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 Ohio Department of Children and Youth (DCY) is a new agency set up by function rather than program to ensure all programs benefit from cross program coordination. More importantly the agency is set up in this way to streamline services for children, youth and families. As a result of the function structure, it builds in transparency and accountability as multiple managers will have overview and insight into the program and supports rather than just one singular point of contact. To address numbers 1 & 6 - Integrity will be maintained through the Contracts and Monitoring area responsible for reviewing cases for family eligibility and provider payments. This is done through random case reviews and regular monitoring protocols in addition to any referrals. Additionally, our fiscal team will monitor that escalate as concerns but also through daily monitoring activities of expenditures and grants. To Address numbers 2, 5 & 6 -Delegation and Segregation of activities across the Department reside in Systems for eligibility, Policy and Training for alignment with federal and state rules and Fiscal to cross check that the system payments are accurate, timely and done with integrity. The delegation of duties creates necessary checks and balances to ensure multiple areas are reviewing and assessing the components of the program. To address number 3- Coordination of Activities roles up through the Executive team giving purview of all roles and responsibilities across the enterprise to the Chief Operating Officer and Chief Strategy Officer which allows for oversight and accountability at two points of control. To address number 4-Communication between fiscal and program staff happens is being built through a regular cadence of weekly meetings to review payments and eligibility trends along with weekly reports. Additionally quarterly strategy meetings have been established allowing for long term planning and control. 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 basis for aligning funding with costs, including indirect costs, is the account coding structure. The account coding structure consists of multiple codes that identify important elements: funding source, the unit initiating the transaction, and the benefiting program for all financial transactions in the agency. The objective of this coding structure is to organize and document the accounting of financial transactions, to simplify financial reporting and grant award reconciliations, and to maintain the integrity of federal and state funds. Internal documents, including purchase requisitions, print orders, encumbrances, and commitments, must specify the purpose and intent of each transaction and contain proper authorization before the department will commit, encumber, or disburse funds. 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: All administrative financial transactions are recorded by Ohio Administrative Knowledge System (OAKS), which serves as the system of record for all appropriated financial transactions for the state of Ohio, including DCY. The State’s central accounting office, Office of Budget and Management (OBM), manages OAKS and has the ability to provide detailed journal files through the data warehouse to the Ohio Department of Children and Youth (DCY) for analysis and reporting. OAKS captures the complete account coding for each transaction c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: All administrative financial transactions are recorded by OAKS, which serves as the system of record for all appropriated financial transactions for the state of Ohio, including DCY. The State’s central accounting office, Office of Budget and Management (OBM), manages OAKS and has the ability to provide detail journal files through the data warehouse to the Ohio Department of Children and Youth (DCY) for analysis and reporting. OAKS captures the complete account coding for each transaction. and OAKS is the basis for federal reporting. d. Other. Describe: NA 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: Set up agency controls in Ohio Administrative Knowledge System (OAKS) accounting system. Internal documents, including purchase requisitions, print orders, encumbrances, and commitments, must specify the purpose and intent of each transaction and contain proper authorization before the department will commit, encumber, or disburse funds. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: DCY leadership meets monthly with the Fiscal team to review trend reports from for eligibility and expenditures. These reports are reviewed for any anomalies but also to ensure the program is tracking as forecasted. When unexpected changes occur, it is a flag for the team to look at recent policy changes, the school schedule, enforcement activities or recent local changes. c. How the results inform implementation. Describe: The results from the monthly meetings often lead to additional conversations with the policy, system and integrity teams. Depending on trends these meetings can be indicators for necessary recruitment events, ideas for automation to streamline and track eligibility, or where we may be able to further invest or outreach if utilization is under projections. d. Other. Describe: NA 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: Each process used by the Lead Agency to identify risk (including entities responsible for implementing each process). Describe: DCY has a team dedicated to program integrity responsible for overseeing monitoring of payments made to providers through the Publicly Funded Child Care program, funding with CCDF funding. The team audits publicly funded child care provider (CCDF) records utilizing a multi-tiered process identifying providers through the following ways: 1.Referral-Based Identification: DCY receives referrals from the public, county partners, or internal staff through licensing or eligibility reviews. All of the providers are screened based on a set of data gathered from licensing and payment records, informed by Ohio’s Time, Attendance and Payment (TAP) system. Reviews include observation, interviews with provider staff, and comparing required attendance documentation to billing records. In addition to DCY’s fraud hotline, the Auditor of State’s (AoS) Office also accepts referrals for all of Ohio’s benefit programs, including child care. DCY and the AoS try to coordinate activities, to eliminate case review interference and duplication efforts when possible. DCY defers to AoS when AoS makes DCY aware of an official review and investigation and provides case updates of the active review and investigation. 2. Annual Random Sample: An annual program audit of at least 400 providers is conducted to capture and determine areas of risk, training, and system enhancements. This represents a statistically valid sample of providers with an agreement to serve children eligible to receive public funds. 3. Data Analytics and Screening: Providers are identified for review through targeted data analytics that include factors such, but not limited to: provisionally licensed programs, high earners, and/or discrepancies between licensed capacity and billing. Additionally, a team of reviewers conduct monthly eligibility audits during the federal fiscal year. The following elements are reviewed: application/redetermination, qualifying head of household, residency, parental work/training status, qualifying child, qualifying care, and provider arrangement, income requirements, and payment. The Early Care and Education Technical Assistance area is copied on all error correspondence to the county agency. This is to ensure that the case is rectified, overpayments are pursued, and statewide training can be developed based on error trends. The Office of Budget and Management (OBM) conducts Management Information Audits (MIA) of each government agency, including DCY for CCDF. OBM is a third-party agency that reviews both the processes and controls of each agency to identify risks, needed improvements, and deficiencies. If findings or management comments are issued, each agency will be required to participate in a corrective action plan to address the issues. Frequency is annual and follows the state fiscal year (July 1- June 30). b. The frequency of each risk assessment. Describe: Random Sample child eligibility audits- Frequency is annual and follows the state fiscal year (July 1- June 30). 