DEPARTMENT OF CHILDREN AND FAMILY SERVICES
FINANCIAL AND COMPLIANCE AUDIT
Summary of Findings:
WILLIAM G. HOLLAND
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DEPARTMENT OF CHILDREN AND FAMILY SERVICES
FINANCIAL AND COMPLIANCE AUDIT
For The Two Years Ended June 30, 1998
|SELECTED ACTIVITY MEASURES||
- Foster care
During Audit Period: Mr. Jess McDonald
All child abuse and neglect reports not timely investigated
All child abuse and neglect investigations not timely completed
Number of overdue investigations has increased in recent years
Checks not deposited timely
Documentation for expenditures missing
Minority adoptive and foster family plan not written
Staff not receiving required training
Child welfare files missing required documentation
Repayment not received for loans made to individuals
Critical computer systems must be made Year 2000 compliant
Annual inventories not performed
Reimbursements from contractor not deposited timely and contract maximums exceeded
Purchases not properly reported
Deposits to State Treasury not timely
Performance of internal audits could improve operations
Our 1998 audit of the Department is presented in two volumes. Volume I contains the findings, recommendations, and agency responses. Volume II contains the agency's financial statements.
FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
24 HOUR INVESTIGATIONS
The Department did not initiate an investigation of every child abuse and neglect case within 24 hours of receipt of the report as required by the Abused and Neglected Child Reporting Act. Department statistics indicate the following noncompliance:
Percent of Reports
Failure to respond to a report of abuse or neglect within 24 hours is a violation of the Act and could result in further endangerment of the child. (Finding 98-9, pages 37-39)
We recommended the Department initiate investigations of all child abuse and neglect reports within 24 hours of receiving the report as mandated by State law.
Department officials responded it is their objective to initiate all investigations within 24 hours and they agree that any level of non-compliance is reason for concern. Department managers have reviewed the files for non-compliant cases and have provided the following reasons for cases to be listed as out of compliance: data entry errors, children were out of state, staff responsible were non-specialized staff working after hours, problems transmitting information to the field, worker error, and workload issues. Department officials said they will conduct a Quality Assurance audit of the non-compliance issue this fiscal year. They are working to maximize staff levels and will consider a failure in this area to warrant disciplinary action.
OVERDUE CHILD ABUSE/NEGLECT INVESTIGATIONS
Reports of child abuse and neglect were not always determined within 60 days as required by the Abused and Neglected Child Reporting Act. The Act states the Department shall determine, within 60 days, whether a report is "unfounded" or "indicated" and provides that the Department may extend the period up to an additional 30 days for good cause. Department statistics indicate the following noncompliance:
Failure to make a determination of a report within 60 days is a violation of the Act, could delay the implementation of a service plan and could result in further endangerment of the child. (Finding 98-10, pages 40-42)
We recommended the Department determine reports of child abuse or neglect within 60 days as mandated by State law.
Department officials agreed that all investigations should be completed within 60 days, unless extensions for good cause are granted. They provided the following reasons for investigations being overdue: clerical errors, supervisory vacancies, absences due to training, staff shortages, and poor staff performance. Department officials agreed that non-compliance in this area is critical and the current number of overdue reports is decreasing rapidly.
INADEQUATE CONTROLS OVER LOCAL ACCOUNTS
The Department did not deposit checks received for the Children's Trust Fund on a timely basis. We selected 26 checks for testing and noted the checks were held from 12 days to 175 days before deposit. The check held for 175 days was in the amount of $204,528. These funds are not earning interest while the checks are sitting in the agency and there is the risk of potential loss due to theft or misplacement. (Finding 98-4, page 27)
In addition, expenditures from the Children's Benefit Fund lacked proper documentation to support the Fund's expenditures. We selected 10 checks written in Fiscal Years 1997 and 1998 for examination and found supporting documentation for five of the checks was not complete. The Fund's checks are issued to individuals who purchase goods or services for the benefit of the children and the purchaser is responsible for obtaining receipts for the expenditures. The five checks for which receipts were not available totaled $3,554. (Finding 98-5, page 28)
We recommended that Children's Trust Fund receipts be deposited on a daily basis and that individuals entrusted with Children's Benefit Fund checks be required to support such expenditures with receipts.
Department officials agreed with the recommendations, but noted that daily deposit of Children's Trust Fund receipts was not possible.
LACK OF REQUIRED PLAN FOR RECRUITING, PLACING AND TRAINING MINORITY ADOPTIVE AND FOSTER FAMILIES
The Department has no written plan for recruiting, placing and training minority adoptive and foster families. The Children and Family Services Act requires the Department to "develop and implement a written plan for placing children" which shall include a plan for recruiting, placing and training minority adoptive and foster families. Approximately 75 - 80% of foster care children are African-American.
We recommended that the Department implement a written placement plan as required by statute or pursue legislation to have the mandate rescinded. (Finding 98-23, page 61)
The Department agreed with the finding and stated that it will convert 6 regional recruitment plans into one plan. According to the Department, each of the individual regional recruitment plans have targeted recruitment of African American homes.
LACK OF TRAINING FOR CHILD PROTECTIVE INVESTIGATORS AND CHILD WELFARE SPECIALISTS
The Department did not follow requirements for employing and training certified child protective investigators and child welfare specialists. By law, the Department is required to maintain a continuous in-service staff development and evaluation system. In our testing of 19 employees, we found 9 had less than 20 hours of in-service training for the two-year certification period.
We recommended the Department implement a system to ensure that employees hired have the appropriate educational requirements and that they receive appropriate training after hiring. (Finding 98-24, page 62)
The Department agreed with our recommendation and indicated that it has taken actions to ensure that staff receive the required training.
DOCUMENTATION MISSING FROM CHILD WELFARE FILES
Child welfare files lacked documentation required under federal and state laws. Of 50 files selected for testing, 10 lacked a current service plan or had untimely initial service plans, 9 were missing court orders and 2 were missing administrative case reviews. In addition, 4 files could not be found at the field office.
The Child Welfare Program received almost $12 million in FY98. Failure to comply with federal requirements could result in sanctions from the granting federal agency resulting in loss of federal funding.
We recommended that the Department follow provisions of the law in providing services for children and in documenting what services have been provided. We further recommended that enforcement of Department procedures be strengthened to ensure files contain all required documentation. (Finding 98-6, page 29)
The Department disagreed with the finding, noting that its review of the case files cited by the auditors noted only 5 exceptions. The auditors responded that the Department's review took place almost 4 months after the auditors' review and required documentation was still missing.
REPAYMENT PROVISIONS OF LOAN AGREEMENTS NOT STRICTLY ENFORCED
The Department is not strictly enforcing agreements with individuals who obtained loans from the Family Reunification Fund.
Of 12 transactions sampled, all persons obtaining a loan had signed a form committing to a monthly loan repayment amount or a time donation to community service. However, 10 of the 12 individuals made no form of repayment. In total, the Department disbursed approximately $30,350 in FY97 and $35,700 in FY98, of which $700 and $3,500 was repaid, respectively. Without loan repayments or additional donations to replenish the fund, other families are unable to receive assistance. (Finding 98-15, page 48)
We recommended the Department strictly enforce the conditions of signed loan agreements. The Department agreed with our recommendation and stated that it will continue to take steps to get repayment or document community service.
YEAR 2000 EFFORTS COULD BE IMPROVED
The Department's efforts to define and correct impending computer problems due to the impact of the Year 2000 were not fully adequate.
The Department's Y2K Coordinator has developed a compliance plan and master project timetable, but the required systems changes were not scheduled to be completed until late in 1999. In addition, the amount of work to be completed is great. Since the Department uses computer systems to process information to meet its mandates and objectives, addressing the technical issues surrounding the millennium is important. It is imperative that the Department meet its Y2K goals in order to ensure the continuous operation of critical systems. As of September 30, 1998, the Department self-reported that it was only 30% complete in bringing its critical systems into compliance. (Finding 98-8, pages 35-36)
Department officials agreed and responded they are actively remediating 40 mission critical applications that support the child welfare functional areas. They plan to have the critical financial systems completed in May, 1999 and the remaining critical systems completed in September, 1999. The response indicates contingency plans are being developed and the entities licensed by the Department are being alerted of potential Y2K problems.
WEAKNESSES IN MANAGEMENT PRACTICES
During the course of our audit we performed tests of transactions and evaluated the Department's management practices. The following areas were noted as needing improvements:
Annual property inventories were not performed for Fiscal Year 1998 or 1997. In addition, the Department did not maintain a property control log or an Additions and Deletions Register for Fiscal Year 1998. Our tests revealed items that could not be located, items missing inventory tags, items not included on the inventory listing, and items located at addresses different than on the inventory listing. (Finding 98-2, pages 24-25)
The Department allowed its largest institutional service provider to reconcile the payments under its contracts and determine if the Department owes or is owed money. The Department had 24 contracts totaling approximately $49.2 million with this provider in 1998 and 24 contracts totaling $48.2 million in 1997. An overpayment refund of $479,000 was received on June 11, 1998 but not deposited until July 6, 1998, although it should have been deposited within 24 hours. Additionally, the Department allowed the provider to claim reimbursements in excess of maximums obligated in the contracts. The excess totaling approximately $259,313 was paid by offsetting other contracts for which the maximum amount was not reached. This procedure was only done for this provider. (Finding 98-1, pages 22-23)
During our review of leases and installment purchases, we discovered two new installment purchases of EDP equipment and 3 terminations of existing installment purchases that were not reported to the State Comptroller. As a result, a $57,000 adjustment to the financial statements was necessary. (Finding 98-3, page 26)
State Treasury Deposits
Receipts and refunds received by the Department were not always deposited into the State Treasury within the time periods required by State statute. Of the 192 receipts and refunds examined, 39 receipts, ranging from $42 to $800,000, and 18 refunds, ranging from $122 to $888,291 were deposited from 3 to 28 days late. The Department had even been granted deposit extensions by the State Comptroller. Untimely deposits increase the chances that such receipts could be misplaced or misappropriated. (Finding 98-12, pages 44-45)
Prudent business practices require that agency fiscal procedures be appropriately managed to ensure accountability and the safekeeping of State funds.
Department officials agreed with each of these findings and stated they will take steps necessary to correct the weaknesses.
INSUFFICIENT INTERNAL AUDITS
The Office of Internal Audits did not audit all of the Department's major systems of internal administrative and accounting controls during Fiscal Year 1998 and 1997 as required by the Fiscal Control and Internal Auditing Act. Of the eighteen internal audits planned, only four were completed. According to Department personnel, the Office of Internal Audits was unable to perform most of the planned audits because the Office was assigned special projects by management, and also due to staffing deficiencies. The completion of internal audits would provide recommendations which could result in cost savings, improved internal controls, increased operating efficiency and increased program effectiveness. (Finding 98-13, page 46) This finding has been repeated since 1986.
Additionally, the auditors found that the chief internal auditor was not free of all operational duties as required by the Act. An internal audit function free of operational duties would allow the Department to identify and correct internal control and other deficiencies in a more timely manner. (Finding 98-14, page 47)
We recommended additional resources be allocated to the Department's Office of Internal Audits so that it will be allowed to function in accordance with all provisions of the Fiscal Control and Internal Auditing Act.
Department officials agreed with our recommendations and stated adequate resources are being allocated. They said internal audit positions are posted and they are soliciting applications and that operational duties will be assigned to other units. (For previous Agency responses, see Digest Footnote #1.)
The remaining findings are being addressed by the Department. We will review progress toward the implementation of our recommendations in our next audit.
Mr. Jess McDonald, Director of the Department, provided the agency's responses.
Our auditors stated the Department's June 30, 1998 and June 30, 1997 financial statements are fairly presented.
1. INSUFFICIENT INTERNAL AUDITS - Previous Agency Responses
1996: The Department agrees with the finding and will implement the recommendation. A plan to audit all major systems will be developed. Moreover, the OIA has hired two (2) new Internal Auditors to primarily perform EDP audits. This will enhance the Department's ability to perform additional internal audits in order to comply with the Fiscal Control and Internal Auditing Act (FCIAA).
1994: Accepted and in the process of implementation.
1992: The Department agrees with the finding and partly agrees with the recommendation.
The Office of Internal Audits is functioning in accordance with the provisions of the Fiscal Control and Internal Auditing Act. The Department will keep special projects to a minimum.
1990: The Department agrees with the Finding and is studying the Recommendation.
The Office of Audits was reduced by five (5) positions during the Fiscal 1982 and 1983 layoffs and by one (1) position in a 1987 layoff. Due to tight State revenues and in spite of increasing responsibilities, the Office of Audits has never been restaffed to the Fiscal 1982 headcount.
The Department continues to study internal responsibilities of the Office of Audits. The results of these internal studies could reallocate some of the Office of Audits' responsibilities to other monitoring units and, thus, help to bring it into compliance with the Act.
1988: The Department agrees with the finding and is studying the recommendation.
The Office of Audits was reduced five positions during the fiscal 1982 and 1983 layoffs. As cited before, in the response for finding #17, due to tight State revenues and the ever-increasing children's needs, the Office of Audits has never been restaffed to the fiscal 1982 headcount.
The Department continues to study the internal responsibilities of the Office of Audits. The results of these internal studies could reallocate some of the Office of Audits' responsibilities to other monitoring units and, thus, help to bring it into compliance with the Act.
1986: The Department agrees with the finding and is studying the recommendation.
The Office of Audits was reduced five (5) positions during the fiscal 1982 and 1983 layoffs. As cited before, in Response #17, due to tight State revenues and the ever-increasing children's' needs, the Office of Audits has never been restaffed to the fiscal 1982 headcount.
The Department has begun internal studies which could reallocate some of the Office of Audits' responsibilities to other monitoring units and, thus, bring it into compliance with the "Act".