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: Assignment of Authority and Responsibilities DEL is the lead agency for the CCDF program and assumes responsibility for administering the program in a manner that promotes and supports program integrity. DEL has established internal control processes that are implemented from a lead agency perspective as well as delegated to the ELCs and applicable contractors that deliver CCDF at the local level. Assignment of authority and responsibilities at the lead agency level is identified respectively in the workplans of DEL’s Finance Administration and Budget Services (FABS) and PI Units. Assignments of authority and responsibilities at the local level are captured in the early learning grant agreements (and contracts) executed with the 30 ELCs and applicable contractors. Delegation of Duties The duties (workplan) assumed by DEL’s FABS Unit include providing oversight and administration of 1) state and federal grants management and reporting; 2) accounting, disbursements, and revenue recognition; 3) subaward agreements and vendor contracts; and 4) budget and legislative analysis. The duties (workplan) assumed by DEL’s PI Unit include 1) managing and executing fiscal and programmatic monitoring activities for the 30 ELCs and select contractors; 2) assisting with CCDF policy development; 3) providing technical assistance to ELCs (and applicable contractors) as it relates to implementation of internal controls; and 4) conducting the triennial United States Health and Human Services Error Rate Improper Payments Review. The duties delegated to the ELCs via Sections 1002.83(1) and 1002.84, Florida Statues and the early learning grant agreement include administration and implementation of local comprehensive programs of CCDF services for all of Florida’s 67 counties. Coordination of Activities At the lead agency level, coordination of internal control activities is identified in DEL’s FABS and PI Unit workplans. Internal control activities at the local level are coordinated via the early learning grant agreements (and applicable contracts) with the 30 ELCs and select contractors. Communication Between Fiscal and Program Staff At the lead agency level and local level, communication of internal control expectations is carried out by financial management program guidance published by DEL’s FABS and the PI Unit’s published monitoring guidance (monitoring review guides and ICQ). Actual monitoring of ELCs and applicable contractors by DEL’s FABS Unit and PI Unit also communicate internal control expectations. Segregation of Duties At the lead agency level, segregation of duties is facilitated by having separate sections in the FABS Unit that manage early learning grant agreements and contracts and separate sections that process reimbursements from the ELCs and contractors. This same concept is implemented at the local level by ELCs and contractors who assist with providing CCDF services. ELCs and applicable contractors are also required to complete an ICQ that includes a section on how separation of duties is implemented including other mitigating controls that may be used at the local level. In addition, a separate PI unit in DEL is responsible for ongoing program compliance reviews and fiscal monitoring of the ELCs. Program monitoring staff conduct site visits biennially of each ELC administering CCDF programs. Establishment of Checks and Balances to Identify Potential Fraud Risks DEL uses the following processes as checks/balances to ensure PI and timely sharing of data. 1. DEL staff perform ongoing/routine reviews of applicable federal/state grant program laws, rules, and regulations. 2. The accountability section of the PI Unit conducts programmatic monitoring activities for ELCs and contractors. 3. The fiscal monitoring section of the PI Unit conducts monitoring activities for ELCs and contractors. 4. The FABS Unit conducts periodic fiscal desk reviews for ELCs and contractors. 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: Use of uniform chart of accounts ￿ ELCs, RCMA, and contractors are required to use a uniform chart of accounts for reporting budgets, revenues, and expenditures. DEL staff review annual budgets, revenue, and expenditure reporting to ensure activities are reported as required and in compliance with targeted grant/contract funds and restrictions. Prior approval of selected cost items ￿ DEL has prior approval processes that align with state purchasing rules and require ELCs and other direct subrecipients to obtain prior approval for cost items identified in 2 CFR §200/45 CFR §75 and state purchasing rules. Completion of monthly invoice workbooks ￿ ELCs/RCMA are required to submit monthly reimbursement requests to DEL using a standardized electronic-based invoice workbook. DEL compares submitted invoice details against each entity's detailed general ledger transactions. DEL staff also verify spending levels for administrative, non-direct, quality, direct childcare payments, and reconciliations of any issued advances to (1) ensure each entity meets spending minimums from program guidance and (2) related spending caps are not exceeded. Analytics for internal controls - DEL requires each ELC/subrecipient to complete and submit an annual ICQ. This self-assessment tool helps identify/document sound processes and procedures for each entity and allows for periodic assessments and monitoring by DEL and by entity management. Written policies and procedures - Written policies and procedures are required for key operating areas/necessary functions (operations, IT, etc.). Each non-federal entity must: - Connect/correlate expenditure details with specific program activities. - Describe grants management systems, policies, procedures, and proper recordkeeping requirements. - Establish and maintain effective control over federal award(s). - Evaluate and monitor its own compliance with federal/state statutes, regulations, and the terms/ conditions of the federal award(s). - Take prompt action when instances of noncompliance are identified, including noncompliance identified in monitoring/audit findings. - Take reasonable measures to safeguard personally identifiable information (PII) and protected personal identifiable information (PPII). - Allow for identification of Federal reporting requirements by use of the state’s current other cost accumulator (OCA)-based accounting system. - Achieve compliance with federal requirements for internal controls documentation with DEL’s annual ICQ process. Fiscal monitoring procedures for DEL subrecipients ￿ Periodic (no less than biennial) onsite fiscal monitoring visits to ELCs, RCMA, and other DEL subrecipients are used to help DEL meet its oversight and monitoring duties. DEL identifies key fiscal operating areas and performs periodic tests to inspect, sample, and monitor transactions for each entity. Draft test results are shared with each entity's leadership team at the end of the monitoring engagement. A monitoring report is prepared to describe the findings, observations, and related corrective actions/recommendations from DEL. Each entity submits a preventive/corrective action plan reply to DEL, and DEL staff perform follow-up tasks to ensure the intended corrections are made. DEL staff also provide additional technical assistance efforts on an as needed basis. 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: Use of OCA codes for reporting costs - To properly classify expenditures for federal reporting purposes under 45 CFR § 98.70 Reporting requirements, and for day-to-day operations of ELCs or other DEL subrecipients, a consistent and reliable cost accounting system to report program costs incurred in an organized and systematic manner has been put in place. DEL established OCA codes and definitions as part of its cost accounting system for use by ELCs and other subrecipients. OCA guidance includes definitions for allowable costs (with examples), related federal/state regulations, and/or state statutes and other relevant instructions. These codes are also grouped into subcategories for direct services, quality activities, other non- direct service expenditures, and administrative costs. Use of monthly budgeting/forecasting tools - DEL staff perform monthly reviews of ELC expenditure projections in the SR expenditures projection tool/SR Invoice Workbook. ELCs are required to use this tool which includes administrative, non-direct, quality, direct childcare payments, and reconciliation of advances received for each program year. Desk reviews to track costs - DEL staff perform periodic desk reviews of ELC expenditures to verify allowability of reimbursed expenditures and to complement monthly invoice submission process and annual financial monitoring activities. These desk reviews select a limited number of samples from administrative, quality, and other non-direct service expenditures. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: Before each fiscal year starts, staff from all DEL units (Policy, FABS, Program Integrity, Data) coordinate to verify DEL has a correct list of required state and federal reporting requirements. For federal reports, United States Department of Health and Human Services (USDHHS) Notice of Awards and online terms and conditions are obtained and reviewed to search for new, revised or deleted reports. For state reports, the same process is applied to new state legislation and existing state statutes for early learning programs. Data elements for state/federal reports typically include children served, costs incurred, compliance issued noted and performance goals/benchmarks reached. DEL’s Fiscal Budgeting Services Unit collects invoices from each ELC monthly to determine the amount of funds expended and to determine the number of children served. The Data Services Unit utilizes the information input to the statewide information system for providers and children enrolled to generate multiple reports. The Program Integrity Unit’s Fiscal Monitoring Section utilizes the information collected on invoices and in the statewide information system to monitor/review financial records of early learning coalition’s and to generate reports. The Program Integrity Unit’s Accountability Monitoring Section uses statewide information system data to analyze and monitor programmatic aspects. This includes generating reports to determine if payments were processed correctly. Once the reports are complete, DEL routes the reports through DEL’s leadership team for approval. 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: DEL’s definition of effective fiscal management practices includes the following: 1) Identifying and disseminating (to DEL and ELC/contractor staff) the rules and regulations that govern the CCDF program through training, program guidance, and grant/contractual agreements; 2) Ongoing fiscal monitoring of CCDF funded programs administered by ELCs/contractors; 3) Providing timely feedback on fiscal monitoring results to identify risks and inform DEL (and ELC/contractor) leadership on areas that may need improvement; and 4) Developing and implementing corrective/improvement action plans to address fiscal monitoring results. 5) Ongoing technical assistance and training for ELC staff on fiscal management practices. 6) Reviewing and advising ELCs on fiscal policies and procedures in their Coalition Plan. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: Measures and tracking of fiscal management and compliance activities occur throughout each fiscal year. Compliance trends are identified by the combined efforts of DEL’s FABS and the Program Integrity Fiscal Monitoring Section. Desk review results and any known instances of operational issues (for all DEL subrecipients) are shared in real- time by FABS with the Fiscal Monitoring Section and are part of (1) the periodic fiscal monitoring risk assessments made for each entity and (2) the planning tasks completed for all annual fiscal monitoring visits performed. DEL’s Fiscal Monitoring Section also compiles historical trend analysis data for all DEL subrecipients based on the key operating areas identified in DEL’s Annual Fiscal Monitoring Tool (financial management systems, internal controls, cash management, purchasing, travel, cost allocation, disbursements testing, etc.). Details for ten-year trend analysis data are gathered and updated in these categories after the fiscal monitoring cycle for each fiscal year is completed, and results are shared with DEL’s management and all units of DEL, as requested. In a connected process, DEL reviews the results of questions and technical assistance requests from ELCs/contractors to determine and track the effectiveness of fiscal management practices. Trends are identified by listing requests submitted on a tracking form and determining which requests have more or fewer instances occurring based on monitoring findings. Compliance trends are identified and are used to provide insight into areas of risk and improvement. c. How the results inform implementation. Describe: Compliance trends are identified to provide insight into areas of risk and improvement. From there, corrective/improvement plans are developed for implementation. 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: The following are risk factors reviewed by DEL: 1) total value of grant or contract funding allocated to an entity; 2) additional special projects or grant/contract funding allocated to an entity; 3) entity operations (service delivery model, recipient and provider relations, complexity and diversity of operations, etc.); 4) timeliness and accuracy of reporting (required filings) by an entity; 5) percentage of funding covered by independent audit review of entity; 6) issues identified by independent audit of entity; 7) number of entity repeat fiscal and programmatic monitoring findings (over the past two monitoring cycles); 8) entity adherence to corrective action plans resulting from prior year monitoring findings; 9) entity personnel turnover in key personnel positions such as executive, finance, operations, and information technology; 10) the materiality of entity findings from other oversight bodies such as the offices of the auditor general and inspector general; 11) status of general operating conditions of entity (operating practices that did not rise to level of observations or findings the previous monitoring cycle); and 12) the adequacy of the entity’s established internal control environment. The following periodic processes occur to analyze risks for CCDF program policies and procedures. - DEL staff review operating and monitoring results from prior program years. Areas of difficulty and/or trends of errors at the state and local levels are identified and given a ranking of priority for resolution. - DEL staff present recommendations to management for review and receive instructions/resources to address identified issues based on DEL management decisions (e.g., which issues/errors have the most impact on early learning services and can be addressed effectively in updates to policies or procedures). - DEL staff make revisions/updates to policies and processes. If multiple issues/changes happen, DEL may prepare an additional ￿crosswalk￿ file to offer more help. - DEL conducts other webinars, phone conferences, and/or group and in-person training updates each program year, with participation by all subrecipients encouraged. b. The frequency of each risk assessment. Describe: Annually for fiscal management and biennially for programmatic management. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: Risk assessment results identify areas of focus which may include additional sampling of monitoring items and targeted technical assistance provided at the state level or for individual entities. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: The effectiveness of DEL’s risk assessment processes is realized by seeing consistently lower fiscal/programmatic monitoring error rates for proceeding operational/monitoring cycles 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: DEL has an implementation team tasked with identifying all policy and procedure changes/new CCDF requirements. Updates and progress reporting occur in staff meetings and quarterly meetings with ELCs and RCMA. Through supervision, management oversight, and meetings, DEL ensures all staff and subrecipients are informed of any updated policy or procedure. DEL accountability stakeholders (DEL policy and monitoring staff and ELC staff) are trained and oriented to assist with implementation tasks as needed. DEL CCDF policy staff also conduct periodic training with ELCs and RCMA on CCDF requirements. Sometimes a new process or policy update needs to be shared in between the scheduled quarterly meetings with ELCs and RCMA. When this happens, one or more of the following options is used by DEL’s implementation team working with other DEL units (as needed). • Share the new process/policy update in the next scheduled Executive Directors’ call (occur every two weeks on Friday mornings). • Share the new process/policy update in the next scheduled Finance Directors’ call (occur the first Tuesday of each month). • Share the new process/policy update in an ad hoc, special-scheduled Teams meeting with all ELCs and RCMA. ii. Describe how staff training is evaluated for effectiveness: The effectiveness of DEL’s staff member training is realized by seeing consistently lower fiscal/programmatic monitoring error rates for proceeding operational/monitoring cycles. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: Risk assessment and error rate results identify areas of focus which may include targeted technical assistance and training provided at the state level or for individual entities. 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: DEL notifies SR Program providers directly or through the ELCs and RCMA of applicable policy changes using electronic notifications and virtual conference calls. Also, CCDF child care providers are informed about CCDF program requirements by ELCs and RCMA during the provider onboard process prior to contract execution. In addition, each ELC and RCMA conducts child care provider trainings on an as needed basis or as directed by DEL to assist CCDF Program providers to implement and comply with CCDF program requirements. ii. Describe how provider training is evaluated for effectiveness: DEL monitors ELCs/contractors and assesses policy implementation on an ongoing basis to ensure provider training is effective. DEL also requires each ELC and RCMA to monitor all CCDF child care in accordance to established Florida administrative code (Rule 6M-4.630, F.A.C.) to verify compliance with state instructions. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: Error rate triennial reviews are shared with DEL executive leadership, ELC/contractor leadership, and the DEL Program and Policy Unit. The State will continue to update its current monitoring tools to focus on the errors identified in the most recent error rate review; track error rates during yearly monitoring engagements; and conduct targeted monitoring, using risk assessments to determine case sample size. Risk assessment results are also used to identify areas of focus which may include targeted technical assistance and training provided at the state level, provider level or for individual entities. 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: Error rate triennial reviews are shared with DEL executive leadership, ELC/contractor leadership, and the DEL Program and Policy Unit. The State will continue to update its current monitoring tools to focus on the errors identified in the most recent error rate review; track error rates during yearly monitoring engagements; and conduct targeted monitoring, using risk assessments to determine case sample size. DEL will also continue to provide annual training opportunities to ELCs/contractors on the CCDF (SR) review guide and other CCDF Policy guidance to ensure ELCs/contractors are provided the necessary technical assistance to facilitate compliance with the CCDF requirements. Analysis of triennial error rates will facilitate an evaluation of the effectiveness of established internal controls. 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: When, or if, DEL receives an audit finding (from the Office of Attorney General, FDOE’s OIG, USDHHS or other authoritative entities), the operational and/or compliance issue(s) identified are examined by all impacted units of DEL. Staff is encouraged to work together to evaluate (1) how/why any deficiency occurred, (2) was this an isolated instance or whether a process failed or was not followed, (3) does a policy or written staff instruction need to be revised, (4) are there other corrections DEL needs to make, and (5) how quickly can DEL work to complete these tasks. A written summary of these results is prepared as DEL’s suggested corrective action plan. The suggested corrective action plan(s) developed by DEL staff for any operational or compliance findings are evaluated by DEL’s executive leadership team for adequacy and to ensure the planned corrections (a) address the issues noted and (b) support DEL’s ongoing efforts to ensure Florida’s early learning programs operate at the optimal levels possible. These approved corrective action plan results are also shared with leadership of ELCs and other local/regional partnering agencies and programs to promote transparency and DEL’s ability to obtain valuable input from other potentially impacted entities. Fiscal and programmatic audit/monitoring results are shared with DEL executive leadership, ELC/contractor leadership, and the DEL Program and Policy Unit. Further, published audit/monitoring reports are available to the general public upon request. Analysis of monitoring results and trends will facilitate an evaluation of the effectiveness of established internal controls. 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. [x] No. If no, describe when and how it was most recently determined that there were no weaknesses in the Lead Agency’s internal controls. DEL continuously monitors internal controls for accuracy and weaknesses. If any weaknesses are identified, DEL amends the identified procedures to ensure weaknesses are mitigated. b. [ ] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls?