Audit Report on the Compliance of Miracle Makers, Inc., with Foster and Child Care Payment Regulations

AUDIT REPORT IN BRIEF

Miracle Makers, Inc., is a not-for-profit organization that provides services to children in its Regular Foster Boarding Home, Special Needs Foster Boarding Home, Emergency Foster Boarding Home, Therapeutic Foster Boarding Home, and Group Homes 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 Miracle Makers $14 million for providing services to 1,210 individuals in its programs.

This audit assessed the adequacy of Miracle Makers’ 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.

Miracle Makers 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 expenses, revenue, and days-of-care.

However, Miracle Makers billings included 215 days-of-care previously billed when children were absent. Conversely, Miracle Makers under-billed ACS for 105 days-of-care it provided. Consequently, Miracle Makers owes ACS a net amount of $102,532. (See Appendices I through VI.) Also, Miracle Makers’ books and records indicated that costs incurred for its Star Program totaled $49,594 when $63,000 in program funds was received from ACS. Therefore, the unused portion of the program’s funds, $13,406, should be refunded to ACS or be used to offset future funding. As a result of these audit adjustments, Miracle Makers owes ACS $115,938.

In addition, Miracle Makers included $76,503 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 these funds to ACS because our computed operating per diem rates exceeded the maximum per diem rates allowed by New York State, even after we deducted the unallowable expenses.

We recommend that Miracle Makers: remit $115,938 to ACS; 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 recoup $115,938 from Miracle Makers and ensure that it complies with the report’s recommendations.