licensing regulations. When violations are discovered, consequences such as placing a program on a Corrective Action plan, are aligned to the level of risk of the violation. b. The frequency of each risk assessment. Describe: The Lead Agency reviews payments and coding at a minimum of a monthly basis. The Office of the State Comptroller (OSC) performs an audit of a random sampling of expenditures on a monthly basis. The Auditors of Public Accounts (APA) perform State and Federal audits of our agency on an annual basis and perform a departmental audit on a three-year basis. For overseeing the UWC contract, risk assessments are built into regular intervals. For contracts and program management, these are conducted weekly, monthly, quarterly, depending on the portion of the contract / work stream being examined. Licensing visits occur annually, and they are unannounced. More frequent license monitoring visits can occur if risk assessment determines the need or if minor changes, such as address or licensed capacity changes. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: If our monthly reconciliation or the external audits performed by our sister agencies yield any inconsistencies or errors, we analyze the findings to determine if there is a systemic issue or room to improve or grow in our policies and procedures. When necessary, we review and make changes to our procedures to ensure we have the most effective and practical methods in place. For overseeing contracts, the Risk Assessment Steps: Identify the hazards, decide who might be harmed, evaluate risks and decide on precautions, implement findings, review assessment and update when/if necessary are built into our Active Contract Management Process as well as our monitoring of licensure requirements. In Active Contract Management, program managers and individuals assigned to oversee contracts review contract language with our Grants and Contracts division and the state’s Attorney General’s office looking for any risks or potential for harm to any stakeholder. Once contracts are approved and executed, active contract management consists of reviewing the requirement contractor weekly, monthly, quarterly programmatic, and fiscal reports applying the risk assessment framework. Weekly, monthly, and quarterly meetings are scheduled to review and discuss findings and make adjustments or draft amendments when necessary. During monitoring licensing visits, OEC licensing specialists apply the risk assessment model in their monitoring visits, observing practice, environment, reviewing files, etc. ensuring all practices and activities are aligned to our state licensing regulations. When violations are discovered, consequences such as placing a program on a Corrective Action plan, are aligned to the level of risk of the violation. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: We know that our monthly reconciliation is effective because on occasion we have found discrepancies in coding that we’ve had to enter journal vouchers to correct. Additionally, the audits performed by APA for all agencies are posted on their website and show the results of all the audits they have performed. For contracts, risk assessment is on ongoing process, intertwined into active contract management and monitoring of licensing requirements. OEC staff involved in this work operate within a continuous cycle of improvement, this the process is ongoing with results reviewed regularly for success or needed revision. 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: Regular onsite trainings, as well as virtual trainings are provided to all staff members who administer the CCDF program, for policy and procedure, given the turnover of staff, as well as when new policies or changes in policies are enacted. OEC has hired staff specifically for the CCDF program and their roles are related to CCDF activities. Staff members are also offered opportunities to attend conferences such as STAM to learn more about CCDF program requirements and their role within the program. Staff members are also provided with materials, such as federal instructions and guidelines, to learn about the rules and regulations of the CCDF program. Staff attend all meetings relating to CCDF to become more familiar with the activities, contracts, and agencies associated with the program. Our CCR&R also responds to providers' individual requests for update trainings. We implement the concepts of Tell, Show, Do, Review in our training, which we have found to be effective with new staff onboarding. This includes showing the staff the process to complete, walking them through the process, having them complete it independently and then reviewing their work. ii. Describe how staff training is evaluated for effectiveness: This would be completed during the ￿Review￿ portion of the training mentioned in the previous response to make sure there are no errors. It also gives an opportunity to provide feedback/suggestions to new staff. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: OEC takes information from audit findings from APA to re-train and update procedures as necessary. OEC uses the results of error rate to inform agency staff of areas of opportunity in our subsidy program to help providers and families better understand eligibility rules and requirements. For example, it has been noted that there has been a high rate of application denial due to income and activity requirements and have advised all agency staff that use of the Parent Portal and pre-screening tool online are available to reduce the high denial rate and increase efficiency. 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: CT has created, posted and implemented an on-demand training which provides an overview of the CCDF requirements with a focus on how to maintain program requirements and ensure program integrity. The training is accessible to licensed centers and group homes, and license exempt programs on the Care 4 Kids website. Providers were made aware of this training via e-mail with a direct link to the website on the ECE listserv. The OEC has contracted with providers to offer a number of free trainings to the field, broadly accessible to both family childcare providers as well as centers. These trainings have been targeted to support family childcare providers more inclusively than ever before. Trainings include: Provider Orientation Training for Care4Kids providers which covers a number of child development topics Medication Administration train the trainer sessions to replicate the Yale University model CPR, First Aid trainings, and nutrition trainings Backpack and I Am Moving I am Learning based trainings Coaching. In addition, training is provided free to providers regarding CCDF policies, procedures, and practices. Accreditation support is also provided free of charge. These are advertised on our state ECE listserv, through social media, and on the Agency and CCR&R websites. In these trainings, providers are encouraged to provide trainings for families. As part of licensing and accreditation, providers are required to communicate with families, share information with families and help families connect with potential supports when needed. ii. Describe how provider training is evaluated for effectiveness: The OEC professional registry and the Care 4 Kid ImpaCT system tracks provider compliance in meeting the orientation. Relatives are required to complete a pre- service orientation program the includes the topic areas: child development, SIDS, building and physical premise safety, emergency preparedness, storage of hazardous materials, nutrition and physical activity. Currently, we do not have an evaluation tool built for the training. However, we are partnering with UWC to develop an online evaluation survey that would be optional after the trainings are completed. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: OEC uses the results of error rate study to inform ongoing providers training needs in multiple ways. During a recent error rate review, the review team identified numerous errors related to self-employment reporting requirements. It was found that many families submitted incorrect documentation on their self-employment which delayed process of their applications. OEC has contracted with CohnReznick to streamline reporting requirements and has conducted training for United Way staff to better assist providers who help family's complete eligibility documents. The training materials are available for reference for on the Care 4 Kids website for families and providers to access. Additionally, we found through the error rate process that many families send incomplete applications requiring missing information letter to be sent out. The C4K and OEC staff have encouraged families to access the online Parent Portal to submit applications and documentations. 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: Connecticut completes the triennial error rate review and submits the ACF-404 Improper Payment Report. This report summarizes key finding from the review and the report is shared with staff and leadership members of both organization (OEC and UWC). The report is used to evaluate the internal controls used at UWC when determining family eligibility and issuing subsidy payments. Based on the finding OEC/UWC develop plans to ensure effective internals controls are maintained. 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: The Lead Agency receives its audit results from APA via email and it is made available on the APA website. The Lead Agency uses the feedback and any suggestions to improve and strengthen our internal controls when necessary. 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: 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? The Auditors of Public Accounts (APA) review all expenditures and business practices on a routine basis. OEC uses their findings and recommendations to make improvements on our internal controls. For example, as a result of a recent State Audit finding, OEC recently updated the written procedures for preparing and submitting the quarterly ACF-696 Financial Report to be more accurate with the current procedures followed.