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 is designed to ensure rigorous oversight and implementation of internal controls that bolster program integrity and accountability. BCDHSC works closely with the Program Integrity unit and the Finance unit to ensure program integrity and quality assurance with three key areas of focus: finance, operations and programming. DHHS has a Special Investigations Unit (SIU) to which DHHS staff (BCDHSC or Bureau of Client Services) refers clients or providers when suspected of unintentional program violations. 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 BCDHSC assigns a designated staff person to oversee each of its grants and contracts. This individual works with the contractor to monitor all grants and contracts by (a) reviewing invoices prior to submitting for payment, (b) reviewing data, deliverables and reports submitted to the BCDHSC according to each contract's requirements (e.g., monthly, quarterly, etc.), and (c) collaborating with the DHHS Bureau of Finance to ensure that expenditures are occurring as expected over time (i.e., reviewing monthly appropriations statements and ongoing reports specific to grants and contracts). In addition, the BCDHSC Bureau Chief and Budget Team regularly review the Fiscal monthly/quarterly and annual budget and expense reports along with the contractual obligations, deliverables, and reporting to further ensure both compliance and accuracy. Funds are subject to a three- level approval process before payment: 1) BCDHSC contract contact accepts, reviews and processes the invoice with verifying signature; 2) the invoice is then forwarded to the Finance Unit where it is reviewed, tracked into the system, funded; and 3) before any payments are released, the payments are reviewed and verified by a supervisor-level staff person in Finance. The payment is also scrutinized for appropriate budget allocation and allowable expenses under Federal guidelines, especially those specific to the CCDF funding guidelines. DHHS uses an electronic financial management system to document, track, approve, pay and monitor the entire provider billing system. This is done in tandem with the provider eligibility and licensing systems to monitor all payment activities for accuracy and timeliness. The NH Child Care Scholarship payments are made on behalf of an eligible child directly to a DHHS-enrolled child care provider within 21 calendar days from receipt of the provider's correctly completed invoice based on the child's attendance up to the authorized service level. Invoices processed on Monday, Tuesday, and Wednesday result in a payment made on Friday. Invoices processed Thursday or Friday result in a payment made the following Tuesday. Typically payments are made within 10 days. As of August 2017, child care provider web billing became mandatory as a mechanism to (a) expedite the billing and payment process for providers, and (b) reduce billing errors by requiring providers to complete certain fields such as arrival and departure time, absent or present, A.M or P.M. and the actual provider charge, prior to submitting the claim for payment. Additionally, BCDHSC staff conducts audits for billing accuracy when an issue arises from a conversation with a provider, parent or district office. 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: DHHS uses standard accepted accounting practices to manage all financial procedures, which includes review of contract and internal expenses to ensure they are both reasonable (cost effective, best practice) and allowable under state and federal guidelines for expenditures, specifically those pertaining to CCDF (i.e., discretionary/nondiscretionary status; permitted funding utilization; timelines for encumbering and expending funds, etc.). The tracking systems include both budgeting and expenditure activities. During the budget planning and implementation processes, the BCDHSC consults federal and state partners as necessary to resolve questions regarding allowable costs. Prior to payments, a fund code is applied and checked against the approved budget expense. In the event of a discrepancy or question, Finance reaches out to the BCDHSC Chief to review the expense and coding. A monthly financial statement including a budget and expense report is generated for review by the Finance representative and the BCDHSC Chief to ensure both financial integrity and adherence to the CCDF cost guidelines. As part of the contracting process, applicants are required to demonstrate that costs are reasonable and allowable within Federal rules. Once the grant/contract is awarded, the BCDHSC staff member responsible for monitoring a grant or contract carefully reviews each invoice and compares expenditures to the approved budget prior to submitting for payment. If a question arises as to whether a charge is reasonable or allowable, the contract manager will contact the contractor/grantee to resolve the issue, and the cost will either be approved or denied. In addition, all payments are scrutinized for appropriate budget allocation and allowable expenses under Federal guidelines, especially those specific to the CCDF funding guidelines. The grant manager will document risk and communications with the vendor via the contracts quality management process. These systems are created on excel spreadsheets and housed in secured SharePoint sites. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: The CCDF ACF-696 report is prepared and submitted quarterly, and contains cumulative federal, State Matching and MOE expenditures by grant year. Each quarter, after the monthly Cost Allocation Plan is run, the quarterly expenses are summarized by cost center (also called Activity numbers). Each Activity Number is assigned a line number from the ACF-696 for reporting purposes. The summarized costs are transferred to a workbook that staff use to calculate the federal share of costs by ACF- 696 report line, as well as the appropriate grant to which the expenses are assigned. The Department spends Mandatory and Matching funds first. The Federal Reporting Staff also maintain Desk Review Workbooks designed by ACF to track benchmarks by grant year to ensure that the department is also meeting the Quality and Infant Toddler Benchmarks. The total benchmark is calculated each year based on the expected allotments published by ACF. Upon the completion of the ACF-696, the report and all supporting details (including the Cost Allocation detail and Desk Review workbooks) and sent to the Bureau of Child Development and HeadStart Collaboration Financial Manager for review and approval. The Financial Manager will notify Federal Reporting Staff of their approval, and forward to the Division of Economic Stability Director for signature. Upon receipt of approval from the Financial Manager, Federal Reporting staff enter and submit the ACF- 696 in the On-Line Data Collection (OLDC) module of the GrantSolutions website. d. Other. Describe: If BCDHSC determines that a contract is underperforming based on the status of benchmarks and/or deliverables, BCDHCS applies Department policy that ensures vendors entering into Agreements with the Department satisfactorily complete contractual requirements, address Vendors who are underperforming, and provide remedies in the event of default. 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: Utilization of a multi-tiered system of checks and balances with the program and Bureau of Finance to identify and mitigate potential risk to CCDF program and ensure expenses are allowable and reasonable under state and federal guidelines for expenditures, specifically pertaining to CCDF. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: DHHS uses standard accepted accounting practices to manage all financial procedures, which includes review of contract and internal expenses to ensure they are both reasonable (cost effective, best practice) and allowable under state and federal guidelines for expenditures, specifically those pertaining to CCDF (i.e., discretionary/nondiscretionary status; permitted funding utilization; timelines for encumbering and expending funds, etc.). The tracking systems include both budgeting and expenditure activities. During the budget planning and implementation processes, the BCDHSC consults federal and state partners as necessary to resolve questions regarding allowable costs. Prior to payments, a fund code is applied and checked against the approved budget expense. In the event of a discrepancy or question, Finance reaches out to the BCDHSC Chief to review the expense and coding. A monthly financial statement including a budget and expense report is generated for review by the Finance representative and the BCDHSC Chief to ensure both financial integrity and adherence to the CCDF cost guidelines. As part of the contracting process, applicants are required to demonstrate that costs are reasonable and allowable within Federal rules. Once the grant/contract is awarded, the BCDHSC staff member responsible for monitoring a grant or contract carefully reviews each invoice and compares expenditures to the approved budget prior to submitting for payment. If a question arises as to whether a charge is reasonable or allowable, the contract manager will contact the contractor/grantee to resolve the issue and the cost will either be approved or denied. In addition, all payments are scrutinized for appropriate budget allocation and allowable expenses under Federal guidelines, especially those specific to the CCDF funding guidelines. The Financial Compliance Unit (FCU) consists of fourteen full-time and one part-time staff to assist in ensuring the oversight and implementation of effective internal controls for program integrity and accountability for the Department of Health and Human Services (DHHS). There are currently two full time and one part time staff assisting the Bureau of Child Care. The Child Care unit in conjunction with the FCU will develop a checklist to assist in the review of the back-up documentation of the invoice submitted for payment by the childcare providers. The Child Care unit will review the details of the information submitted by the providers to ensure the allowability of each expense based on a risk assessment. Prior to awarding any new contract, a risk assessment is completed. This assists in determining the amount of monitoring needed to ensure disbursements are made in accordance with all guidelines. The FCU reviews childcare provider payments to assure all compliance requirements are met. As the reviews are completed, the FCU will work with the Child Care Unit to determine the proper course of action to correct any deficiencies found during the review. The lead agency reviews the data reports and identifies areas in need of enhancement and works to improve those parts of the system. c. How the results inform implementation. Describe: Separation of duties is part of how the Department evaluates the effectiveness of fiscal management practices. Each part of the fiscal process is separated so no one individual has control of the entire process and introduces several areas where work is reviewed before advancing in the process. In terms of federal reporting and cash management, the Federal Report is completed based on the output from the cost allocation plan. Each month, after the cost allocation plan is run, an accountant in the Federal Reporting and Cash Management unit will record the federal share of expenses, as determined by cost allocation plan, into a separate federal ledger. These expenses are reviewed monthly by a Business Administrator III. Once reviewed for reasonableness, an accountant will calculate the federal cash due to the Department, which is the reviewed for accuracy by a BA III. Once approved, another accountant will draw cash from the appropriate federal account and create the cash receipt in the State’s accounting system, NH FIRST. These fiscal processes help to inform allowable dispersants of payments and contract amendments. d. Other. Describe: Not Applicable 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: BCDHSC conducts a quarterly Risk and Reward assessment of each component of the CCDF Plan and aligned the results with the mitigating effort/activity or policy/procedure that applies. This activity helps to ensure that future required modifications to policies and procedures will be identified, vetted and communicated before a critical juncture is reached. Where appropriate, finance, legal, licensing, policy and other internal and external experts and stakeholders are consulted to fully expand the risk and reward picture. NH DHHS has a contracts quality management process that provides leadership, consultation and technical assistance using selected systems of data-informed and performance-based contracting and monitoring throughout the contract lifecycle. CQM is the first point of contact when considering a contract that may contain high risks, large dollar amounts, or a significant impact to New Hampshire citizens. b. The frequency of each risk assessment. Describe: Monthly the risk section of the contracts quality management system are completed to understand contract risks and document the concern and any follow up for the concern. Quarterly Risk and Reward assessment of each component of the CCDF Plan and aligned the results with the mitigating effort/activity or policy/procedure that applies for all internal entities implementing aspects of the CCDF program. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: DHHS, and specifically the BCDHSC, have a multi-tiered system of checks and balances to identify and mitigate potential risk to CCDF program integrity. Risk is categorized into three major areas - financial, programmatic and operational. Multiple checks and balances in each of these areas are utilized regularly and, by design, are interlinked to inform and prompt another set of checks and balances. For example, if a BCDHSC staff liaison reviews and approves an invoice from a CCDF contractor that was improperly coded or included an expense that falls outside of the CCDF funding guidelines for allowable expenses, DHHS accounting will "red flag" the invoice and return it to the BCDHSC contract liaison for clarification. The BCDHSC Chief will be made aware of the issue through the monthly reporting system, along with a direct notification from the accounting staff. The BCDHSC Chief will also apprise DHHS upper management as necessary on these issues. The BCDHSC staff contract liaison will communicate with the contractor to ensure their understanding of the allowable expense policies, obtain a corrected/adjusted invoice, and resubmit to finance with an advice email stating what actions were taken to ensure accuracy and compliance. The contractor may then need to modify the expense category or identify a different funding source for a portion of their work to comply with the contract and CCDF guidelines. Operationally, DHHS engages in the following activities/processes for checks and balances: adherence to standard accounting and business practices; the use of both hardcopy and electronic recordkeeping systems; internal activity report; IT supported computer databases and word processing systems that have multiple backups; a concrete hierarchy for completion and oversight of activities and authority for spending approvals; and a detailed state-wide and Bureau emergency plan for ensuring the availability of ongoing child care and payments to providers in the NH Child Care Scholarship program. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: Internal audits are conducted on an ongoing basis on program eligibility, expenses, and adherence to CCDF guidelines; and multiple reports are run to ensure program Improvement is effective. e. Other. Describe: Not applicable. 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: Nh was cited and notified on May 23,2024 of non-compliance due to the Monitoring Team did not find evidence that the Lead Agency provides training to child care providers and Lead Agency staff on program integrity. NH plans to address this non-compliance by ensuring program integrity is explicitly included in the training for staff in the Bureau of Family Assistance. ii. Describe how staff training is evaluated for effectiveness: For a majority of the first year while a Family Service Specialist is training, all cases completed by the trainee are reviewed by either Family Service Specialist II’s or Supervisors before being confirmed. Confirmation for programs is only given once the worker meets and maintains a specific percentage level of accuracy. 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 training unit uses this data to determine where more training is needed. 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: When child care providers enroll with NH CCDF they are given a web billing training manual and other PowerPoint trainings that coincide with billing for child care scholarship. If providers have additional questions after reading the web billing manual, they are given the opportunity to have a zoom/Teams training, phone call or email communication with the lead agency staff. Right now, we have also started the process of implementing the Enrolled Provider training into NHCIS and this will allow providers to enroll online. Next steps, will have the web billing modules posted on NHCIS. Once the provider is enrolled they will be expected to take all module trainings. Certificates and professional development hours will be administered. Nh was cited and notified on May 23,2024 of non-compliance due to the Monitoring Team did not find evidence that the Lead Agency provides training to child care providers and Lead Agency staff on program integrity" and add how you plan to address this finding for child care providers. ii. Describe how provider training is evaluated for effectiveness: The provider relations specialist is available daily to support providers with billing on the web billing portal, answer questions regarding eligibility for the families that they are serving and provide technical assistance through Zoom, TEAMS and phone calls. We are working on implementing a training system to allow providers to take review trainings, mandatory trainings at initial enrollment and at reenrollment. These will cover all billing practices, program integrity and specific guidance on how to look at the eligibility of the child. Data on billing technical assistance and what the billing error or needs are will inform the effectiveness of these trainings. BCDHSC will ensure training covers areas of need through on-going monitoring of this data. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: NH uses our eligibility and billing system to have queries sent to us on a weekly and monthly basis. We run reports that highlight areas of need to improve program integrity on both sides of eligibility and billing. 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 Triennial Reviews and Report is completed by the Bureau of Program Integrity’s Financial Compliance Unit (FCU). They complete 23 audits per month for 12 months. The results are compiled into a final report that is sent to the OCC & BCDHSC. The error rate for 2022 was 3.87%. FCU uses the Corrective Action Plan described in the triennial report to complete monthly ￿Child Care Quality Control Audits￿. FCU has been completing these monthly audits since July 2023; tracking results in a report that is distributed to BCDHSC, Bureau of Family Assistance (BFA), and New HEIGHTS, at the end of every month. As of July 2024, FCU has been working with the BFA Training Unit to develop a more in- depth training for new workers and a refresher for current employees in an effort to mitigate errors seen in the triennial 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: In the interim of the triennial reviews, FCU completes Child Care Quality Control Audits. They review one District Office per month, a minimum of 13 cases per month. FCU reviews the eligibility documents and process and compile findings into a report that is shared monthly to BCDHSC, they review and then share the report with the District Office. 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? A weakness discovered in the internal Agency is training for eligibility workers on Child Care.