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: DHS/DFD governance consists of staff from Contracts, Legal, Fiscal, Budget and Program (Office of Child Care) to oversee and manage contracts and Memorandum of Agreement (MOA). Designated staff from each of the respective offices and units are assigned specific contract management responsibilities to ensure oversight of all aspects of deliverable services and budgets outlined in contracts and MOAs. Along with dedicated staff from the Office of Child Care, there are lead staff from contracts, budget, financial reporting, including claims and procurement that are assigned and regularly meet as a group to review and provide oversight of all contract and agreements activities and spending. Multi-level reviews, standardized forms, standard operating procedures and approvals are in place, as well as ongoing communication and cross-unit discussions to ensure internal controls are effective. 2. Delegation of duties: Each unit is responsible for oversight and management of its respective area. The Office of Child Care (Program) is responsible for overseeing programmatic activities and direct services, to ensure compliance with performance measures outlined in contract and MOA. The Contract Unit manages budgets, reviews authorized allocations and submits payment request, ensures compliance with Standard Language Document (SLD), reviews and approves contract budgets, and monitors spending. Financial Reporting ensures that any funding is used only for the purpose it was authorized for, reviews quarterly expenditure reports and compiles expenditures. Budget prepares DFD Cost allocation, coordinates and monitors the establishment and execution of grant funding accounts; provides detailed expenditure data/back as well as review reports; and provides fiscal advice to the Office of Child Care (Program). All units are responsible for monitoring, tracking, preparing reports, participating in interagency meetings, and providing technical assistance and support to subrecipients. 3. Coordination of activities: The Contract and Program units work closely together to develop the scope of work, and determine contract compliance, as well as conduct reviews. The four major units coordinate their efforts to ensure compliance with the terms and conditions of the Contract/MOA. A Spending Plan is established to support the goals of program activities, which are discussed collectively at quarterly meetings. All units participate in subrecipient monthly meetings and ACF check-in meetings, and collaborate on monitoring activities and contracts, as well as annual fiscal review. All units work closely to modify and adjust budget and contract funding. Additionally, all units work closely to ensure compliance of mandatory, and discretionary allocation and spending, as well as grant funding. 4. Communication between fiscal and program staff: Each respective unit have assigned staff responsible for overseeing Child Care related contracts. Internal collaborative quarterly and ad hoc meetings are held to review performance measures and spending. Monthly, quarterly and annual reviews are conducted to evaluate compliance with the terms and condition of the agreements; as well as to determine achievement of performance measures. Activities are reviewed monthly, and are tracked and monitored by DHS/DFD staff. In addition, service providers are required to submit an organization-wide audit annually, and DHS/DFD selects agencies to undergo audits as well. 5. Segregation of duties: There are always a minimum of three levels of internal controls. Contract Administrator, Program Manager, Contract Fiscal, Contract Supervisor and Contract Manager all do an assessment and thorough review of the budget, modifications and expenditure reports. 6. Establishment of checks and balances to identify potential fraud risks: All service providers are required to submit regular programmatic and expenditure reports, which are reviewed to make sure approved services and expenditures are within an approved budget’s allowable limits and made to eligible persons in accordance with all specifications contained in the Contract/MOA. All agencies are required to submit their annual audit to the DFD Contracts Unit. The Contract Administrator reviews the audit report and discuss with the Office of Child Care. As needed, Contract Administrator provides ongoing, technical assistance training to their assigned agencies. 7. Other activities that support program integrity: Copy of Annual Contract Review Template and Standard Operating Procedures outlining fiscal management oversight 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: Contract Administration staff provide ongoing technical assistance to all grantees to ensure compliance with the DHS Contract Policy and Reimbursement Manuals. The Standard Language Document (SLD) is the official "contract" and incorporates all DHS/DFD contract terms, conditions, and requirements, as well as all Request for Proposal (RFP) requirements. The SLD document also sets forth the responsibilities, obligations, and rights of the parties and captures the signatures of the contracted parties. The Annex A establishes the program specific requirements including the level of service and program reporting requirements. The Annex B is the official budget and once approved requires strict adherence to the modification policy in order to execute any changes. DHS/DFD program, fiscal, and contract staff meet regularly to discuss and review contracts. Additionally, DHS/DFD's team collectively meets with service providers to go over contracts, spending, and modifications. DHS/DFD has multiple levels of review and signoff requirements for contract approvals and modifications. Multiple staff within Budget Operations, Contracts, and Financial Reporting review and have different levels of approval to ensure fiscal Integrity. 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: DHS/DFD contracts with a service provider to administer an automated time and attendance system and issue electronic payments to child care providers. The billing record process is automated and coordinated between the eligibility and payment systems with DHS/DFD oversight. For example, prior to authorizing payment, a provider and parent agreement, which outlines the authorized rate, numbers of care days, and authorized period of service must be signed. To ensure timely payment, DHS/DFD requires service providers to have the following procedures in place, including but not limited to: ● Written payment processes and procedures established for staff handling fiscal activities, including outlining internal controls to ensure separation of payment authorization and eligibility determination roles. ● Performance standard timelines for quick resolution of payment discrepancies within two pay cycles. ● Tracking and monitoring of payment discrepancies. ● Contract Fiscal staff review payment reports to ensure all payment requests were paid. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: Financial reporting staff reviews expenditure reports submitted from internal and external sources for reasonableness and accuracy. Staff then enters the expenditures into an Excel spreadsheet which aligns with the categories in the ACF 696. Once complete and reviewed by supervisory staff the information is then entered into OLDC for management approval and submission to ACF. d. Other. Describe: ● The Division is audited by various federal, state, and private entities including the annual, federal single audit, the Office of State Comptroller (OSC), the State Auditor (SA), the Office of Inspector General (OIG), etc. ● Budget Operations submits quarterly spending plans to the Department of Human Services and period plans to the NJ Office of Management and Budget (OMB, Treasury). ● Fiscal staff participate in the bi-weekly meetings with the child care automated systems vendor. ● Fiscal staff hold quarterly meetings with the fiscal officers from the 21 County Social Service Agencies (CSSA). ● Fiscal staff participate in the periodic meetings with the Child Care Resource & Referral (CCR&R) agencies. 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 updates the compliance and review of the internal controls process with the Department of Human Services and the Office of Management & Budget (OMB)/Treasury b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: Fiscal staff conduct a variety of internal reconciliations to ensure the accuracy of reporting and data entry and submission c. How the results inform implementation. Describe: Fiscal operations staff participate in periodic meetings with CCR&R, CSSA, and all internal fiscal and program units to ensure that fiscal reporting and review is consistent and accurate. 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: ￿ Fiscal meets with program staff on a regular basis to determine areas of current and possible future concern. ￿ As part of the provider service monitoring process, DHS/DFD reviews certain policies and procedures to measure correctness or barriers of policy interpretation and implementation. Reports are reviewed and collaborative cross unit meetings are held to review agencies’ administrative oversight and contract processes, and to assess effective internal controls are in place such as systems, processes, and payment issuance and delegation. DHS/DFD’s respective units conduct financial oversight reviews. Fiscal, Contract Supervisor and Contract Manager all do an assessment and thorough review of the budget, modifications, and expenditure reports. The Office of Program Compliance reviews payment accuracy through desk audits and discusses findings with child care operations supervisory staff. DHS/DFD created a PowerPoint, "DHS/DFD Best Practice Child Care DeskTop Guide" to support program field staff and provide technical assistance to CCR&R agencies. b. The frequency of each risk assessment. Describe: ￿ The Chief Fiscal Officer meets with all other senior staff (Program, IT Support, Quality Control, Management Evaluation, etc.) on a weekly basis. ￿ Fiscal conducts other meetings on important fiscal issues on an as-needed basis. ￿ DHS/DFD meets regularly with the service agency providers to discuss policies and provide ongoing onsite technical assistance to aid in implementation. Regularly scheduled webinars led by DHS/DFD staff are also used to provide technical assistance on required scope of work, budget authorized allocations and new policies and procedures. Joint in- person training occurs when policy implementation involves other state agencies outside of DHS/DFD. ￿ DHS/DFD also meets regularly with and distributes policy communications to relevant State departments and vendors to ensure program integrity. ￿ Quarterly reviews of expenditures are collected and reviewed, annual fiscal reviews are conducted, and annual contract budgets are reviewed and discussed with service providers. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: ￿ Risk assessment is discussed at the aforementioned weekly Senior Staff meetings and in other meetings, as needed. ￿ DHS/DFD receives monthly reports from its service providers as one approach to risk management. Data and trends are shared with service providers to discuss opportunities, improve data integrity, and help inform policy and/or future investments or address gaps. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: ￿ Once policies are finalized, DHS/DFD meets with the service providers to discuss operational concerns, opportunities, and provide feedback on new policies and/or services. Designated specialists are assigned to ensure that the entire agency is educated on new policies and initiatives. ￿ DHS/DFD staff members also attend county level meetings with partners and stakeholders where policies and initiatives are discussed. ￿ The effectiveness of risk assessment processes discussed at the aforementioned weekly senior staff meetings, and in other meetings as needed. ￿ Additionally, the effectiveness is assessed through the various audits conducted on the Division. 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: DHS/DFD provides routine trainings at the monthly and quarterly meetings when releasing new guidance, policy, or program changes; and offers ongoing technical assistance, as well as trainings through webinars or other methods as needed. CCR&R agencies have designated lead trainers and policy specialists that meet with DHS/DFD staff monthly, as well as participate in small workgroups to discuss policies and review targeted technical assistance. ii. Describe how staff training is evaluated for effectiveness: CCR&R representatives are part of a policy workgroup that provides input for policy development. Once policies are finalized, DHS/DFD meets with the CCR&Rs to discuss operational concerns and feedback on these new policies. Each CCR&R has a designated policy specialist to ensure that all staff are educated on new policies. Additionally, DHS/DFD use surveys to solicit feedback and help inform the effectiveness of trainings. DHS/DFD staff members also attend county provider meetings where policies are discussed. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: Any identified risks as determined by timeliness of reports, contract documents, audits, audit findings, key staff turnover, and other information are used to inform future needs￿trainings, targeted technical assistance, additional supports, and best practices. Any identified trends, systemic issues, and/or relevant policies and procedures are analyzed/evaluated. The data is utilized to undertake additional research of key issues, and identify strategies to address and correct these issues to improve outcomes. 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: DHS/DFD’s policy manual details operating procedures for service providers on how to communicate policies to child care providers. Different modes of communication are utilized; such as calendars with scheduled trainings, which require registration. Webinars and in-person trainings also require registration. The majority of webinars are recorded and posted. Providers can submit questions, which are posted as a FAQ and made available on the provider portal. Training offerings are assigned course codes and are tracked in the NJCCIS Workforce Registry management system. All training attendance records, certificates and documentation can be uploaded from the outside to an individual attendee’s profile record in the NJCCIS. In addition, DHS/DFD staff are available to present and clarify policy-related TA and training requirements/updates during provider meetings, as needed. ii. Describe how provider training is evaluated for effectiveness: Training evaluations are completed for all courses offered by DHS/DFD contracted partners. Evaluation functionality has been programmed through the NJ Workforce Registry (NJCCIS) so that training agencies can easily administer post-training evaluations to training participants. The data collected from the evaluations are used to inform updates and revisions to training for continuous quality improvement. For some training topics, an additional evaluation is administered two weeks after the training session was completed to receive input from training participants on how the training has been applied in their everyday work. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: Any identified risks as determined or discovered through monitoring, inspections, meetings, or communicated by partners or stakeholders, and other information are used to inform and identify training and targeted technical assistance needs. Any trends or systemic issues identified, or misinterpretation of policies also are used to inform ongoing provider training needs. 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 DHS/DFD Evaluation and Program Compliance Unit shares the triennial report and results with Child Care Operations and CCR&Rs staff. This provides an opportunity to discuss the errors, determine if changes are needed to policy, and determine technical assistance (TA) needs. Additionally, a similar monitoring tool is used annually and a desk guide of best practices was also created based upon the monitoring that is discussed and shared with CCR&Rs. The results help craft DHS/DFD’s and CCR&R on-going reviews and assist in evaluating the accuracy of the CCR&R quarterly Quality Assurance (Q&A) reports. 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 governance within DHS/DFD to oversee various aspects of the contract consists of staff from Operations, Contracts, Fiscal, and Evaluations. Findings are discussed amongst the group to identify risks and employ strategies to address findings. A collective plan of action and activities are developed to mitigate and establish preventive measures including new policy and procedures, system modifications, development of reports, and targeted monitoring and technical assistance. Additionally, contract unit staff monitor audit findings and results for several years to ensure there are no weaknesses in internal controls. 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: The results from the triennial improper payment monitoring are summarized for ACF on the ACF 404 report. Internally, the information is shared with the DHS/DFD’s Managers of the Office of Child Care who oversee the Child Care Resource and Referral (CCR&R) agencies so the errors can be discussed/analyzed and addressed with technical assistance. Additionally, a desk guide of best practices is also created based upon the monitoring that is discussed and shared at the CCR&R Director’s meeting. The results also help craft DHS/DFD’s internal on- going CCR&R reviews and assists in evaluating the accuracy of the CCR&Rs quarterly Quality Assurance (QA) reports. 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. Over the past three years, DHS/DFD has undergone several audits to address any identified weaknesses in DHS/DFD’s internal controls. DHS/DFD has written procedures for all processes. Duties are separated with at least three people involved in every transaction. All transactions are reviewed and approved by a Supervisor and Manager and reconciled to source documents so that any discrepancies are identified and corrected. Closeouts are conducted independently using source documents and reconciled back to internal documents. Independent reports of transactions are run routinely and reconciled to internal records. Contract and fiscal files are stored on secure network drives and full access is restricted to only those staff who need access to perform their job duties. All contract funds are approved by the Budget Office and all payments are approved by the Accounting Office, which is not within the Contracts unit, and provides check and balance. b. [ ] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls?