A Report on On-site Audits of Residential Child Care Providers
Report Number 12-050
All five providers audited did not consistently maintain adequate supporting
documentation to demonstrate that they accurately reported funds they expended
for providing 24-hour residential child care services. The providers receive
funds from the Department of Family and Protective Services (Department) for the
delivery of goods and services--such as therapy, food, shelter, and
clothing--that promote the mental and physical well-being of children placed in
the providers' care. Providers deliver those services through contracts with the
Department and report their revenue and expenditures on annual cost reports.
(See Appendix 4 for cost report requirements.)
Those five providers were:
- Simply Love All People, Inc. (see Chapter 1).
- Antelope Valley Child, Youth, and Family Services (see Chapter 2).
- Unity Children's Home (see Chapter 3).
- Carter's Kids, Inc. (see Chapter 4).
- Agape Manor Home (see Chapter 5).
All five providers' external accountants performed the majority of their
financial activities, which could include preparing the cost reports and
financial statements, processing payroll, and making vendor and/or foster parent
payments. Auditors identified internal control weaknesses at all five providers.
- Four providers lacked detailed written policies and procedures for key
- Three providers did not have adequate segregation of duties.
- All five providers did not conduct reviews of the financial information
prepared by the external accountants.
- Four providers created their general ledgers from bank statements instead
of financial transaction documents, such as revenue receipts, invoices, and
Auditors also identified instances of noncompliance with cost report and
background check requirements at all five providers audited. Two of the three
providers audited that are child placing agencies (Agape Manor Home and Antelope
Valley Child, Youth, and Family Services) generally paid their foster parents
the required amounts according to the children's level of care and days of
service; however, the remaining provider that was a child placing agency (Simply
Love All People, Inc.) did not have supporting documentation for a majority of
the foster parent payments tested. In addition, all three of those providers
should improve their documentation of and compliance with foster parent
Auditors also communicated less significant issues separately in writing to
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