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 West Virginia Department of Human Services houses both the Division of Early Care and Education and the Division of Finance. Each Division has core functions for clear delineation of authority and responsibility. Each Division has specific duties within and between the two Divisions to ensure that no one individual is completing all steps in a single process. The Division of Early Care and Education makes budget recommendations and requests, based on analysis of statistical data. Those recommendations include subsidy certificate and quality initiatives costs. Leadership, including the WV DoHS Commissioners, Deputy Commissioners, Chief Financial Officer and Secretary have final authority to approve the recommendations. Duties of both Divisions are delegated. While the Division of Early Care and Education makes recommendations and summarizes anticipated costs, it is the Division of Finance that ensures recommendations and costs are in alignment to the budget. Through a system of checks and balances, and through face-to-face meetings and written correspondence (i.e. email) both Divisions discuss emerging fiscal issues and opportunities. The Department’s organizational structure is designed to ensure rigorous oversight and implementation of internal controls that bolster program integrity and accountability. The structure involves meetings between the CCDF Co-administrators, and applicable members of the finance team. In these meetings, they review case counts, cost trends, application guidelines, and spend-down reports, addressing any significant changes in caseloads or benefit amounts due to policy changes. The Department uses PATH (People’s Access to Help) system which prepare provider payments for processing which are initially input into the system by R&R staff from paper billing statements submitted by licensed and registered child care providers participating in the child care subsidy program. Designated financial staff review the payment reports for accuracy and makes final approval for payment once reviewed and verified. This layered review process ensures meticulous verification and accountability at each step. 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 WV DoHS has created a CCR&R monitoring system. Interview guides and processes were developed to evaluate services delivered by the agencies. During this process, the DoHS program and contract staff interview all CCR&R staff as well as some local DoHS staff, providers and recipients, and review case records, personnel, and financial files. Program staff monitor work flow and environment. If deficiencies exist, the state requests corrective action and then monitors to ensure corrective action was taken. The state has the option to issue a new competitive grant announcement if improvement does not occur. All six agencies have been reviewed in this manner. In addition, technical assistance staff review a sample of eligibility determinations on a quarterly basis and provide feedback to staff in the CCR&R. In addition, an annual audit is conducted to ensure that all CCDBG funds, not only those allotted to CCR&R functions, are dispersed in compliance with federal, state, and WV DoHS policies and regulations. Should a noncompliance issue arise, it is the responsibility of designated program staff to work directly with finance staff to determine next steps as allowable based on written policies and procedures. 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: The lead agency monitors reasonable and allowable costs through a three-tiered system. Grantee budgets are developed in conjunction with direction from lead agency program staff and grantees. These budgets are reviewed and approved at a Bureau level, before being forwarded for review at the State level. Once awarded, expenditures are reviewed monthly. c. Processes and procedures to prepare and submit required state and federal fiscal reporting. Describe: The necessary fiscal document is the ACF-696, Child Care and Development Fund Financial Report (OMB No 0970-0510), which replaces the SF-425, Federal Financial Report. The ACF-696 is required on a quarterly basis. It is compiled by the Office of Grants Management's Grant Administration and Reporting Division (GARD), a branch of the West Virginia Office of Shared Administration (OSA). A grants management accountant prepares the report, and the GARD Director reviews it to confirm that the reported numbers align with the working papers and the statewide accounting system (wvOASIS). Following the GARD Director's approval, the Office of Grants Management's Director or the Chief Budget Officer examines the report before it is sent to the OSA Chief Financial Officer for endorsement. d. Other. Describe: Not applicable. 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 Child Care Resource & Referral (CCR&R) supervisors are charged with monitoring and reviewing the payment process to expedite accurate and timely payments to providers. The Child Care Provider can submit the payment request and attendance verifications to the CCR&R, either in person or by mail. Upon receipt the payment request documents are reviewed by the CCR&R staff for accuracy of basic information, such as missing signatures, complete documentation of time and attendance, and inappropriate correction attempts (whiteout or correction tape). After submission the payment request is secondly reviewed for accuracy by the CCR&R case manager, based upon the case information in the Family and Childrens Tracking System (FACTS). The case manager then enters the payment data into the FACTS system for each child. The CCR&R supervisor then reviews each payment request then approves the request for payment. The full process has three basic steps at the CCR&R level prior to being forwarded to the payment level. The WV DoHS has created a CCR&R monitoring system. Interview guides and processes were developed to evaluate services delivered by the agencies. During this process, the DoHS program and contract staff interview all CCR&R staff as well as some local DoHS staff, providers and recipients, and review case records, personnel, and financial files. Program staff monitor work flow and environment. If deficiencies exist, the state requests corrective action and then monitors to ensure corrective action was taken. The state has the option to issue a new competitive grant announcement if improvement does not occur. All six agencies have been reviewed in this manner. In addition, technical assistance staff review a sample of eligibility determinations on a quarterly basis and provide feedback to staff in the CCR&R agencies. The lead agency monitors reasonable and allowable costs through a three-tiered system. Grantee budgets are developed in conjunction with direction from lead agency program staff and grantees. These budgets are reviewed and approved at a Bureau level, before being forwarded for review at the State level. Once awarded, expenditures are reviewed monthly. In addition, the lead agency expends and accounts for Federal awards in accordance with State laws and procedures for expending and accounting for the State's funds. All financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The state's financial management system provides for the following: Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. Records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Effective control over and accountability for all funds, property, and assets. The State safeguards assets and ensures they are used solely for authorized purposes. Comparison of expenditures with budget amounts for each Federal award. Written procedures to implement the requirements of 2 CFR 200.305 as related to Federal payments for States. Written procedures for determining the allowability of costs in accordance with 2 CFR 200 subpart E and the terms and conditions of the Federal award. b. How the Lead Agency measures and tracks results of their fiscal management practices. Describe: The Lead Agency tracks fiscal management practices through and annual Single Agency Audit. The audit reviews all programs and identifies areas of risk and concern. The Lead Agency measures the effectiveness of fiscal management through performance indicators such as expenditure rates, compliance with budget allocations, and audit results. Tools like expenditure tracking systems and monthly financial reporting are utilized to monitor these indicators closely. c. How the results inform implementation. Describe: Audit results inform corrective actions and policy development. d. Other. Describe: Not applicable 10.1.4 Identifying risk Describe the processes the Lead Agency uses to identify risk in the CCDF program including: a. Each process used by the Lead Agency to identify risk (including entities responsible for implementing each process). Describe: The Lead Agency contracts with an outside auditor to review programs annually. A series of checks and balances are employed across the Division of Finance to ensure budgets, procurement, accounting and grants/contracts units are all operating in coordination. The Division of Finance supplies regular spending updates to program staff to ensure program staff can assess the rate, accuracy and projections for spending. The WV DoHS and its applicable programs have the responsibility to monitor the activities of its Grantees as necessary to ensure the awards are used for authorized purposes and in compliance with laws, regulations, and the provisions of its grant agreements. More importantly, the DH, DHF, and DoHS have a responsibility to ensure adequate progress is being made toward achieving the programmatic goals and objectives established by the Federal government and the State of West Virginia. Requirement to Evaluate the Grantee’s Risk of Noncompliance When monitoring the activities of a Grantee and ensuring that adequate progress is being made toward achieving programmatic goals and objectives, or when planning for such monitoring activities, the Spending Unit must evaluate the Grantee’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate level of monitoring to apply to the award. The level of monitoring applied to a particular Grantee for an individual grant award can depend on multiple factors, such as the Grantee’s prior experience with the same or similar grant awards or programs; the Grantee’s prior experience with any type of grant award or program; the results of previous external audits or internal reviews, including but not limited to whether or not the Grantee receives a Single Audit in accordance with 2 CFR 200 Subpart F (￿Audit Requirements￿); and whether the Grantee has new personnel or new or substantially changed systems. When a Spending Unit considers such factors prior to awarding a grant or during the early stages of the grant, they are in essence evaluating the Grantee’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the grant award. If an evaluation of such factors proves that the Grantee’s risk of noncompliance is high, yet the award will still be made, special conditions corresponding to the degree of risk may be applied to the award. In other words, the Spending Unit may adjust or impose specific and additional award conditions upon a Grantee if the risk evaluation proves that such additional conditions are appropriate. Assigned program staff are responsible for conducting risk assessments through review of quarterly reports, completion of risk assessment documentation which includes grantees prior experience, ability to implement requirements effectively, results of previous audits, reviews, site visits, etc. In addition, risk assessments of the grantees management systems and standards is considered. Should any concerns be identified during the initial risk assessment process, additional award conditions may be established such as a need for additional project monitoring or establishing additional prior approvals. The Division of Early Care and Education conducts a formal on-site audit annually with each grantee to review case files, processes and procedures and other requirements as identified in the Statement of Work. Should any issue arise, a formal corrective action plan is given to the grantee which establishes corrections needing made, an offer of additional technical assistance and a timeline for correction. That corrective action plan and subsequent documentation demonstrating compliance are shared with applicable WV DoHS staff and become part of the formal record of the grantee. b. The frequency of each risk assessment. Describe: Dependent upon what type of assessment is occurring, risk assessments can be monthly, quarterly or annually. c. How the Lead Agency uses risk assessment results to inform program improvement. Describe: The outside auditor prepares a report that identifies areas of risk and areas for improvement. The Lead Agency Risk assessments are conducted with varying frequencies to ensure comprehensive oversight. Subsidy payment issuance is assessed prior to each payment run to ensure accuracy. In addition, expenditures are reviewed monthly by both the finance and program team to ensure appropriate spending. Quarterly reports from the child care resource and referral agencies are submitted quarterly and reviewed by program staff who determine trends and identify emerging issues. Issues that are identified are triggered by program staff to determine what type of training, written guidance or policy revision/clarification may be needed. This tiered approach ensures continuous monitoring and timely resolution of potential issues. d. How the Lead Agency knows that the risk assessment processes utilized are effective. Describe: The audit is performed annually, and the current year’s results are compared to the previous year to ensure improvement. e. Other. Describe: Not applicable. 10.1.5 Processes to train about CCDF requirements and program integrity Describe the processes the Lead Agency uses to train staff of the Lead Agency and other agencies engaged in the administration of CCDF, and child care providers about program requirements and integrity. a. Describe how the Lead Agency ensures that all staff who administer the CCDF program (including through MOUs, grants, and contracts) are informed and trained regarding program requirements and integrity. i. Describe the training provided to staff members around CCDF program requirements and program integrity: CCR&R staff receive regular training regarding Child Care Policy and Audit processes and procedures. This process allows for continued monitoring of field staff and providing updated information on systematic or procedural changes in the payment process ii. Describe how staff training is evaluated for effectiveness: The Lead Agency performs quality assurance audits of each CCR&R to ensure that workers understand policies and procedures and apply them properly in practice. Effectiveness of the training is evaluated for effectiveness through subsequent quality assurance audits. If there is a reduction in errors that the training was given to resolve, the training is deemed effective. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing staff training needs: CCR&R staff receive regular training regarding Child Care Policy and Audit processes and procedures. This process allows for continued monitoring of field staff and providing updated information on systematic or procedural changes in the payment process 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: CCR&R agencies provide training to child care providers on subsidy system rules and requirements. They also monitor compliance through client and provider subsidy compliance checks. ii. Describe how provider training is evaluated for effectiveness: Effectiveness of training is monitored through compliance checks of provider invoices. iii. Describe how the Lead Agency uses program integrity data (e.g., error rate results, risk assessment data) to inform ongoing provider training needs: The agency does not use error rate results for this purpose. No other program integrity data is used. 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 lead agency shares error rate review information with CCR&R agencies and members of local and state government. The agency reviews report results and uses those to assess how well policy and procedures are understood by workers. 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 lead agency shares quality assurance audit results with CCR&R agencies to ensure compliance with policies and procedures and to identify training needs. 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: Not applicable. 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? As with any state, the State of West Virginia has weaknesses in internal controls. Those weaknesses are identified within the WV Single Audit. The WV Single Audit for the Year Ended June 30, 2023 is here at https://finance.wv.gov/FARS/single%20audit/Documents/SingleAud23.pdf. For the findings related to CCDF, see 2023-042, 2023-043, 2023-044, and 2023-045. This information is used to create corrective action plans to address the findings and strengthen practices.