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 Lead Agency’s organizational structure ensures the oversight and implementation of effective internal controls that promote and support program integrity and accountability by ensuring separation of duties, record reviews, and quality assurance reviews. The lead agency uses a centralized vendor to complete the authorization of child care benefits. In turn, the lead agency staff complete record reviews, monitors the quality of the work performed by the vendor and provides technical guidance to the vendor. Likewise, the lead agency uses manual and automated processes to ensure program compliance and integrity. Oversight and the implement of controls are as established as follows: 1. Assignment of authority and responsibilities related to program integrity are divided between the Quality Assurance teams of the lead agency and the vendor authorizing child care scholarship benefits on behalf of the lead agency. 2. Delegation duties are separated through the separation of duties and user roles within the Child Care Administrative Tracking System (CCATS). 3. Coordination of activities are addressed by the lead agency providing technical assistance, training, record review and quality assurance reviews of the work completed by the vendor. 4. Communication between fiscal and program staff are heavily relied upon to ensure spending targets and provider payments are made timely and in accordance with Maryland’s State Plan. 5. Segregation of duties are controlled by the approval of access to the Child Care Tracking System. 6. Establishment of checks and balances to identify potential fraud risks are completed multiple level record reviews completed by the lead agency and the vendor. Cases with errors are flagged for review and correction. 7. Other activities that support program integrity involve the use of automation to identify conflicts in reported attendance and investigations of suspected fraud reported by the vendor, customers, or staff. 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 Division of Early Childhood has grant specialists that oversee and monitor the grants and contracts. The grants specialist also completes monitoring visits throughout the year. Management, including the Office of Fiscal Operation and Accountability, reviews and signs off on all contracts and grants. In the release of any request for proposal, allowable and unallowable expenditures are listed. The grant/contract monitor then reviews invoices to ensure that any requests for payment fall within the allowable charges. Signed assurances are enforced in case of misappropriation. 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: During the review of a grant proposal and proposed budget. The Division of Early Childhood (DEC) ensures that the project scope is specific and is only allowed if adequate cost, historical, or unit pricing data is available to establish a fixed amount award based on a reasonable estimate of actual cost. Upon approval, the DEC creates an expenditure tracking sheet for each award that aligns with the approved budget. The sub-recipients must submit receipts and/or a general ledger that supports the breakdown of actual expenditures reflected on the invoice. The DEC only reimburses the payment if the sub-recipients submit all required documentation and receipt of evidence of acceptable performance within a given period of performance. Also, the DEC performs routine desk audit and routine subrecipient monitoring to ensure reasonable and allowable costs are met. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: The Division of Early Childhood (DEC) has established robust processes and procedures to ensure accurate and timely preparation of required state and federal fiscal reports. Through close collaboration with the Office of Fiscal Operation and Accountability within the Maryland State Department of Education (MSDE), DEC utilizes both the Statewide accounting tool Financial Management Information System (FMIS) and an internal reporting tool "IBM COGNOS Impromptu." These tools are employed to generate routine and impromptu reports for analysis of funding balances and other financial activities related to grants and contracts. Monitoring of these tools occurs on a daily, weekly, and monthly basis to ensure comprehensive oversight of all finance-related activities. Additionally, the DEC finance team conducts professional development sessions for internal program staff and external stakeholders, offering guidance on documentation and funding utilization in strict accordance with prescribed regulations and guidelines. d. Other. Describe: The Fiscal team of Division of Early Childhood (DEC) works very closely with the Office of Fiscal Operation and Accountability withing the Maryland State Department of Education (MSDE) to ensure that the use of grant funds is accurately received, recorded, and managed appropriately. MSDE uses the Statewide accounting tool known as Financial Management Information System (FMIS), as well as an internal Google-based system to create, issue, and track grant award notices and contracts. These tools are monitored daily to track activities related to grants and contracts. DEC has implemented and managed uniform invoice verification processes to provide financial oversight for all grants and contracts. DEC checks the invoice to ensure that expenditures are aligned with the approved budget and are properly supported by receipt and/ or ledgers from the sub-grantees and/or vendors. Any inconsistencies are discussed with the sub-grantees and/or vendors until an acceptable solution is obtained. 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 Division of Early Childhood has established clear guidelines and procedures for budgeting, spending, and accounting related to CCDF expenditures. This includes ensuring compliance with federal regulations and guidelines, as well as transparency and accountability in financial transactions. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: The Division of Early Childhood measures and tracks the results of their fiscal management practices through regular audits/comprehensive desk audits, financial reports, and performance indicators. DEC utilizes tools such as budget variance analysis, expenditure tracking systems, and internal controls to monitor spending patterns, identify potential areas of improvement, and assess the overall financial health of the program. c. How the results inform implementation. Describe: The results of these fiscal management practices inform implementation by providing valuable insights into the efficiency and effectiveness of CCDF expenditures. For example, if audits reveal instances of overspending or misallocation of funds, the DEC can take corrective actions such as revising budgets, providing additional training to staff/sub-grantees, or implementing stronger internal controls to prevent future occurrences. Similarly, if financial reports indicate areas of underutilization or unmet needs, the DEC can reallocate resources to better meet the needs of eligible families and improve program outcomes. d. Other. Describe: The DEC conducts regular risk assessments to identify potential financial risks and implementing strategies to mitigate them. Also, the DEC engages in ongoing communication and collaboration with stakeholders, including child care providers, advocacy groups, and government agencies, to ensure alignment with broader goals and priorities related to early childhood education and care. 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 Maryland State Department of Education, Child Care Scholarship Monitor is responsible for approving or ending user roles within CCATS (Child Care Administrative Tracking System), which helps reduce risks. Likewise, CCATS keeps an internal audit trail of all transactions with the system. The MSDE Quality Assurance staff and the vendor are responsible for completing Comprehensive Program Reporting System Reviews (CPRS) to determine authorization accuracy and to identify program integrity issues and risks. b. The frequency of each risk assessment. Describe: Comprehensive Program Reporting System Reviews (CPRS) are completed throughout the month. User roles are approved or denied upon notification from the lead agency vendor or lead agency staff. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: The Maryland State Department of Education uses risk assessment results to inform where the program needs to change policies and procedures to improve authorization accuracy, increase consistency with the implementation of policies, and to reduce program integrity risks. Risk assessments also inform which program enhancements are needed to reduce program barriers for parents and child care providers. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: The Maryland State Department of Education uses the following line of questioning to determine if the risk assessment processes is effective: Did the procedures put in place after the identification of the risk reduce or eliminate the identified risk moving forward? If not, what additional modifications are needed? e. Other. Describe: The Maryland State Department of Education uses extensive Service Level Agreement (SLA) Reviews to determine if the vendor is authorizing services timely and in accordance with established policies and procedures; what technical assistance is needed; and to assess if policy and procedures are being properly interpreted and implemented. 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 Maryland State Department of Education (MSDE), Child Care Scholarship (CCS) Branch, provides technical assistance and program integrity data training to the CCS vendor and Lead Agency staff who support the administration of the CCDF program. The Lead Agency provides training to the Department of Human Services and to the Maryland Office of Refugees and Asylees on policies and procedures required to approve our common customers with expedited CCDF benefits. The CCS vendor received initial technical assistance from the Lead Agency based on the Task Order Contract and continues to receive ongoing technical assistance or training so that the CCS vendor can train their staff based on the following staffing roles and requirements: case managers, customer service, and payment processing. Staff working for the Lead Agency receive ongoing technical assistance or training based upon the following staffing roles and requirements: quality assurance reviewers, provider payment liaisons, case record reviews, customer service, extended customer service, informal provider approval, dual language support or CCDF compliance. The vendor uses Communications that provide steps, processes and/or print screens to train new and ongoing staff. The Child Care Scholarship Branch and the vendor meet 2-4 times per week to address work required to administer the CCDF program and/or program integrity. During these meetings, a ￿SCRUM￿ format is used where staff report on the following: ￿What was completed yesterday? What are you working on today? Do you have any blockers?￿ Based on the answer(s) provided, training or technical support is provided. The Lead Agency holds a Status meeting with the vendor at least 1-4 times per month to review CCDF administration outcomes and provide technical assistance and training, as needed. Subcontractors receive training from the CCS vendor on the completion of their assigned duties, for example, scanning and forwarding of documents through the appropriate paperless workflows. The Lead Agency meets with the CCS vendor to provide the training and technical assistance required to complete future enhancements for the Child Care Scholarship Portal and the Child Care Provider Portal. The Lead Agency provides Program Integrity data training for new and continuing Lead Agency staff by teaching staff how to complete record reviews and service level agreement reviews. ii. Describe how staff training is evaluated for effectiveness: The Lead Agency evaluates the training for all staff who administer the CCDF program by examining the accuracy of CCDF authorization and payment processing. If random case review or record review indicate nominal or no errors, we consider that training was successful, if random case review or record review indicate inconsistent application of policies, errors, or deficiencies, then we consider training unsuccessful and seek to provide technical assistance to achieve greater success. Consistent implementation of policy and procedures and few administrative errors is how the Child Care Scholarship Branch evaluates if training provided to staff was effective. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: Review of program integrity data shapes the development of future policy and identifies the need for immediate programmatic changes or system enhancements, i.e., Child Care Scholarship Family Portal or Child Care Provider Portal. Likewise, the review of program integrity data helps to identify program strengths, weaknesses, and unintended consequences. 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 Maryland State Department of Education (MSDE) provides monthly listening sessions, open office hours, and direct communication through emails regarding program changes and requirements. MSDE works with community partners to establish broader communication regarding the training needs and concerns of child care providers. Child care providers are provided with electronic communication through the Child Care Provider Portal. The MSDE Division of Early Childhood has monthly informational sessions with child care stakeholders. ii. Describe how provider training is evaluated for effectiveness: The training for providers is evaluated based on provider feedback and positive responses. For example, if we had a 40% rate of improperly submitted invoices, provided training on ￿How to Submit a Proper Invoice,￿ and the following month, the rate of improperly submitted invoices was at 4%, we would consider this training successful. In this same example, we use automation to track the number of improper invoices, determine what caused the invoice to be improper, and determine if the provider needs to submit an email with steps to correct it. Eventually, we implemented technology that prevents providers from submitting improper invoices. The training for providers is also evaluated by the increase in positive behavior or the shift in understanding. 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 Maryland State Department of Education (MSDE) reviews program integrity data to determine the effectiveness or deficiencies of training provided to staff supporting CCDF approvals. For example, if program integrity review indicates a consistent error in the calculation of a checkwriter request for an underpayment or the misapplication of an income disregard for a case authorized CCDF benefits: technical guidance is provided to the vendor and the vendor may be asked to provide a revised Communication to ensure the corrections are provided to the applicable staff. Likewise, for example, if program integrity data indicates a program weakness, we provide technical assistance based upon the findings, a Communication is developed to address the deficiency, and we determine if the error noted can be addressed through automation. An example of using program integrity data to address provider training and program integrity needs is our 25% Invoice Audits, which enables the Lead Agency to determine if providers need training on the completion of an invoice, reduction of licensing violations, record keeping. 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: The Maryland State Department of Education utilizes the triennial error rate results to evaluate the effectiveness of the internal controls by using the scoring and deficiencies cited to determine if additional measures need to be put in place to improve quality assurance and authorization accuracy. The score and deficiencies cited within the triennial error rate are shared with the error rate review team and quality assurance reviewers and the vendor processing CCDF benefits on behalf of the Maryland State Department of Education. shared within the Lead Agency. The purpose for reviewing the triennial error rate results is to improve quality assurance evaluation approaches, reflections on what can be changed to better support or improve processes from the conclusion to the beginning of the next triennial error rate review and to determine future action steps, monitoring, etc. 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 Child Care Scholarship (CCS) Branch conducts random monthly case reviews to determine the effectiveness of its internal controls. The results of the reviews are forwarded to the Lead Agency and the vendor and technical assistance, or training are developed based on the findings and to reduce repeat findings. The Lead Agency also uses audit and random record review to determine if providers are operating in compliance with the Provider Statement of Understanding and to determine if the CCS vendor is authorizing benefits in accordance with state and federal requirements. 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: Maryland State Department of Education (MSDE) shares an overview of the information with the Quality Assurance (QA) team and the MSDE Child Care Scholarship (CCS) Vendor to improve training, internal controls, and to reduce repeat findings. The information is used to understand what resulted in the error or findings and to determine the level of effort and/or cost to increase program integrity or policy/procedure implementation. 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. The January 2023 Federal Monitoring visit did not determine any weaknesses with Maryland’s CCDF internal controls. b. [ ] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls?