Audit on the Compliance of Seamen’s Society for Children and Families with Its Day Care Contracts With the New York City Administration For Children’s Services

Audit Report In Brief

This auditdetermined whether the Seamen’s Society for Children and Families (Society) complied with the provisions of both its Center and family day care home contracts with the Administration for Children’s Services (ACS). In addition, we ensured that the Society spent ACS and Child and Adult Care Food Program (CACFP) funds on legitimate expenses related to the operation of its day care services to children.

The Society generally complied with the provisions of both its Center and family day care home contracts and had adequate internal controls over its financial processes. Specifically:

• All ACS and CACFP funds received for day care services were properly deposited and recorded in the cash receipts journals.
• ACS and CACFP funds were spent on legitimate expenses related to the operation of the day care services to children.
• An authorized official signed all checks.
• The Center’s classrooms and play areas were safe and sanitary.
• Most of the family day care home operators were paid accurately for providing day care services.

However, our examination disclosed some weaknesses. Specifically:

• Family day care home operators did not always ensure that children were cared for in a safe environment.
• The files for Center employees and family day care home operators did not always contain the required documentation for background investigations and did not always contain evidence, as required, of training.
• The Center is under-enrolled.
• The Society undercharged private students.
• Supervisory approval was not obtained for all time records of Center employees.
• The Society commingled parent fees and funds received from ACS with funds received from other sources. Such commingling is prohibited. In addition, funds received from private fees were not maintained, as required, in a bank account separate from ACS funds and parent fees.

To address these issues, we make 16 recommendations that include the following.

The Society and ACS should:

• Conduct unannounced inspections more frequently at all family day care homes to ensure that they are maintained in a safe and sanitary manner and comply with health code regulations.
• Ensure that background investigations, including the SCR and DOI checks, are performed in a timely manner and conducted for all family day care home operators, their assistants, and their household members 18 years of age or older. Furthermore, the Society should ensure that medical clearances are up-to-date for all family day care home operators, their assistants, and their household members. All documents should be maintained in the files.
• Ensure that all family day care home operators and their assistants receive the required 15 hours of training each year. The training certificates should be maintained in the files.
• Obtain the required DOI background investigations for the six employees identified by this audit and ensure that the required background investigations are performed in a timely manner for all employees and are maintained in their personnel files for the duration of their employment.
• Immediately arrange for the eight employees identified by this audit to be trained in detecting child abuse and maltreatment and ensure that all employees receive this training immediately after hiring. Training certificates should be kept in personnel files of the employees for the duration of their employment.

ACS should:

• Periodically review the personnel files for all employees of the Society to ensure that the required documents, such as background investigations and training, are maintained.
• Periodically review the files for all the family day care homes affiliated with the Society to ensure that the required documents, such as background investigations, up-to-date medical clearances, and training, are maintained.

The matters covered in this report were discussed with officials of the Society and of ACS during and at the conclusion of this audit. A preliminary draft report was sent to officials of the Society and of ACS and was discussed at an exit conference on May 13, 2003. On May 19, 2003, we submitted a draft report to Society and to ACS officials with a request for comments. We received a written response from ACS officials on behalf of both organizations on June 9, 2003. Officials of ACS and of the Society generally agreed with the audit’s findings and recommendations and have taken steps to investigate some of the conditions and missing documents identified. The response stated:

“ACS looks forward to working with your office to improve the delivery of services to the children of the City of New York.”