Audit Report on the Compliance of Louise Wise Services with Foster and Child Care Payment Regulation

EXECUTIVE SUMMARY

Louise Wise Services (Louise Wise) is a not-for-profit organization that provides services to children in its Foster Boarding Home, Mother-Babies Group Residence, and Maternity Program under a contract with the Administration for Children’s Services (ACS). Foster care providers are reimbursed for expenses based on a per diem rate. From July 1, 2000, through June 30, 2001 (Fiscal Year 2001), ACS reimbursed Louise Wise $7 million for providing services to 448 individuals in its programs.

This audit assessed the adequacy of Louise Wise’s internal controls over expenses, revenues, and days-of-care; the appropriateness of its per diem rates; and its compliance with State and City payment and reimbursement standards.

Louise Wise generally complied with promulgated announcements and regulations of the New York State Standards of Payment and the City Foster-Care Reimbursement Bulletin No. 92-5. It had an adequate system of internal controls over the recording and reporting of its revenue, expenses, and days-of-care.

However, as a result of our audit adjustments, Louise Wise is owed $128,262, $20,624 less than it would have received before taking our audit adjustments into account. In addition, Louise Wise included $17,574 in administrative expenses on its Report of Actual Expenditures DSS-2652 that should not have been charged to its foster care programs. These audit disallowances did not result in repayment of funds to ACS because our computed operating per diem rates exceeded the maximum per diem rates allowed, even after we deducted the unallowable expenses.

We recommend that Louise Wise: report days-of-care accurately and bill ACS for only those children in attendance at the foster care programs; and include only allowable expenses in its reporting. In addition, we recommend that ACS reimburse Louise Wise $128,262, rather than $148,886 it would have received before audit adjustments for expenditures incurred in excess of advances received, and ensure that Louise Wise complies with the report’s recommendations.

ACS, which also responded on behalf of Louise Wise, stated that it will reimburse Louise Wise Services $128,262 for expenditures incurred in excess of advances and advise its officials, in writing, to comply with the Comptroller’s recommendations by including only allowable expenses on its Report of Actual Expenditures DSS-2652, and by reporting its days-of-care accurately and in accordance with New York State and ACS regulations.