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: 1) Assignment of authority and responsibilities related to program integrity: The Georgia Department of Early Care and Learning (DECAL) is the Lead Agency for CCDF and must follow State budgetary, accounting, procurement and human resources policies as promulgated by State oversight agencies as follows: Office Planning and Budget (OPB) (https://opb.georgia.gov/), State Accounting Office (SAO) (https://sao.georgia.gov/) and Department of Administrative Services (DOAS) (https://doas.ga.gov/ ). DECAL is also subject to audits and reviews by the Georgia Department of Audits and Accounts (DOAA) (https://www.audits2.ga.gov/). DECAL is a well-structured organization with clear lines of responsibility and fosters a culture of integrity, accountability, and ethical values. Organization charts and job duties are clearly defined and documented for all staff and divisions of DECAL. DECAL’s Finance and Legal divisions establish internal policies and procedures to ensure financial integrity and compliance with State policies and Federal cost principles. Internal controls (policies and procedures) are designed and evaluated periodically to ensure they operate effectively. The Childcare and Parent Services (CAPS) Division must follow Finance and Legal policies and procedures, and CAPS staff are assigned responsibilities and specific roles that support program integrity and achieve program objectives, such as eligibility determination for families, and payments to child care providers. To ensure program integrity for eligibility determinations, CAPS has a stand-alone Quality Assurance & Training (QA&T) unit that performs quality assurance reviews of eligibility determinations made by staff. These quality assurance reviews are used to monitor and assess policy implementation, ensure program integrity, and determine training effectiveness. The QA&T unit does not determine eligibility but does administer the quality assurance process by reviewing the work of others and providing training for staff in areas that need improvement. Cases are selected from a random sample of initial eligibility, changes during the eligibility period, and redeterminations completed each month. Cases processed by newer staff are monitored more frequently than staff who have more experience processing eligibility. To further ensure program integrity, the QA&T unit also supports staff by conducting ongoing focused training in areas with the highest error rate in determining eligibility. CAPS also created a new functional area, CAPS Provider Relations, that includes four teams, one of which is the Quality Assurance and Payments team. Staff on this team support program integrity by receiving and reviewing child care provider invoices, ensuring accurate and timely payments for child care providers, and overseeing and completing quality assurance processes to support accurate payments. Quality Assurance and Payments also identifies training and technical assistance needs that providers may have and communicates those needs to the Education and Outreach team to offer technical assistance and create training sessions to support provider needs. 2) Delegation of duties: DECAL’s executive and senior leadership determines the level of authority for each division to fulfill organizational responsibilities. All divisions must submit contracts and grant agreements to the Finance and Legal division for review and approval. The Legal division ensures contracts are legally compliant and diminishes financial risk for DECAL. All non-contracted expenses must be approved by one-level above the buyer/purchaser before submission to Finance. Budget and procurement staff conduct reviews of payment requests to validate appropriateness with budget, cost-allowability and State policies. 3) Coordination of activities: Finance and Legal divisions conduct annual contracting and purchasing training to all business owners of each division of DECAL. CAPS sends directors and managers to Finance and Legal training. The Child and Parent Services Deputy Commissioner and Directors manage access and payment authorizations in the CAPS eligibility system (GACAPS). The staff who approve payments for providers, the Quality Assurance & Payment Manager/Coordinator, do not have permissions to approve a provider’s enrollment in CAPS, which is completed by the Enrollment Services team. Finance staff do not have access to authorizations within GACAPS. CAPS staff do not have recording and payment access in the State’s accounting and banking systems. Payments are made by a payment vendor, contracted by DECAL. DECAL Finance wires funding to the payment vendor. 4) Communication between fiscal and program staff: The Finance division conducts quarterly budget meetings with Deputy Commissioners and Directors for all DECAL programs and cost centers which includes CAPS staff. These meetings serve multiple purposes like reviewing budget- to-expenses variances, validating all expenses charged to the correct program and reviewing appropriateness. 5) Segregation of duties. The Lead Agency relies on checks and balances and separation of duties to ensure program integrity. Examples of this are evident in the processes and the structure of the Lead Agency and the CCDF program. In the CCDF program, the Lead Agency has a stand-alone Quality Assurance and Training Unit (QA&T) that performs quality assurance reviews of eligibility determinations made by the staff. This QA&T unit does not determine eligibility but does ensure quality control of the quality assurance process. The quality assurance process includes reviewing eligibility determinations and training staff in areas that need improvement. The Lead Agency also assigns certain duties to other divisions that do not perform regular CCDF program administration. This differentiation of duties helps ensure program integrity in the CCDF program. The Lead Agency’s Finance Division is responsible for receiving the CCDF funding, for making payments to CCDF providers, and for financial reporting to ACF. The Audits and Compliance Division is responsible for performing reviews and investigations of CCDF participants, providers, and eligibility staff to ensure program integrity. This allows CCDF program staff to focus on administering the program and provides extra checks and balances to ensure program integrity. Processes are documented by flowcharts to identify and remediate any weaknesses in the segregation of duties. 