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: CDD’s organizational structure consists of six-person CCFAP unit to ensure the oversight and implementation of effective internal controls for the purpose of promoting and supporting program integrity and accountability. There is a benefits administrator, two program integrity specialists, two grant monitors and one payments position. The benefits administrator oversees the program and all its functions. The program integrity specialists conduct program integrity investigations of families and child care providers to determine compliance with the program. They are also responsible for identifying error-prone policies, procedures, and case situations and recommending corrective action to reduce/eliminate eligibility and payment errors. The two grant monitors visit and audit the case files of the CCCSAs eligibility specialists and provide technical assistance along with training on topics related to program compliance. During the case file audits, the grant monitors have the opportunity to refer any questionable cases to the program integrity team for investigation. The payments position is the connection between the program and the state’s business office and the contact for all questions related to the issuance of payments. They also initiate manual recoupments and assist providers with adjusting or submitting claims as needed. Outside of the CCFAP unit, the Data unit synthesizes data from CDDIS to inform program integrity and accountability. All payments are made in partnership with the DCF Business Office and follow statewide policies set by Vermont's Agency of Administration. The Lead Agency operates within guidance and oversight from the State of Vermont Agency of Administration, Department of Finance and Management, and Department of Buildings and General Services ￿ Office of Purchasing and Contracting. All agreements are subject to State of Vermont Administrative Bulletin 3.5 Procurement and Contracting Procedures and Bulletin 5 Policy for Grant Issuance and Monitoring. Where applicable, all agreements are subject to all in- effect Administrative Bulletins, Finance and Management Policies, Grant Guidelines and Procedures, Secretary’s Directive Memos, and Internal Control Standards based on the COSO model. Individual agreements include a clear statement of work, program administration and evaluation, and payment provisions including a schedule of program and financial reporting requirements. Grant agreements also include a monitoring plan establishing expectation of desk reviews and internal audits. 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 Vermont pays child care providers directly on behalf of eligible families. Providers submit attendance in two-week intervals called service periods. Attendance may be submitted immediately after the end of the service period. Attendance reports serve as invoices. All invoices submitted each week by Wednesday at noon are processed on Thursday with checks issued on Friday. Payments are processed every week to pick up any late payments submitted by providers or adjustments to previous service periods. Providers have sixty (60) days to submit invoices. In exceptional circumstances, the payments position in the CCFAP unit will assist with entering attendance that falls outside of the sixty (60) day period. Each provider payment goes through a two-step approval process. During this process 10-15% of the total number of invoices submitted receive a secondary screening of authorized child care hours versus attendance hours submitted. Providers are contacted if the hours, coded days, or payment amount does not look accurate or if the provider submitted for the incorrect service period. CCFAP has eleven (11) contracts with CCCSAs to provide child care eligibility and referral services. Contract invoices are submitted on a quarterly basis and reviewed for expenditures prior to approval. Budget to actual is verified and grantees, upon request, must produce source documents supporting the use of funds. An invoice is rejected if any issues are found during processing. The CCCSA must then correct the issue and submit a new invoice. Agreements are also subject to the state procurement process to ensure suppliers have equal access and opportunity to compete for programs funded by CCDF funds. The Agency of Human Services provides fiscal oversight via an approved Federal Cost Allocation Plan. The Cost Allocation Plan identifies, accumulates, and distributes allowable direct and indirect costs to cost objectives, and identifies the allocation methods used for distribution to cost objectives, based on relative benefits received. A separation of duties is maintained between program staff and business office/fiscal staff. These teams work collaborative to ensure the chart of accounts and accounting practices are sufficient to meet cost allocation and reporting requirements. The chart of accounts is maintained with sensitivity to ACF-696 financial reporting guidance, the approved State Plan, and Guidance for Federal Financial Assistance. 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: CDD uses a web-based, centralized integrated data system that includes a rules engine for the determination of eligibility for CCFAP. This use of an automated attendance reporting and payment system, CCDIS, simplifies attendance reporting and significantly reduces time between provider reporting and payment. CCDF funded programs include financial reporting and monitoring with oversight by CDD. The Agency of Human Services provides fiscal oversight via an approved Federal Cost Allocation Plan. Program staff and business office/fiscal staff work collaboratively to maintain the integrity of the approved cost allocation plan and accounting data as it becomes available throughout the year. A Cost Allocation Plan process is conducted formally every quarter to support all reporting and cash draw activity of the active/relevant periods. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: There are three federal funding sources for allowable costs in this program based on cost categories in the federal report. The federal claim is calculated via the preparation of the ACF-696 report. Report Compilation Process: The DCF Cost Allocation Plan ("CAP") results are the basis for the quarterly CCDF federal claims. The CAP is inclusive of all gross eligible administrative and programmatic costs incurred during the quarter and allocates those costs to their benefitting objectives based on specified allocation methods for each cost pool. Additionally, the CAP is inclusive of administrative and indirect costs DCF is assessed by both the State of Vermont, referred to as State Wide Indirect Cost Allocation Plan ("SWICAP"), and by AHS' Central office for activities performed on behalf of DCF. The federal report automatically calculates the federal share of claims when gross claims are entered. Control A: The ACF-696 is prepared by the Financial Administrator III/Financial Manager I. Preparation includes compiling the report in an Excel workbook using the results of the quarterly CAP provided by DCF, reviewing formulas and links within the workbook for accuracy, and updating the quarterly estimate calculation. Once the report is compiled, the Financial Administrator II enters the results into the Grant Solutions ("OLDC") reporting system to be reviewed concurrently with the Excel workbook. The OLDC system is password protected and is maintained by the Federal Administration for Children and Families ("ACF"). Control B: The Financial Manager III/Financial Director II reviews the ACF-696 Excel workbook to ensure that the CAP results provided by DCF are being claimed on the appropriate lines of the federal report. Any questions about the CAP results are discussed with DCF staff and any necessary updates are made accordingly. Control C: The Financial Manager III/Financial Director II verifies the data entry in the OLDC system to ensure it matches the prepared and reviewed Excel workbook. Any needed revisions are made by the Financial Administrator II prior to the Financial Manager III certifying and submitting the report in the OLDC system. Note: In the event that the Financial Administrator III, Financial Manager II, Financial Manager III are unable to perform the above outlined roles, the responsibilities shift to include the Financial Director IV so that there is always a separation of duties between the preparation and review/certification/submission of the report. d. Other. Describe: N/A 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: AHS supervises the administration of this State Plan. Where AHS supervises the administration of this State Plan, there are adequate methods for assuring compliance with the requirements of the plan by local agencies and/or services contractors. AHS utilizes such methods of administration as are necessary for the proper and efficient administration of the plan. AHS' uniform administrative requirements and cost principles are in compliance with the relevant provisions of 45 CFR Part 75, except where these provisions are superseded by statute or program regulations. With regards to the provision of any services included in this plan to individuals or groups of individuals, AHS has established in writing and will maintain policies and procedures for the provision of such services. These policies shall include a description of the scope and nature of each service and the procedures and conditions under which each such services are to be provided, including criteria for establishment of fee schedule or contributions, if applicable. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: AHS maintains sufficient fiscal control and accounting procedures to assure proper disbursement of and accounting for federal funds paid under this plan. Payments are disbursed from the State to subrecipients according to provisions set forth in the payment provisions attachment of the grant agreement. A grantee submits Financial Reports and Request for Reimbursement invoices to the program manager for review and initial approval. Issues or discrepancies identified during reviewed are followed up with the grantee for resolution. After review and approval the invoices are submitted to the DCF business office for final compliance review, processing, and payment. Grantees are required to submit program reports and performance measure reports on a regular basis, as determined by the provisions within the signed grant agreement, which are also reviewed by the program manager. Single Audit Requirement: Included in the grant application as well as grant requirements is requirement for grantees to complete the Subrecipient Annual Report within 45 days after its fiscal year end. Grantees that receive more than $750,000 in total for all federal funding are required a Single Audit. Annual audit reports that are maintained in the program grant files. Findings from the audit are shared with the subrecipient, and corrective actions are requested if necessary. c. How the results inform implementation. Describe: AHS monitors spending along with all the other funds available and tries to best utilize the monies where we can get the most from them. This consists of tracking, forecasting and redistributing funds where it is most appropriate. d. Other. Describe: N/A 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: All grantees undergo a risk assessment prior to authorization of a new grant or contract. 1. What type of accounting system do you use: automated, manual or combination? 2. Does your organization have an accounting system that allows you to completely and accurately track the receipt and disbursements of funds related to the award? 3. Does your organization maintain policies which include procedures for assuring compliance with the terms of the award? 4. Does your organization have a system in place that will account for 100% of each employee's time, including 100% of each employee’s time associated with this award? 5. Did your organization have one or more audit findings in your last single audit regarding program non-compliance? 6. Did your organization have one or more audit findings in your last single audit regarding significant internal control deficiency? The assessment includes a review of performance measure compliance. These performance measures include improper payments percentages and eligibility determination requirements. Fund accountability and agency audit practices are also assessed. All CCDF funded programs are subject to the state procurement process, include performance measures, financial and programmatic monitoring, and reporting requirements. The CCCSA processes are monitored through the following processes: Performance based agreements specifying the quality and accuracy of eligibility determination activities required by the CDD. Data is pulled from case reviews and CDDIS to determine if performance measures are met Regular on-site monitoring to ensure compliance with regulations and quality assurance including individual case reviews by CDD CCFAP Grant Monitors Regular on-site technical assistance from CDD CCFAP Grant Monitors Grant managers are responsible for oversight and monitoring of CCDF funded programs with regular supervision from CDD management. For families, risk is identified through regular case file assessments by the Grant Monitors and program integrity inquiries. All program integrity inquiries are investigated to determine if there is risk in CCDF programming. Eligibility specialists are trained in identifying risk when processing applications and how to submit program integrity inquiries to the Lead Agency. For families with ongoing or past program integrity concerns, a red flag can be entered in the Child Development Division Information System (CDDIS) to alert internal users of previous investigations and if further verification is needed to process a current application. For providers, risk is identified by reviewing provider claim records and through program integrity inquiries. All program integrity inquiries are investigated to determine if there is risk in CCDF programming. Eligibility specialists are trained in identifying risk related to provider claim records and how to submit program integrity inquiries to the Lead Agency. For providers with ongoing or past program integrity concerns, a red flag can be entered in the Child Development Division Information System (CDDIS) to alert internal users of past violations to assess if the provider is at risk of future program violations. b. The frequency of each risk assessment. Describe: All grantees undergo a risk assessment prior to the execution of a new grant or contract, at least every five years. The assessment includes a review of performance measure compliance. These performance measures include improper payment percentages and eligibility determination requirements. Fund accountability and agency audit practices are also assessed. Each month, at least 100 claims are reviewed by program integrity staff to assess risk of improper payments. Program integrity inquiries are reviewed as they are received. Between January and June 2024, 52 program integrity inquiries were received and investigated. Of these 52 inquiries, 46 were regarding family applications and 6 were regarding provider claims. As a result of these inquiries, 2 families were found to have intentionally violated program rules and had repayments for overpayments of $14,456 arranged. Between January and June 2024, the regular review of claims and program integrity inquiries resulted in technical assistance being provided to 22 providers either in person, via email, or over the telephone. Between January and June 2024, 243 case file assessments were completed statewide. These case file assessments identified 15 applications with eligibility determination errors. Ongoing, 2-3 case file assessments are completed per month for each of the 12 Community Child Care Support Agency locations. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: CDD reviews performance measure outcomes and the accompanying narratives on the bi-annual data reports from grantees. The results of the data reports are used to inform training or technical assistance needs at a statewide and agency level. The statewide case file assessments are completed to identify error prone policies, along with training needs for child care providers and eligibility specialists. Between January and June 2024, most of the 15 eligibility determination errors were a result of improper income calculations. The identification of these common errors lead to a virtual training on income calculation and helped identify policy improvements. Common errors in claim submission, such as improper usage of attendance codes and requirements for accurate billing, have been incorporated into the CCFAP Program Integrity training for providers. Ongoing, the data from risk assessments will be used to identify updates in the training material and technical assistance needs. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: Data is compared from earlier risk assessments to determine if the current risk assessment is accurately measuring areas of potential risk or if there have been any changes to the level of risk, including case file assessment data and program integrity inquiries. The Lead Agency’s process for risk assessment is successfully identifying overpayments as a result of both intentional and unintentional program violations from parents and providers. Since July 2022, $381,500.61 has been recouped for both intentional and unintentional program violations. e. Other. Describe: N/A 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: Several opportunities are provided to ensure all staff administering the CCDF program are informed and trained on program requirements and integrity. Lunch and Learn trainings on relevant topics are offered virtually, statewide and regional meetings are held where policies and procedures are reviewed, a SharePoint page is available to access resources relevant to CCFAP. All CDD CCFAP staff and eligibility specialists are trained on