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: ECECD’s organizational structure ensures effective internal controls that promote program integrity and accountability by establishing clear roles, emphasizing compliance, and holding individuals accountable for their responsibilities through the following activities: Assignment of Authority and Responsibilities: Within ECECD, each division has designated directors, financial staff, and program support personnel that ensures that ECECD manages internal authorities and responsibilities. These individuals hold specific authority related to program integrity. Delegation of Duties: Within ECECD, responsibilities are delegated, and roles are intentionally separated across various divisions. This deliberate separation ensures that there is an appropriate level of review and approval before implementing significant activities or incurring costs. Coordination of Activities: ECECD’s Administrative Services Division (ASD) and program staff maintain communication via email or verbal channels regarding program activities. ASD and program staff also confer with ECECD leadership on a regular basis to ensure that the coordination of activities provides for the effective and efficient provision of services to the public. Confidential emails are used to ensure the integrity of sensitive information. Communication Between Fiscal and Program Staff: ECECD requires its staff to communicate between fiscal (financial) staff and program staff. This ensures alignment and transparency in program management. Segregation of Duties: By separating roles, ECECD prevents any single individual from having too much control over critical processes. This segregation of duties enhances accountability. Establishment of Checks and Balances: ECECD establishes checks and balances to detect potential fraud risks by engaging an external auditor to review internal controls. Any identified risks are promptly addressed. ASD also uses systems of checks and balances while working with program staff to approve any costs. Other Activities Supporting Program Integrity: ECECD’s program integrity is further supported by involving key individuals in oversight. ECECD’s executive leadership, including the Secretary, Deputy Secretary, ASD Director, Office of General Counsel (OGC), and Chief Information Officer (CIO), actively participate in ensuring program integrity. 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: ECECD ensures effective fiscal management practices for all CCDF funds, including those funds dispersed through grants and contracts, by utilizing a collaborative effort between executive leadership, program staff, and ECECD’s Administrative Services Division (ASD). Program staff play a crucial role in initiating funding requests and understand the program needs to advocate for the necessary resources within the CCDF framework. As the fiscal steward for ECECD, ASD ensures that the required funding is not only available but also strategically allocated. ECECD’s ASD expertise in financial management is instrumental in this process. ASD’s role extends beyond mere approval as it actively collaborates with program staff to assess the feasibility and impact of each funding request. Leveraging upon the staff’s fiscal management expertise, ECECD’s ASD ensures that CCDF funds are effectively utilized and balance financial prudence with program effectiveness. This collaborative approach fosters a robust partnership where program staff rely on ECECD’s ASD guidance, while ECECD’s ASD appreciates the program’s insights into operational needs. This system, with guidance and oversight from ECECD’s executive leadership, supports CCDF expenditures and enhances program outcomes. 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: ECECD has tracking systems that ensure that only reasonable and allowable costs are approved, and trace funds to a level adequate to establish that such funds have not been used in violation of this provision. When expenditures are requested by program staff, ECECD’s Administrative Services Division (ASD) assesses the request and collaborates with program staff to identify the most suitable funding stream for each request. ECECD’s primary financial tracking system is SHARE, which is common to most New Mexico state agencies. It serves as the authoritative record of all CCDF-related transactions. Through SHARE, ECECD meticulously tracks financial data and can identify discrepancies or anomalies. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: Within ECECD, the Administrative Services Division (ASD) and program staff work together to ensure that all program expenses are accurately captured and documented appropriately. ECECD’s ASD performs reconciliation processes for invoicing and payments through the SHARE financial data platform. If any discrepancies arise during this process, an electronic journal entry is promptly created or updated to reflect necessary adjustments and maintain accurate figures. Once ECECD’s ASD and program staff agree on accurate program expenses, ECECD creates the required federal or state fiscal report and submits it to the appropriate entity. 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: ECECD defines effective fiscal management practices as adherence to applicable federal and state regulations and implementing the highest standards of practice. ECECD’s operations are aligned with the directives of the federal Office of Management and Budget (OMB) and follows the Model Accounting Practices (MAPs) guidelines set forth by New Mexico Department of Finance Administration (DFA). These standards provide ECECD with a structured approach to managing resources, assessing performance, and ensuring that ECECD’s actions align with the expectations of stakeholders and the public. By adhering to the directives of OMB and MAPs’ guidelines, ECECD maintains the highest standards of governance and management. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: ECECD measures and tracks the results of its fiscal management practices by meticulously monitoring outcomes and evaluates the recommendations provided in all fiscal audits. This rigorous tracking process allows ECECD to ensure accountability, maintain transparency, and continually strive for improvements in operations. By closely scrutinizing results, ECECD holds itself responsible for the effectiveness of its actions, openly shares information about its performance, and actively seek ways to enhance its management of CCDF funds. c. How the results inform implementation. Describe: ECECD reviews the results of its fiscal management practices by analyzing the feedback it receives from its auditors and carefully analyzes their input to strategically incorporate preventive measures to address any identified gaps. These measures act as safeguards to ensure compliance with all CCDF requirements and mitigate potential risks. 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: ECECD collaborates closely with auditors to identify and then monitor and assess risk factors in the management of CCDF funds. These auditors meticulously examine ECECD’s operations, processes, and systems and provide valuable insights into any shortcomings or potential liabilities. Based on the auditors’ feedback, ECECD creates a detailed plan in collaboration with the program staff and ECECD’s Administrative Services Division (ASD) to mitigate or address any potential risks. b. The frequency of each risk assessment. Describe: ECECD performs an annual comprehensive risk assessment to its operations and, when necessary or prudent under the circumstances, conducts audits of its individual programs. These audits ensure compliance with federal program requirements and assess both ECECD’s financial statements and adherence to regulations, along with any funds spent by contractors or subrecipients of federal funds. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: ECECD uses risk assessment results to inform program improvement through collaboration between its Administrative Services Division (ASD) and program staff to devise a comprehensive strategy for addressing potential risks in a meticulous manner and implementing any necessary policy or procedure changes. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: ECECD knows that its risk assessment procedures are effective through monthly meetings where program staff collaborate with ECECD’s Administrative Services Division (ASD). These meetings aim to align efforts and facilitate necessary follow-up. During these meetings, ASD and program staff discuss strategies, share insights, and address any challenges or opportunities to lower risk. Program and ASD staff also provide updates to each other on administrative matters, ensuring mutual understanding and alignment of objectives. Additionally, these meetings enable effective follow-up on action items or decisions, promoting transparency, accountability, and collective responsibility within ECECD. ECECD also conducts audits when necessary or required to ensure that risk is mitigated and ECECD’s policies and procedures are effective. 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: ECECD informs its staff through newsletters and other communications about the CCDF state plan changes. ECECD also posts the CCDF state plan on its website for staff to review. ECECD’s Child Care Assistance program conducts regular staff meetings and training to ensure staff consistency apply the current policies regarding eligibility determinations and other relevant matters. Additionally, the Improper Payment (IP) team conducts training sessions for Eligibility Interviewers (EIs), covering program requirements, eligibility determination, necessary documentation, and CCDF requirements. During these training sessions, feedback from supervisors and EIs is actively solicited. After the changes to the CCDF plan are made, CCSB updates its procedure manual to ensure compliance with CCDF program requirements and standards and trains staff on the updates. ii. Describe how staff training is evaluated for effectiveness: ECECD evaluates the effectiveness of staff training through a comprehensive and systematic approach. Each month, ECECD staff randomly review 30 client files, evenly distributed across regions, alongside 2 percent of newly approved files from ECECD’s OnBase system. These evaluations provide insights into compliance and program integrity. ECECD also shares error reports with CCSB supervisors and Regional Operation Managers (ROMs) on a regular basis to promote transparency and collaboration. ECECD’s consistently low IP error rates demonstrate the success of training initiatives. Continuous monitoring and adjustment of training strategies ensure that staff members receive the support they need to maintain excellence in their work and uphold program integrity standards. In addition, ECECD employs a rigorous system of audits to ensure compliance and integrity in their Child Care Assistance program. Before releasing any payments to providers, ECECD conducts comprehensive audits covering 100 percent of payments. These audits utilize various methods, including generating reports to identify pending payments, detecting duplicate payments to prevent overpayments, reviewing manual entries for eligibility justifications, utilizing the EPICS database functionalities to prevent multiple payments for the same period, and verifying questionable payments with program supervisors. These measures are instrumental in maintaining program integrity and ensuring adherence to regulatory standards. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: Each month, ECECD’s Improper Payment (IP) team conducts 30 random client file reviews, evenly distributed across regions, alongside with 2 percent of newly approved files from ECECD’s OnBase system. These evaluations provide insights into compliance and program integrity. The evaluation findings are compiled into error reports, which are shared with supervisors and regional office managers on a regular basis. ECECD also develops tailored trainings that address the specific areas of concern identified through this analysis. These trainings cover topics such as eligibility determinations, documentation requirements, and CCDF guidelines, and providing staff members with the knowledge and skills needed to effectively carry out their responsibilities. Feedback from supervisors and Eligibility Interviewers (EIs) are actively solicited during these training sessions. This feedback and program data, combined with ongoing monitoring, allows for continuous improvement of training initiatives to better meet the evolving needs of staff. 