Audit Report on Rosalie Hall, Inc., and its Compliance with its Child Care Agreement

EXECUTIVE SUMMARY

Rosalie Hall, Inc. (Rosalie Hall), at 4150 Bronx Boulevard in the Bronx, is a not-for-profit organization that provides housing and maternity care through its Maternity Residence Program to unwed pregnant women up to the age of 18 (or 21 if they are still in school). Child care providers are reimbursed for expenses based on a per diem rate that is calculated based on a formula developed by the New York State Office of Children and Family Services. The per diem rate is limited to the Maximum State Aid Rate (MSAR) established by the New York State Office of Children and Family Services and the New York City Administration for Children’s Services (ACS).

This audit determined whether Rosalie Hall maintained adequate internal controls over the recording and reporting of its expenses, revenues, and days-of-care; was paid based on the appropriate per diem rate in accordance with the New York State standards of payment and ACS regulations; and complied with certain promulgated announcements and regulations contained in the New York State Standards of Payment and the City’s CWA Foster-Care Reimbursement Bulletin No. 92-5 and applicable amendments.

From July 1, 2000, to June 30, 2001 (Fiscal Year 2001), ACS reimbursed Rosalie Hall $760,020 for providing services to 78 individuals in its Maternity Residence Program. In addition, Rosalie Hall received $33,237 from ACS for its Independent Living Skills Program, an educational program for individuals in its care who are at least 14 years of age.

Rosalie Hall generally complied with the provisions of its child care agreement with regard to those promulgated announcements and regulations contained in the New York State Standards of Payment and the City’s CWA Foster-Care Reimbursement Bulletin No. 92-5 and applicable amendments. It had an adequate system of internal controls over the recording and reporting of its revenue, expenses, and days-of-care. Thus, we were reasonably assured that Rosalie Hall’s internal controls over its operations were sufficient and operating as prescribed by management. However, for the period July 1, 2000, to June 30, 2001, Rosalie Hall received excess payments from ACS totaling $34,126, but it under-billed ACS $13,022 for its Maternity Residence Program. As a result, Rosalie Hall owes the City $21,104.

In addition, Rosalie Hall included administrative costs totaling $37,596 that should not have been charged to the Maternity Residence Program, based on New York State and ACS regulations. These expenses included fund-raising costs, the cost of dues to a representational organization, undocumented auto insurance costs, audit fees not properly allocated, a staff Christmas party, subscriptions, and a staff function not related to child care. Since our computed operating per diem rate for Rosalie Hall still exceeded the maximum per diem rate after we recalculated program costs, no recoupment of funds is warranted. (See Appendix I for Rosalie Hall’s computed per diem rate, as audited.)

We recommend that Rosalie Hall remit $21,104 in excess funding to the City, and include only those expenses allowed in the New York State Standards of Payment for Foster Care of Children and the CWA Foster-Care Reimbursement Bulletin No. 92-5 and applicable amendments on its Report of Actual Expenditures DSS-2652. In addition, we recommend that ACS ensure that Rosalie Hall complies with the report’s recommendations.

ACS, which also responded on behalf of Rosalie Hall, stated that both agreed with the audit’s findings and recommendations. ACS stated that Rosalie Hall agreed to repay ACS $21,104 and to ensure that only allowable expenses are included on its Report of Actual Expenditures, DSS-2652. ACS also stated that it notified Rosalie Hall officials of the repayment terms for the $21,104 assessment.