Audit Report On The Compliance Of Compliance Of Graham Windham With Foster And Child Care Payment Regulations July 1, 2001 – June 30, 2002

AUDIT REPORT IN BRIEF

Graham Windham is a not-for-profit organization that provides foster care services to children under a contract with the Administration for Children’s Services (ACS). This audit assessed the adequacy of Graham Windham’s internal controls over expenses, revenues and days of care; whether Graham Windham was paid based on the per diem rate payments in effect for Fiscal Year 2002; and compliance with State and City payment and reimbursement standards.

For Fiscal Year 2002, ACS reimbursed Graham Windham $23,535,078 for providing services to 1,785 children—262 in its Institution Program, 1,125 in its Foster Boarding Home Program, 94 in its Therapeutic Foster Boarding Home Program, 291 in its Emergency Foster Boarding Home Program, and 13 in its Supervised Independent Living Program. In addition, Graham Windham received $475,629 from ACS for its Independent Living Skills Program, an educational program for individuals in its care who are at least 14 years of age, and $234,002 for its Substance Abuse Program.

Audit Findings and Conclusions

Graham Windham generally complied with the New York State Standards of Payment and City Foster-Care Reimbursement Bulletin No. 92-5 regulations. Graham Windham had adequate internal controls over the recording and reporting of expenses, revenues, and days of care related to its foster and child care services. Moreover, Graham Windham was reimbursed by ACS for only those expenses appropriately incurred on behalf of its Independent Living Skills Program and Substance Abuse Program.

Although Graham Windham generally complied with the regulations, we found several exceptions over the course of our review. In particular, we determined that Graham Windham owes the City $366,772 resulting from the difference between the funds it received (advances) from ACS and the actual expenses it incurred to operate the various programs we audited and the actual days of care it provided. For Fiscal Year 2002, ACS advanced Graham Windham $23,535,078. Based on our calculated expense disallowances, Graham Windham was entitled to receive $23,175,401, a difference of $359,677. In addition, Graham Windham owes $7,095 for overbilling ACS 116 days of care (see Appendix I).

Our review of the expenses submitted to ACS disclosed that for Fiscal Year 2002, Graham Windham inappropriately claimed a total of $404,220 in expenses that were not allowed under the New York State Standards of Payment and the City Foster-Care Reimbursement Bulletin No. 92-5 regulations.

Audit Recommendations

We make the following five recommendations, that Graham Windham:

• Remit $366,772 in excess funding to ACS;
• Include only allowable program expenses in its Report of Actual Expenditures DSS-2652;
• Ensure that ACS’s program expenses are offset against other related sources of income that Graham Windham receives;
• Maintain separate accounts for ACS and non-ACS programs; and
• Report its days of care accurately and in accordance with New York State and ACS regulations, and bill ACS for only those children in attendance at the foster care programs.

We make the following two recommendations, that ACS:

• Issue a written notice to Graham Windham requiring that it remits $366,772 in excess funding to ACS; and
• Ensure that Graham Windham complies with the report’s other recommendations.