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: ECECD ensures all providers for children receiving CCDF funds are informed and trained regarding CCDF program requirements and program integrity by implementing, in collaboration with the University of New Mexico Early Childhood Services Center, an online course titled ￿Child Care Assistance Provider Orientation￿ on the New Mexico Early Learning System (NMELS) training platform. This training was created as an entirely online, self-paced course designed with the following learning objectives: (a) Understand the intent of the Child Care Assistance program (CCA) and background on its creation, as well as an introduction to the communities it aims to serve; (b) Understand the CCA family eligibility requirements, age definitions, and how to apply for CCA; (c) Be informed on what providers need to know about CCA, such as child care placement agreement, provider agreements, and EPICS Provider Dashboard information; (d) Understand the reporting requirements concerning changes that impact contracts. In addition, resources such as newmexicokids.org and ECECD weblinks, are provided to the training participants. ECECD also effectively disseminates child care policy changes to providers through a multifaceted approach, including listservs, social media platforms, monthly communication calls, stakeholder meetings, at some in-person visits and during inspections by compliance officers, and through provider e-blasts. ii. Describe how provider training is evaluated for effectiveness: ECECD evaluated provider trainings for effectiveness by requiring trainings to be completed on a sequential order, each part having to be completed before the next can be started. At the end of each section, a knowledge check is administered to determine the comprehension of the material just reviewed in which the participant must complete with at least a 70 percent accuracy rate before proceeding to the next section. A second quality check is in place via a final assessment to gauge the understanding of Child Care Assistance (CCA) by the participant. Finally, an evaluation is provided to allow the participant an opportunity to express concerns, suggestions for improvement, and clarification. ECECD then reviews the final evaluations to also gauge the effectiveness of the effectiveness of the training. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: ECECD uses program integrity data to inform ongoing provider training needs by revising the Child Care Assistance Provider Orientation, as needed, based on the data and the feedback collected from the training evaluation. Additionally, ECECD disseminates child care policy changes to providers through a multifaceted approach, including listservs, social media platforms, monthly communication calls, stakeholder meetings, at some in-person visits and during inspections by compliance officers, and provider e-blasts. 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: ECECD generates the triennial error rate review results to evaluate the effectiveness of its internal controls. In federal fiscal year 2021 (FFY21), ECECD’s Improper Payment Audit team reported a 4.35 percent improper payment error rate. This data was promptly communicated to the ECECD Child Care Services Bureau (CCSB), enabling it to take strategic action to lower the error rate. CCSB utilized this information to analyze trends across various offices and counties, empowering supervisors, and managers to identify specific areas needing improvement and tailor training programs accordingly. This led to improvements in the state 12-month employee case review process. 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: ECECD’s Improper Payment Audit team performs 30 randomly selected file reviews, 15 per region, as well as 2 percent of newly approved files for each month from OnBase. OnBase is the electronic case management system used by ECECD. The information is shared with the ECECD program staff every 6 months. ECECD program staff utilize this information to analyze trends across various offices and counties, empowering supervisors, and managers to identify specific areas needing improvement and tailor training programs accordingly. In addition, ECECD’s Child Care Assistance team conducts regular staff meetings to ensure consistency with current policy regarding eligibility determinations. 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: ECECD’s Improper Payment Audit team reviews case files and reviews errors in child care services. The report is shared every six months with the Child Care Services Bureau (CCSB). The CCSB utilizes this information to analyze trends across various offices and counties, empowering supervisors and managers to identify specific areas needing improvement and tailor training programs accordingly. Also, ECECD’s Child Care Assistance team holds regular meetings to make sure staff follows CCDF guidelines. ECECD conducts comprehensive audits on all Child Care assistance payments before releasing payments to providers. ECECD uses the following methods to conduct the Child Care Assistance Payment Audits: (a) Generates a 'Pending Payment Report' to identify all payments awaiting issuance; (b) Detects duplicate payments by cross-checking service dates, providers, applicants, and children to prevent overpayments; (c) Reviews manual entries to ensure that they align with eligibility criteria; (d) Utilizes EPICS functionalities to prevent multiple payments for the same service month, provider, and child, thus avoiding overpayments; (e) Verifies questionable payments with program supervisors; and (f) Encourages supervisors to report unintentional program violations. These auditing procedures are crucial for maintaining program integrity and adherence to regulatory standards. 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. ECECD has detected no internal control weaknesses thus far. To further fortify internal controls, ECECD contracted with an external auditor to conduct a comprehensive review of its internal controls. In addition to this, the auditor's expertise was enlisted to collaborate in crafting and refining ECECD’s policies and procedures, ensuring they are robust and aligned with industry standards. This proactive approach underscores ECECD's commitment to maintaining the highest standards of operational integrity and efficiency. b. [ ] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls?