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 employs a Program Integrity Team responsible for monitoring child care providers through Corrective Action plans, desk reviews, and fraud investigations. The Program Integrity Team consists of a supervisor and team members who are responsible for distinct tasks, for example, the team member responsible for Corrective Action plans does not do the desk reviews so there is a separation of duties within the team. In the case of an investigation, the Program Integrity Team supervisor gives an objective review and reports directly to the CCDF Administrator. Within the Lead Agency, the Program Integrity Team coordinates with the OOC child care compliance and regulation teams to assess all reported complaints about child care providers as well as the legal services team to review any findings that may require further legal action. The development and revision of program integrity procedures are completed in collaboration between the Lead Agency’s Program Integrity Team and finance team. The program integrity team coordinates with the Lead Agency’s finance team in the event that the recoupment of funds is necessary. The Lead Agency Program Integrity Team is separate from the subsidy payment and agreement teams to ensure staff issuing payments and contracts are not the same staff responsible for monitoring providers. The Lead Agency has two primary mechanisms for identifying fraud, through proactive and reactive investigations. Proactive investigations come in the form of assigned monthly desk reviews to audit provider practices. Reactive investigations come in the form of complaints sent to the Lead Agency and investigated accordingly. 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 state of Missouri utilizes an accounting system called SAMII which has multiple internal controls, including various required approval levels, spending authority controls, secured access, cash availability and management rules, obligation and liquidation checks. Missouri Department of Elementary (DESE) has a comprehensive general fiscal guidance for federal grant programs that covers the requirements and procedures necessary for responsible financial grant management at both the grantor and grantee level in accordance with the Uniform Grant Guidance and the Education Department of General Administration Regulations. Invoices for subsidy payments for direct services are due in CCDS within 60 days of the service month. At least one staff member in the Lead Agency review the invoices for contract compliance. Upon review, if approved, staff in the Lead Agency forward the results to the Childhood Finance team for final review and payment. Prior to denial, staff contact the provider for an opportunity to provide missing or corrected information. If denied, the provider is notified accordingly along with the instructions on how to request an administrative review. Invoices for grants and contracts are submitted monthly or quarterly depending on the terms and conditions of the contract. In addition, the Lead Agency completes a yearly review to ensure contract/grant requirements are met. 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 sets up grants based on spend plan activities that align with CCDF regulations. Grants are set up in the accounting system based on each individual grant’s requirements with a coding string which allows for the ￿fund code￿ for that grant, ￿org code￿, ￿appropriation code￿ and a ￿reporting category￿ that distinguish each expenditure separately so they can be tracked appropriately. These funding streams are set up based on the type of expenditure. Invoices are submitted to the Childhood Finance team, where they are distributed to the contract manager, who review expenditures submitted by the contractor to ensure invoiced expenses meet contract requirements and are allowable expenses. The Childhood Finance team then processes and tracks expenditures to monitor expenditures through the contract year. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: The Lead Agency prepares the data for federal reporting by a review of data conducted by subject matter experts in the Office of Childhood. The type of data that are reviewed depend on the reporting requirements (e.g., quality, fiscal, aggregate child count). After previewing the data, the CCDF co-administrator prepares the report and submits in the federal reporting system. d. Other. Describe: 10.1.3 Effectiveness of fiscal management practices Describe how the Lead Agency knows there are effective fiscal management practices in place for all CCDF expenditures, including: a. How the Lead Agency defines effective fiscal management practices. Describe: The Lead Agency has several checks and balances in place to ensure proper payments are made to child care providers and/or contractors. Program staff review documents prior to finance staff processing the payments. For example, invoices are reviewed by program staff in the Lead Agency staff for appropriate activities, then the invoices are sent to the finance team to review and approve to pay. The Lead Agency makes payments to child care providers through an online, web-based system called child care data system (CCDS). This system interfaces with a web-based attendance system called child care business information system (CCBIS) to verify the accuracy of invoices. The attendance system has internal controls such as photo capabilities, a GPS locator, and time clocks to help prevent fraud. Payments are made on a timely basis by allowing child care providers to invoice the first day of the month following a service month. These processes have allowed Lead Agency staff to better identify where funds are being directly spent and track areas requiring further training for child care providers to prevent unintentional fraudulent behavior. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: The Lead Agency conducts post-payment reviews to verify accuracy of payments by analyzing the daily Error Reports generated from CCDS. Payment records and invoices are stored in CCDS and remain available to both providers and Lead Agency staff for their regular review for payment accuracy. c. How the results inform implementation. Describe: The Lead Agency uses the outcomes from post-payment reviews to inform training or re-training of child care providers or other professionals on the systems and procedures used for documenting and collecting information for payments. As needed, individual technical assistance may be provided by the Lead Agency or its contractors assisting with implementing fiscal management and sound business practices. The Lead Agency finds child care providers or other professionals who are trained or receive technical assistance have fewer or no follow up payment issues. 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 Lead Agency assesses risk through rigorous policies, plans, and procedures that include internal controls for financial management, property standards, procurement, financial monitoring, sub recipient monitoring, record retention, and remedies for non-compliance. DESE’s Administrative Manual contains organizational policies established in accordance with federal and state law and the rules and regulations of the State of Missouri, Office of Administration. The main purpose of this Manual is to explain to staff how these laws and regulations are to be applied within DESE through procedural steps. DESE’s Internal Control Plan contains processes established in accordance with federal and state law and the rules and regulations of the Office of Administration. The main purpose of this plan is to ensure internal controls are implemented to help safeguard DESE from fraud and abuse, minimize risks, protect assets, ensure accurate records, and promote efficiency. The Lead Agency assesses risk for the subsidy program by reviewing activities that are commonly tied to fraudulent practices. When paying on attendance, Lead Agency program integrity staff conducts audits of providers’ submitted attendance to ensure that it is signed and entered by parents, large amounts of attendance entered by the provider would be an indicator of fraudulent behavior. The Lead Agency Program Integrity Team monitors the accuracy of provider attendance and payment data, application timeframes, and provides feedback on possible concerns and suggests techniques for future monitoring. The Lead Agency has established a separation of duties with a program integrity unit acting as an individual unit apart from leadership of other units to ensure fair checks and balances. In addition, the Lead Agency participates in Improper Payment Reviews and undergoes periodic audits from the state auditor’s office. b. The frequency of each risk assessment. Describe: The Lead Agency assesses risks for grants and contracts throughout the life of the contract. Eligibility Supervisors review case determinations for any new staff before final approval to ensure accuracy in eligibility determination. In addition, Eligibility Supervisors conduct targeted case reviews on a monthly basis. The policies for targeted reviews include issues that have been identified through audit reports, monitoring activities, and new policy areas. These targeted reviews change quarterly based on trends and feedback from families and staff. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: The Lead Agency uses risk assessment results as part of ongoing risk management of the contract. The risk assessment identifies outstanding contractor and Lead Agency actions and potential impacts to the contract. Eligibility Supervisors review case determinations for any new staff before final approval to ensure accuracy in eligibility determination. In addition, Eligibility Supervisors conduct targeted case reviews on a monthly basis. The policies for targeted reviews include issues that have been identified through audit reports, monitoring activities, and new policy areas. These targeted reviews change quarterly based on trends and feedback from families and staff. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: The targeted reviews help identify training needs on specific policies used by Eligibility Specialists. The Lead Agency uses the outcomes from the targeted case reviews to inform training or re-training of Eligibility Supervisors and Specialists on the systems and procedures used for documenting and collecting information from parents. As needed, individual technical assistance may be provided by the Eligibility Supervisors or Lead Agency. The Lead Agency finds staff trained or receive technical assistance have fewer or no follow up eligibility issues. 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: All grants and contracts that are paid with CCDF funding are reviewed by administrators in the Lead Agency to ensure they are compliant with all applicable rules and regulations prior to execution. Additionally, staff who manage grants and contracts are engaged in ongoing technical assistance and training opportunities provided by ACF and their designees to further expand their understanding of CCDF eligibility. The Office of Administration, Division of Purchasing, provides the Lead Agency contract and grant guidance through the Contract Management Guide and Contract Management online/on-demand training. The guide and training standardizes contract requirements best practices and clarifies the roles and responsibilities of staff members. The Contract Management training consists of four modules: Introduction to Contract Management and Contract Formation, Kickoff, Performance Management, and Closeout. The Lead Agency staff working in the payment and program integrity teams participate in the same training delivered to Eligibility Specialists, which occurs anytime there is a new policy or change in policy impacting child care subsidy. In addition, internal staff are trained on policy change notices during OOC monthly staff meetings. The Lead Agency consults with staff as any applicable policy is developed and reviewed, in order to obtain input prior to final decisions being made. Policy change notices affecting OOC staff are distributed through emails and information is included in the Lead Agency’s Childhood Connections newsletter for stakeholders. In addition, policy change notices are communicated during OOC monthly staff meetings, and as needed. In order to promote ongoing coordination of child care subsidy activities, the Lead Agency meets quarterly with staff from DSS FSD to review policies and discuss their practices and procedures. ii. Describe how staff training is evaluated for effectiveness: Results of targeted case reviews are reviewed to determine if there is a need for policy clarification, rewrites, or additional training. The Lead Agency attends regular meetings with the frontline staff to answer questions and provide policy interpretation. These meetings build relationships with staff that allow up/down communication and understanding why a policy is implemented. 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 hosts regular leadership meetings where trends of errors, questions, and points of clarity are discussed. Any items identified as areas of concern will be used to guide in the development of targeted training in the form of policy clarifications, staff webinars, and one page informational flyers. These meetings build relationships with staff of all levels that allow up/down communication and understanding why a policy is implemented. 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 requires all contracted providers and their staff to complete subsidy orientation training and at least one staff person view the mandatory CCDF training before they can contract to receive subsidy payments. The Lead Agency makes online training and other professional development opportunity available through the professional development system for providers in child care subsidy. Other training and professional development opportunities are available through the professional development system. In addition, providers and their staff must complete six additional hours of training annually to ensure they stay up to date with the safety protocols and educational trends of child care. The CCDF training covers the Child Care and Development Fund and how it relates to quality child care, the minimum health and safety training requirements for child care providers, health and safety requirements of the Child Care and Development Fund, and knowledge and best practices for the safety and wellbeing of children. ii. Describe how provider training is evaluated for effectiveness: The Lead Agency provides a measure of impact of the training using pre and post assessments completed by participants. The results are analyzed quarterly to monitor effectiveness. The training is updated annually when determined necessary. 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 uses data from Corrective Action plans to evaluate the areas of non-compliances to create additional trainings for providers. 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 uses the results of the Error rate report to focus on administrative errors associated with client eligibility and improper authorizations for payment. We share these results with the eligibility unit and payment units. We create new policies or implement additional trainings depending on the results of the Error Rate Report. b. Audit results. Describe who this information is shared with and how the Lead Agency uses the information to evaluate the effectiveness of its internal controls: The Lead Agency reviews state and federal audit results to assist in evaluating internal control activities. Other processes include reviewing the Monthly Child Care Subsidy Report for data inconsistencies or data trends, evaluating error rates on child authorizations, and seeking input from the State’s budget and planning office on spend plans. The results of the audits are shared with stakeholders, the general assembly, executive leadership and the public. c. Other. Describe who this information is shared with and how the Lead Agency uses the information to evaluate the effectiveness of its internal controls: 10.1.7 Identified weaknesses in internal controls Has the Lead Agency or other entity identified any weaknesses in its internal controls? a. [ ] No. If no, describe when and how it was most recently determined that there were no weaknesses in the Lead Agency’s internal controls. b. [x] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls? The Lead Agency found internal monitoring procedures for the child care subsidy program were based on licensed programs only, which limited the ability to assess all provider types. In response, the identification of cases to monitor changed to random selection for all contracted providers regardless of licensure status.