6) Establishment of checks and balances to identify potential fraud risks. DECAL performs annual risk assessments to identify qualitative risk factors including susceptibility to fraud. Mitigating controls are implemented to address gaps. 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: Provider’s bill for services on a weekly basis. After all invoices are received, built-in system analytics flag possible payment errors for review. Because all providers complete online invoicing, all provider payments are analyzed using these built in analytics. Payment flags where billing is found to be accurate will be released and included in the payment cycle for that week. Payment flags where the billing is found to be inaccurate will be denied, and the provider is notified of the denial; given opportunity for a reconsideration; and later an appeal if the reconsideration returns the same result. Additionally, the Quality Assurance and Payments team will select a percentage of providers to review billing practices in more depth for providers’ invoices that are frequently flagged. Lastly, the Lead Agency’s Audits and Compliance Division conducts audits of provider billing records regularly, and any invoices for care that were paid and not supported by attendance records and sign-in/sign out sheets may result in those funds being recouped by the Lead Agency. 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: The Lead Agency executes and maintains a written agreement with CCDF sub-recipients that includes a budget that itemizes allowable categories of expenditures. CCDF sub-recipients are also required to submit a request for reimbursement monthly. This request details the expenditures for which the sub-recipient is requesting reimbursement and is reviewed by the Lead Agency before disbursement of funds to ensure reasonable and allowability. The Lead Agency Audits and Compliance Division also reserves the right to audit CCDF sub-recipients where expenditures of CCDF funds are reviewed to ensure they are supported and allowable. The Department of Early Care and Learning (DECAL) Finance department tracks expenditures using 36-character coding structure to ensure expenditures are recorded in accordance with the State budget and ACF -696 categories. Again, DECAL uses budget variances to identify unusual spending patterns, suggest areas for expense reductions, and monitor overall financial health of the program. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: The Department of Early Care and Learning (DECAL) Finance staff uses the State’s TeamWorks (Financial) system to record and report all financial transactions. DECAL Finance staff collaborates with the Office of Planning and Budget and the State Accounting office for State budget and accounting policy compliance. TeamWorks Queries are generated for internal reports and to reconcile to the State’s Budgetary Compliance Report, Schedule of Federal Awards and the Annual Comprehensive Financial Report. DECAL Finance staff are required to input data on year-end reporting forms which the State Accounting Office uses for the Statewide reports. State training sessions conducted by the State Accounting Office. DECAL Finance uses internal training sessions for State reports and HHS online resources to train Finance staff for inputting information on the ACF-696 report. DECAL’s general ledger uses specific chart field identifiers to properly categorize general ledger amounts to the corresponding ACF-696 category. 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: Effective fiscal management (EFM) practices ensure financial information is credible, accurate and reported promptly. EFM practices are implemented to prevent errors, overspending, inaccurate reports. EFM practices include training and professional development courses for finance staff to ensure staff understand proper financial approvals, how review of budget reports and the importance of immediately addressing errors or violations of financial policies. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: The Department of Early Care and Learning (DECAL) develops a comprehensive annual budget each fiscal year. CCDF enrollment information and historical expenditure are used to project next year’s budgets. Monthly and quarterly budget reports are generated and disseminated to Child Care and Parent Services (CAPS) managers. Detailed budget coding for the CCDF program is used to quickly identify program costs. Finance schedules quarterly meetings with program staff to examine all costs and to compare expenditures against established budgets. Negative variances are immediately addressed and corrected if necessary. Underutilized budgets are reallocated to other line items of the budget. DECAL has established policies and procedures for budgeting, procurement, payments and monitoring of all expenditures. DECAL maintains detailed budgets and accounting records to provide timely and credible financial information to the CCDF program. DECAL follows state and federal accounting and reporting rules and records transactions as they occur. Annual audits and reviews are conducted by the Georgia Department of Audits (Single Audit, Annual Comprehensive reports) and corrective action plans are immediately implemented to resolve findings or best practice suggestions. Internal controls are periodically evaluated for operating efficiency such as preventing and detecting errors or improper payments. c. How the results inform implementation. Describe: DECAL’s monthly financial reports reflected programmatic decisions on spending grant funds. DECAL creates monthly and quarterly financial reports for senior and executive leadership. Timely decisions can be made to address financial concerns such as potential over-expenditures or revenue shortfalls. d. Other. Describe: DECAL adheres to state accounting policy and federal regulations in making financial decisions. This adherence includes proper governmental accounting practices, review of federal regulations such as the Uniform Administrative Grant requirements (Part 200), and state procurement rules. 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: DECAL performs risk assessments using the GAO Framework, known as the Green Book. Risk factors included are: Complexity of Activity, Centralization of Processes, Location, History of Past Errors, Volume of Activity, Automation, Susceptibility of Fraud. Elements of risk assessment are considered when assessing risk and include Likelihood, Financial Impact, Operational Impact, Strategic Impact, and Compliance Impact. In addition, the Audits and Compliance Division uses data obtained through multiple Lead Agency programs to inform the audit team about risk areas within the program. Furthermore, the CAPS Quality Assurance and Payments team implemented a new process whereby billing data is analyzed upon submission to DECAL to identify red flags that can then be investigated before payment. The Payment Assurance team identifies red flags with each billing cycle and creates a red flag report showing issues that can be investigated before payment. b. The frequency of each risk assessment. Describe: The Department of Early Care and Learning (DECAL) conducts annual risk assessments using the US GAO’s Standards for Internal Controls (https://www.gao.gov/greenbook). Risk assessments are documented and submitted to auditors during the Single Audit process. Risk assessments are reevaluated if changes are made to current policies and procedures. The Child Care and Parent Services (CAPS) Quality Assurance and Payments team reviews multiple items/data on invoices submitted in the payment process to ensure accuracy of payments. For example, the team cross checks data received from the DECAL licensing division for closed facilities to ensure payments are not made when a provider is no longer eligible. This review occurs each week for the payment process. The Audits and Compliance Division can review the risk assessment data output on an as- needed basis. The frequency is driven by the availability of staff to begin an investigation. The Audits and Compliance Division can also assign tasks based on observations from other DECAL programs. The frequency can vary based on the receipt of referrals received. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: The Department of Early Care and Learning (DECAL) performs a Gap Analysis to assess processes that need improvement or additional mitigating controls are required. Improvements may include training staff, adding approval-levels (or authorization) levels or changing processes to further mitigate high risk areas. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: Green Book is the Standards for Internal Control in the Federal Government issued by the Government Accountability Office (GAO). It is a framework for designing, implementing, and evaluating internal controls. Green Book was adopted by the State of Georgia as an internal control framework for organizations receiving federal funds. Utilizing the Green Book framework, CAPS performs activity-level risk assessments to identify, analyze, and respond to risk related to compliance, operation, and reporting objectives. Our risk assessment methodology helps us identify gaps, process improvements, and needed updates to our internal control documentation. Our assessment process analyzes qualitative risk factors related to program activities, determines likelihood of errors and program impacts. The results from our assessments allowed us to identify and document control activities that mitigated the risks and implement controls where residual risk may have resided. For the risk assessments conducted by the Audits and Compliance Division, these results drive the assignment of our reviews and investigations. At the end of a review or investigation of a provider, an overpayment spreadsheet is created showing each instance of non-compliance and any funds owed back to the Department of Early Care and Learning (DECAL) as a result. DECAL knows that this process is effective because we can see the audit results as the reviews are completed. 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 Lead Agency relies on training, checks and balances, and separation of duties to ensure program integrity. Examples of this are evident in the processes and the structure of the Lead Agency and the Child Care and Parent Services (CAPS) program. The CAPS program contains a stand-alone Quality Assurance and Training (QA&T) unit to conduct training on policy that includes information on program integrity. QA&T also conducts training on policy changes and on how policy is implemented. The scope and type of training is based on the needs of the staff members and is categorized into three main areas: 1) new hires, 2) existing staff, and 3) other divisions within the Lead Agency and other agencies. New hires to the CCDF program are trained on full policy and on how to use the various systems needed to operate the program. Existing staff are given policy and systems training based on their needs and on ongoing monitoring that determines areas that need improvement. Other divisions within the Lead Agency and other agencies are given policy and systems training based on their needs and roles. The QA&T unit also conducts weekly updates to address policy changes, policy clarifications, and best practices to help ensure program integrity. When changes to the CAPS program policies and procedures manual are made, CCDF program staff within the Lead Agency, other agencies and stakeholders are notified of all changes via email communications. Additionally, all policy changes are reflected in a comprehensive document that is available to staff members within the Lead Agency, other agencies and stakeholders, on the CAPS program website at: (https://caps.decal.ga.gov/en/). Further, to ensure program integrity, QA&T performs quality assurance reviews of eligibility determinations made by the staff. The QA&T unit does not determine eligibility but does ensure quality control of the quality assurance process. The quality assurance process includes reviewing eligibility determinations and training staff in areas that need improvement. The Lead Agency also assigns certain duties to other divisions that do not perform regular CCDF program administration. This differentiation of duties helps ensure program integrity in the CCDF program. ii. Describe how staff training is evaluated for effectiveness: The Lead Agency’s Child Care and Parent Services (CAPS) program staff conduct quality assurance reviews on eligibility determinations at initial eligibility, case changes, and redetermination. The quality assurance reviews are used to monitor and assess policy implementation on an ongoing basis and determine the effectiveness of training. The quality assurance reviews are completed by members of the CAPS program Quality Assurance and Training (QA&T) unit, management, and coordinators. Cases are selected from a random sample of initial eligibility, changes during the eligibility period, and redeterminations completed each month. Cases processed by newer staff are monitored more frequently than staff who have more experience processing eligibility. Additionally, the Lead Agency’s Audits and Compliance unit outside of the CAPS program conducts quarterly error-rate reviews on cases to ensure training effectiveness, provide feedback to staff, and improve reliability in determining eligibility according to policy. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: The Lead Agency's Child Care and Parent Services (CAPS) program regularly assesses the risk of its policies and procedures to change practices and address training needs. Additionally, the QA&T unit reviews error rate results to support staff with ongoing focused training in areas with the highest error rate in determining eligibility. CAPS program supervisors also use error rate results to follow up with their staff on areas that need improvement. 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: The Child Care and Parent Services (CAPS) New Provider Orientation training includes a review and discussion of CAPS Program Integrity Policy, CAPS/00-16, Provider Rights and Responsibilities, CAPS/00-12, and an overview of the CAPS program, which includes participation requirements, navigation of the GACAPS system, how to read a CAPS scholarship, the importance and requirements of maintaining records, and payment policies. Polls and knowledge checks are given throughout the training to evaluate provider’s comprehension of the information. Also, the orientation is sent to providers via email for reference following training. ii. Describe how provider training is evaluated for effectiveness: Providers are trained on various program requirements, such as record maintenance and retention, arrival and departure sign-in requirements, and transportation documentation. During each review conducted by the Audits and Compliance Division, staff will request these records to assess compliance with these policies. Each instance of non-compliance is documented on an overpayment spreadsheet, which is then sent to the provider for review. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: The CAPS Provider Relations Education and Outreach team (training team) works with the DECAL Audits and Compliance team to discuss trends in findings from investigations and uses that information to target areas where providers need additional and enhanced training. 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: At the conclusion of the triennial error rate review, the review team shares the results with agency leadership and program personnel. Each error is categorized by the error type/cause. The program uses the information to guide improvement plans to reduce the rate of errors. For instance, during the most recent error rate review, program personnel developed staff training that directly corresponds to the types of errors identified during the error rate review. 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 audit team shares audit results with program personnel and agency leadership, especially on occasions when an intentional program violation has occurred that will require a coordinated response, such as a program dismissal or disqualification. In these cases, relevant staff will meet to discuss the findings or outcomes of a case to determine actions that need to be taken. The audit team also provides input during the policy update process. This information is used by the Lead Agency’s Child Care and Parent Services (CAPS) program to evaluate current policy, process, and internal controls and identify changes that are needed to improve program outcomes. 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. Although the Department of Early Care and Learning (DECAL) has not identified weaknesses in its internal controls, DECAL performs annual risk assessments on key processes using the GAO Framework, known as Green Book. Green Book is the Standards for Internal Control in the Federal Government issued by the Government Accountability Office (GAO). It is a framework for designing, implementing, and evaluating internal controls. Green Book was adopted by the State of Georgia as an internal control framework for organizations receiving federal funds. Utilizing the Green Book framework, CAPS performs activity-level risk assessments to identify, analyze, and respond to risk related to compliance, operation, and reporting objectives. Our risk assessment methodology helps us identify gaps, process improvements, and needed updates to our internal control documentation. b. [ ] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls?