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 organizational structure implemented ensures the oversight and implementation of effective internal controls that promote and support program integrity and accountability through separation of duties, transparency, oversight and auditing. The organization is separated into four primary areas • Executive Management • Program Management • Financial Management • Quality Assurance and Auditing Executive Management The highest organizational leadership level of the decision makers, this group is responsible for the oversight and setting strategic priorities for the program, planning for the service array, administering resources and budget, and final approval of the strategic plan for the array of services being offered by the Early Childhood and Education (ECE) division. Program Management Responsible for all programmatic activities within the ECE Division. Program management staff oversee the efficient and effective implementation of the program and has direct oversight of the policies and practice supporting the program’s strategic plan. This group manages the direct and indirect activities and contracts within the program to ensure services are meeting the expectations of the strategic plan. Financial Management Includes the Program Financial Officer (PFO) and Maine Department of Administrative and Financial Service (DAFS) which are separate and independent entities and not part of the OCFS Program Management team. As separate entities for budgeting, financial oversight, and financial reporting, they are able to provide transparency for program fiscal activities. The Lead Agency has developed procedures such as the State Accounting Manual and a CCDF Grant Manual for Service Center management and reporting. Quality Assurance and Auditing The Quality Assurance Unit and Data Management Unit are supervised by the OCFS Associate Director of Technology and Support allowing them to provide impartial review of the CCDF program. This also allows QA to provide clear and accurate feedback as they are specially trained in providing the services. The Program undergoes a separate independent annual audit conducted by the State of Maine Department of Audit. Coordination and Communication The Executive Management Team of the Office of Child and Family Services meets weekly and discusses any areas of need regarding the Child Care Affordability Program, CCDF funding, and CCDF activities. This meeting is a key time of coordination, as it includes representatives from executive management, program management, financial management and quality assurance. Quality Assurance staff coordinate with CCDF Administrators and program staff regularly through email and information connection and at monthly meetings. In addition, there are quarterly meetings led by the Office's grants coordinator and chief operations officer, where program and financial staff review expenses, grant balances, audits, CCDF activities, and like items. 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 Lead Agency's PFO oversees program fiscal oversight of grant funds to ensure reasonable and allowable costs. Funds are tracked through Weekly Budget Variance Reports that enable Program Administrators to monitor revenue, expenditures, and grant balance this includes CCAP, contract, and administrative cost spending. 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 administration and tracking of funds are made through two separate systems. The State of Maine’s financial accounting system (Advantage) is administered through the Maine Department of Administrative and Financial Service (DAFS). DAFS manages state budgeting and payment processes. Advantage is able to provide full accounting of all financial transactions made to any provider. This includes the management of all contract encumbrances and payments. OCFS stores all client level detail of payments made through advantage in its Child Care Management System known as MACWIS. The Department of Audit can trace expenditures from submission, through approval, through final payment across both systems. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: Reports and information are reviewed by the program team, data team, and the Program Financial Officer, and then provided to the Department of Administrative and Financial Services (DAFS) Service Center. The Service Center reviews the data and reporting for accuracy and generates and transmits required state and federal financial reports. Department of Administrative and Financial Services prepares and submits quarterly financial reports on behalf of The Office of Child and Family Services. CCDF reports are subject to a multi-level review. The accountant who manages the grant in the Service Center prepares the report, their manager/managing staff accountant, reviews the accuracy of the report, and the associate director of financial reporting provides a second review. After all reviews have been completed, they are then certified by the Service Center director in the OLDC system. d. Other. Describe: N/A 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 starts with a sound program strategic plan that defines and creates the budget. The budget is managed through cash flows that are monitored by the Program Financial Officer and the Department of Administrative and Financial Services. The PFO with support from the Data team, reviews cash flows to generate budget forecast, allowing OCFS to analyze the programs services and expenditures to ensure they align with the program priorities. Accounts are managed using the State of Maine’s internal control structure which provides separation of duties, approval, and oversight within the State’s Budget and Financial Management System. All of this is completed under the oversight of both DHHS Executive Management and internal State Audit to ensure transparency and accountability and that resources are used efficiently, ethically, and in alignment with the budget priorities and goals. The Lead Agency's PFO oversees program fiscal oversight of grant funds to ensure reasonable and allowable costs. Funds are tracked through Weekly Budget Variance Reports that enable Program Administrators to monitor revenue, expenditures, and grant balance, this includes CCAP, contract, and administrative cost spending. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: Effective fiscal management starts with a sound program strategic plan that defines and creates the budget. The budget is managed through cash flows that are monitored by the Program Financial Officer and the Department of Administrative and Financial Services. Services defined in the plan are monitored by the program leads, the PFO and OCFS Contract Management unit. Monitoring occurs through expense and contract management practices to ensure the outcomes established in the contract or agreement are met. c. How the results inform implementation. Describe: The PFO works with the program team to develop the budget and forecasted expenditures. This information guides annual financial reporting used by DHHS management in support of its budget strategy. OCFS creates annual and biannual budgets required to support planned expenses and contracting needs. These budgets are reviewed and approved by executive management prior to being sent forward for approval. Funding allotment and allocations requests are approved by the legislature based on the program’s expense plan and supporting budget information. We know that our fiscal management practices are effective as they all start with a program strategic plan that defines and creates the budget and the budget is managed through cash flows that are monitored by the Program Financial Officer and the Department of Administrative and Financial Services. Program Administrators and management regularly meet with the financial team for updates and any discrepancies. Program also takes results from the QA Team’s reviews and state audit findings to make necessary corrective actions. d. Other. Describe: N/A 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: OCFS and Maine Office of Information Technology have a risk assessment protocols and OCFS has a Business Continuity Plan and a Continuity of Operations Plan. MACWIS as part of the CCWIS structure falls under the plan. Additionally, the OCFS establishes checks and balances to ensure program integrity through the PFO's oversight of expenditures of CCDF funds, supervisory approval on expenditures at departmental level, and through auditing measures taken by the State. Program works in coordination with the QA Team to ensure accuracy in eligibility determination. Coordination with the QA team includes; - Reviewing 23 files a month, using the approved federal tool. - Reviewing MACWIS and/or Baxter financial information used by the Financial Resource Specialists (FRS) to make determinations - Reviewing documents stored in Docuware (document repository) related to the families and childcare providers used to determine family eligibility. Based on the financial documents used by the child care affordability program specialists, QA uses those same documents to calculate and confirm that a family met the eligibility requirements. QA is required to use the federally approved Record Review Worksheet to document if eligibility met and, if not, clearly document what the issues were using the federally approved language. QA reaches out with the Child Care Subsidy Team when there are questions related to not finding documentation in Docuware or understanding what documents were used. b. The frequency of each risk assessment. Describe: The Lead Agency meets regularly and has quarterly meetings with the PFO and members of the financial team. The QA Team meets monthly. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: The Lead Agency takes the results from multiple sources for overall risk assessments and utilizes those sources to inform program improvement. The Lead Agency establishes checks and balances to ensure program integrity through the PFO's oversight of expenditures of CCDF funds, supervisory approval on expenditures at departmental level, and through auditing measures taken by the State. Program works in coordination with the QA Team to ensure accuracy in eligibility determination. Coordination with the QA team includes; - Reviewing 23 files a month, using the approved federal tool. - Reviewing MACWIS and/or Baxter financial information used by the Financial Resource Specialists (FRS) to make determinations - Reviewing documents stored in Docuware (document repository) related to the families and childcare providers used to determine family eligibility. Based on the financial documents used by the child care affordability program specialists, QA uses those same documents to calculate and confirm that a family met the eligibility requirements. QA is required to use the federally approved Record Review Worksheet to document if eligibility met and, if not, clearly document what the issues were using the federally approved language. QA reaches out to the Child Care Subsidy Team when there are questions related to not finding documentation in Docuware or understanding what documents were used. The risk assessment results help inform program structure, such as staffing levels and division of responsibilities. In addition, the results help inform staff training and professional development. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: The Lead Agency knows the assessment processes are utilized effectively based on measurable goals for either increasing or decreasing variables being measured. For instance, monthly results from the QA team would see a decrease in improper payments of the same category in future months. e. Other. Describe: N/A 10.1.5 Processes to train about CCDF requirements and program integrity Describe the processes the Lead Agency uses to train staff of the Lead Agency and other agencies engaged in the administration of CCDF, and child care providers about program requirements and integrity. a. Describe how the Lead Agency ensures that all staff who administer the CCDF program (including through MOUs, grants, and contracts) are informed and trained regarding program requirements and integrity. i. Describe the training provided to staff members around CCDF program requirements and program integrity: The CCDF Administrators, staff at Maine Roads to Quality Professional Development Network, Child Care Licensing staff, and Child Care Affordability Program staff have regular meetings focused on the CCDF Program and CCDF funded initiatives that are being administered by the Lead Agency to discuss CCDF information. program requirements, checks and balances in program administration, and updates. New CCDF Administrators and new Child Care Affordability Program staff have more detailed CCDF onboarding meetings and training in CCDF implementation and integrity. These trainings include a manual for their CCDF or CCAP related role that details program implementation and compliance. ii. Describe how staff training is evaluated for effectiveness: The training in a specific area of program implementation is determined to be effective if the monthly results from the QA team show a decrease in improper payments in that same area in future months. 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 error rate results, audit findings, and risk assessment data from the QA team inform staff training, by highlighting areas of challenges or confusion, where specific training can build coordination and increase accuracy. The CCDF Administrators review and evaluate findings, determine proper actions, and take corrective actions within established timeframes. The results are discussed in program manager meetings in the Early Care and Education Division to ensure that staff across the division is trained to support CCDF program integrity. 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 Lead Agency provides every new Child Care Affordability Program Provider with a provider packet that includes, CCAP Rules, Provider Agreements by Provider type, QRIS information, billing dates, and billing instructions and a short Program Integrity Training video, which is also available and posted on the website. The training video includes an overview of program requirements, such as billing and reimbursement and an overview of the most common program integrity issues, such as parents not providing two-week notice to their provider ending child care enrollment. ii. Describe how provider training is evaluated for effectiveness: The Lead Agency monitors errors by category and type. Reminders and/or TA is provider either across all providers or individually based on the monitoring. 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 Lead Agency monitors errors by category and type. Reminders and/or TA is provider either across all providers or individually based on the monitoring. The training video is updated annually to add new information and correct outdated information. The Program Integrity Training video shares the most common program integrity issues with providers that lead to recoupment of funds and/or program disqualification, including misrepresentation of household size, nonreporting of job loss, and provider not collecting correct weekly parent fees. 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 Lead Agency shares the results of the report internally with, Leadership, CCAP staff, AQ Team, and across departments with the Department of Administrative and Financial Services and the PFO to determine necessary policy and procedures changes needed to meet requirement or funding for repayments. The report is also shared with the State Auditor for guiding findings from a state audit. 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: Audits inform changes to program, policy and overall budget strategy. The CCDF budget is managed through cash flows that are monitored by the Program Financial Officer and the Department of Administrative and Financial Services. Services defined in the plan are monitored by the program leads, the PFO and OCFS Contract Management unit. Monitoring occurs through expense and contract management practices to ensure the outcomes established in the contract or agreement are met. The Lead Agency shares the audit results internally with Executive Management, CCDF Administrators, the QA Team, the Department of Administrative and Financial Services and the Program Financial Office (PFO) to determine necessary program, policy, or budget strategy changes. 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: N/A 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 Lead Agency had a state audit completed for SFY 2023. The findings resulted in a significant deficiency regarding payment practices. The results require the Lead Agency to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards.