A Performance Audit
An Audit Report on On-Site Financial Audits of Selected Residential Foster Care Contractors
October 2018
Summary Analysis
Three of the four residential child care contractors (providers) audited generally complied with cost reporting requirements for fiscal year 2017. Specifically, The Children’s Home of Lubbock and Family Service Agency, High Sky Children’s Ranch, and El Paso Center for Children accurately reported all or most of the expenditures tested on their cost reports.
The fourth provider audited, Willow Bend Center, had weaknesses in controls over its financial processes; as a result, Willow Bend Center reported errors in its cost report.
One of the two child placing agencies audited (High Sky Children’s Ranch) conducted quarterly supervisory visits as required; however, it did not adequately document the results of those visits. The other child placing agency (El Paso Center for Children) complied with foster home monitoring requirements.
All four providers generally complied with the Department of Family Protective Services background check requirements.
The provider did not always comply with cost reporting requirements. The provider had weaknesses in its controls over its financial processes; as a result, the provider did not always accurately report the funds it expended for providing 24-hour residential child care services for fiscal year 2017. The provider’s inadequate financial controls included (1) conflicts of interest within its governing body, (2) lack of segregation of duties, and (3) poorly designed approval processes for financial transactions. It should also strengthen its data backup processes.
The provider conducted background checks in accordance with Title 40, Texas Administrative Code, Chapter 745, for all employees, volunteers, and subcontractors who were in positions that provided access to children as of May 1, 2018.
The provider complied with the majority of cost reporting requirements, and it accurately reported the majority of funds it expended for providing 24-hour residential child care services for fiscal year 2017 on its cost report.
The provider conducted background checks as required for 103 (94 percent) of the 109 employees, volunteers, and subcontractors who were in positions that provided access to children as of May 1, 2018. However, the provider should improve its processes for conducting background checks to ensure that it obtains all checks within the timeframes required by Title 40, Texas Administrative Code, Chapter 745.
The provider generally complied with cost reporting requirements; however, it did not always accurately report the funds it expended for providing 24-hour residential child care services for fiscal year 2017.
The provider had documentation showing that it had conducted quarterly visits at each of 9 applicable foster homes tested as required. However, for 1 (25 percent) of the 4 applicable foster homes tested, the provider did not conduct at least 2 unannounced visits during the year as required. The provider also did not adequately document the results of those visits.
The provider conducted all required background checks for 214 (97 percent) of the 220 employees and foster parents families, including household members over the age of 14, frequent visitors, and other caregivers who were in positions that provided access to children as of May 1, 2018. However, the provider should improve its processes for conducting background checks to ensure that it obtains all checks within the timeframes as required by 40, Texas Administrative Code, Section 745.
The provider complied with the majority of cost reporting requirements, and it accurately reported the majority of funds it expended for providing 24-hour residential child care services for fiscal year 2017 on its cost report.
The provider complied with most requirements for monitoring foster homes. The provider conducted all required monitoring visits and adequately documented those visits as required.
The provider conducted background checks in accordance with Title 40, Texas Administrative Code, Chapter 745, for all employees and foster parents, including household members over the age of 14, frequent visitors and other caregivers, who were in positions that provided access to children as of May 1, 2018.
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