eligibility policies and procedures. During this training, identification of fraud and potential program violations are reviewed. In addition, each CCFAP staff member is trained on and is actively involved with the state and federal audit process to ensure a complete understating of program integrity. Eligibility for Child Care Financial Assistance occurs at eleven (11) community child care support agencies (CCCSA) in 12 regions. Each CCCSA has available to them on the CCFAP website and SharePoint page all policies and procedures related to the CCFAP. When an Eligibility Specialists is hired by an agency, they receive one-on-one training by the State of Vermont Grant Monitors on the policies and procedures and the use of CDDIS to determine eligibility. To ensure program integrity all new staff eligibility determinations are monitored for a period of three (3) months. ii. Describe how staff training is evaluated for effectiveness: Case file assessments, error rate, other state audits all evaluate the effectiveness of staff training. When any of these methods are showing indicators that an area needs more training, CDD makes a plan for further training and monitoring. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: Data is compiled from case file assessments to identify common areas that are more prone to errors and training on those errors is included in an upcoming meeting for eligibility specialists. The most recent error rate review resulted in a training for eligibility specialists in September 2023 to review the related policies. 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: Training materials are on the CDD Website. The link to the CCFAP for Providers webpage is sent to new child care providers. This website contains several power point presentations on invoicing, adjustments, entering attendance along with other topics relevant to proper invoice submission and use of the CDDIS database. In addition, policy change notices that affect invoice processing, entering attendance or contain information on billing issues are emailed directly to on-line providers and mailed to paper providers. Links are provided for additional information or assistance. CDD issues policy changes and notices as necessary to ensure staff and those who administer programs funded by CCDF are informed of program requirements. Technical assistance is provided by Quality Control/ Program Integrity staff, the CDDIS Help Desk, and the Administrative Services Coordinator who helps providers with claims questions and concerns. The Lead Agency received a notice of non-compliance on 3/11/2024 regarding the lack of training for child care providers on program integrity. Program Integrity is in the process of creating a training for providers on program integrity, proper billing practices, and responsibilities of providers that participate in the Child Care Financial Assistance Program. The training is a Power Point slide presentation and will be available on the CDD website in October 2024. ii. Describe how provider training is evaluated for effectiveness: Common areas of provider errors are evaluated to help inform training material updates. Program Integrity staff review 10-15% of claims to identify errors every week where provide training is evaluated based on claims having notable errors. If errors are found, the provider is contacted and provided technical assistance. Trends in questions that come into the CDDIS Help Desk, Eligibility Specialists, and Administrative Services Coordinator are taken into consideration when evaluating provider training to identify any gaps in training materials with updates made to materials as needed. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: If issues are detected in the 10-15% of claims review, Program Integrity will make a site visit to the provider to gather more information and provide technical assistance. Program Integrity follows up on all technical assistance provided to ensure that providers are in compliance and have noted a 100% compliance rate following technical assistance. 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 review triennial results are shared with Eligibility Specialists and CDD staff who provide training, technical assistance, and quality control oversight This information is used to detect errors that could be indicative of consistent errors in a particular error. CDD uses this information to identify policies and procedures that need to be clarified and/or reviewed. 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 shared with Eligibility Specialists and CDD staff who provide training, technical assistance, and quality control oversight. This information is used to detect errors that could be indicative of consistent errors in a particular error. CDD uses this information to identify policies and procedures that need to be clarified and/or reviewed. 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 CCFAP unit contains a Quality Control Unit/ Program Integrity staff which consists of a Quality Control Specialist and a Senior Quality Control Specialist. The job duties of these positions include identifying error prone policies, procedures, and case situations, and recommending corrective action to reduce/eliminate eligibility and payment errors. In addition, the Quality Control Specialist and Senior Quality Control Specialist evaluate department compliance in specific operational areas relating to program administration and consults with supervisory and management personnel on error findings and operational deficiencies. 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 most recent OCC Monitoring revealed a finding regarding the lack of training for child care providers on program integrity and requirements. The Quality Control unit will be creating a training this fiscal year for providers around program integrity and requirements, including proper billing practices, use of CDDIS for entering attendance and submitting claims along with reviewing the responsibilities of providers that participate in CCFAP.