Texas State Auditor's Office - Summary of Report 26-002

A Performance Audit

An Audit Report on On-site Financial Audits of Selected Residential Foster Care Contractors

October 2025

Overview

Background

Audit Objectives

The two residential childcare contractors (providers) audited—Covenant Kids Inc. and Bluebonnet Haven LLC—had weaknesses in their financial and cost reporting processes.

The child-placing agency audited—Covenant Kids Inc.—conducted quarterly supervisory visits at foster homes as required by the Health and Human Services Commission (Commission). However, the provider did not consistently comply with all foster home monitoring requirements.

PRIORITY

COVENANT KIDS INC. - FISCAL PROCESSES

Covenant Kids had significant weaknesses in its cost reporting and expenditure approval processes, and it did not comply with audit and cash reserve requirements, which increases the risk that it will not operate on a sound fiscal basis.

Jump to Chapter 1-A

MEDIUM

COVENANT KIDS INC. - FOSTER HOME MONITORING

Covenant Kids conducted visits with children in the care of its foster families. However, it did not consistently observe and document all the information required by the Commission's Minimum Standards for Child-Placing Agencies.

Jump to Chapter 1-B

PRIORITY

BLUEBONNET HAVEN LLC - FISCAL PROCESSES

Bluebonnet Haven did not have adequate financial processes. Significant weaknesses were identified with Bluebonnet Haven's oversight and cost reporting of its expenditures, including related-party transactions.

Jump to Chapter 2

Internal Audit

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A Performance Audit

An Audit Report on On-site Financial Audits of Selected Residential Foster Care Contractors

Overview

COVENANT KIDS INC. - FISCAL PROCESSES

COVENANT KIDS INC. - FOSTER HOME MONITORING

BLUEBONNET HAVEN LLC - FISCAL PROCESSES

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