1. Referral-Based Identification- This is competed as needed throughout the year and based on the receipt and evaluation of the referral. 2. Random Sample- Frequency is annual and follows the state fiscal year (July 1- June 30). 3. Data Analytics and Screening- Frequency is no less then annual and follows the calendar year. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: If concerns or issues arise, each agency has to make a formal response to the findings and issue a corrective action plan. OBM will review the plan and then follow up quarterly until the issues are resolved and closed. The agency will have to undertake process improvement and update internal policy and process to more effectively resolve issues. Based on reviews and outcomes of direct referrals, the annual random sample, and data analytics and screening, DCY is able to identify policy, system, training, and technical assistance needs that help drive priorities to reduce risks. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: The Office of Budget and Management (OBM) will review our process at least twice in two phases: First, as closed out in previous state fiscal year audits OBM will review and follow up with all findings and the implementation and progress of the Corrective Action Plan (CAP). Second, in each new state fiscal year audit, prior issues are reexamined to make sure the corrective follow-up was successfully implemented. DCY will review processes no less then semi-annually to determine effectiveness and annual outcomes. e. Other. Describe: NA 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 State is responsible for ensuring county agencies are trained on CCDF program requirements as a result of being state- supervised and locally administered. Training is conducted via monthly virtual meetings, tip sheets, and specialized training when topics are too big for the monthly meetings. There is also new worker training conducted for new team members. ii. Describe how staff training is evaluated for effectiveness: Training effectiveness is determined by quality control reviews where cases are reviewed from application submission to determination, licensing reviews and consistent non compliances, monthly data reviews such as county by county reports to see trends and when changes are occurring or how similar sized counties are realizing changes, but training effectiveness is also evaluated based on and call center questions both from parents, caregivers and county agencies. Common questions or high call volumes also lead to additional trainings or guidance. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: Program integrity data and risk assessments are shared with the DCY Senior team. The DCY Senior team then determines which area is best to lead the necessary follow-up discussions to ensure all DCY parties are updated on findings. Depending on the finding or concern this could be led by fiscal, policy or the systems teams. Once the lead area is determined it is their responsibility to prepare a training, tip sheet, or guidance document to ensure the entire team and any partners are notified of the clarification or changes that must be implemented to ensure compliance or increased efficiency. 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 professionals that wish to be licensed as a child care center, family child care home provider and those whose wish to become certified as an in-home aide provider or approved as an ODJFS day camp to complete a pre-licensing/pre-certification web-based training located in the Ohio Professional Registry. Each of these trainings that must be completed prior to applying for licensure or certification, applicants must complete a module that covers publicly funded child care requirements and responsibilities. Requirements and responsibilities include but are not limited to cooperation with program integrity inquires and investigations. In addition, all the trainings discuss in detail that each type of provider must sign a provider agreement to receive CCDF. The provider agreement is available on our public website to view prior to signing. ii. Describe how provider training is evaluated for effectiveness: The lead agency reviews trainings annually and as needing per regulation changes to ensure updates are completed and the content is accurate. The agency works together with others bureaus to collect feedback on trainings by keeping a consistency log for considerations on how to assess what changed need to be made. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: DCY audits provider records by identifying providers through data analytics. Reviews include comparing required attendance documentation to billing records. Additionally, reviews of eligibility records are conducted -monthly. The following elements are reviewed: application/redetermination, qualifying head of household, residency, parental work/training status, qualifying child, qualifying care, qualifying care and provider arrangement, income requirements, and payment. Policy is copied on all error correspondence to the county agency. This is to ensure that overpayments are pursued, and statewide training can be developed based on error trends. 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: Error rate results are reviewed at the DCY Division level and then escalated with the DCY Senior Leadership level which includes the leads for Fiscal, Policy, and Systems. The results are then assessed and evaluated to determine if they are a cause of team members not understanding the policy or practice, the system not supporting or safeguarding against the error, or lack of guidance in the area that created confusion. Once a cause is determined next steps for a fix or safeguard are determined. Once the next steps are determined the return on investment is evaluated to prioritize or determine if action is warranted. 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: Audit results are reviewed by the Deputy Director responsible for all Department Audits and findings and risks are then escalated to the DCY Senior Leadership level which includes the leads for Fiscal, Policy, and Systems. The results are then assessed evaluated to determine if they are a cause of team members not understanding the policy or practice, the system not supporting or safeguarding against the error, or lack of guidance in the area that created confusion. Once a cause is determined next steps for a fix or safeguard are determined. Once next steps are determined the return on investment is evaluated to prioritize or determine if action is warranted. 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: NA 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. As a new Department DCY has taken the opportunity to evaluate and transition the previous internal controls for the CCDF program while also learning from the other programs transitioning as to how additional safeguards and monitoring can be put in place. This transition has also allowed for new team members to evaluate and review processes and activities and ask new questions with fresh perspectives. Additionally, DCY has already engaged with the Office of Budget and Management on a consultation basis to ensure all necessary best practices are in place from day one and continue evaluation will be conducted as processes reach first and ongoing milestones. b. [ ] Yes. If yes, what were the indicators? How did you use the information to strengthen your internal controls?