Audit Report on the Compliance of the Association to Benefit Children with Foster and Child care Payment Regulations (JULY 1, 1999 – JUNE 30, 2001)

AUDIT REPORT IN BRIEF

The Association to Benefit Children (Association) is a not-for-profit organization that provides foster care services to children in its Foster Boarding Home, Special Needs Foster Boarding Home, and Agency Operated Foster Boarding Home programs under a contract with the Administration for Children’s Services (ACS). Foster care providers are reimbursed for expenses based on a per diem rate. For Fiscal Years 2000 and 2001 (July 1, 1999, through June 30, 2001), ACS advanced the Association $5,759,750 ($2,805,457 for Fiscal Year 2000 and $2,954,293 for Fiscal Year 2001), for providing services to 404 individuals in its programs—329 in its Foster Boarding Home, 31 in its Special Needs Foster Boarding Home, and 44 in its Agency Operated Boarding Home.

This audit assessed: the adequacy of the Association’s internal controls over expenses, revenues, and days-of-care; whether the Association was paid based on the per diem rate payments in effect for Fiscal Years 2000 and 2001; and compliance with State and City payment and reimbursement standards.

Audit Findings and Conclusions

The Association to Benefit Children generally complied with promulgated announcements and regulations of the New York State Standards of Payment for Foster Care of Children and the City Foster-Care Reimbursement Bulletin No. 92-5. The Association had an adequate system of internal controls over the recording and reporting of its expenses, revenues, and days-of-care. Moreover, the Association reported its days-of-care accurately, and was paid based on the appropriate per diem rates in effect for the audit period.

However, for Fiscal Years 2000 and 2001, the Association owes the City a net of $139,682, due to advances by ACS that were estimates based on prior period per diem rates, and our disallowance of certain administrative and pass-through expenses. Specifically, for Fiscal Years 2000 and 2001, ACS advanced the Association $5,759,750 for providing 93,431 days-of-care in its Foster Boarding Home; 9,396 days-of-care in its Special Needs Foster Boarding Home; and 2,037 days-of-care in its Agency Operated Boarding Home. Although the number of days-of-care was reported accurately, the per diem rate applied to determine the advances was not always the same per diem rate in effect during the audit period. Consequently, the Association is owed $2,732 for Fiscal Year 2000, and it owes ACS $142,414 for Fiscal Year 2001. (See Appendices I through VI for our recalculation of per diem rates).

In addition, for Fiscal Years 2000 and 2001, the Association included $11,318 in expenses on its Report of Actual Expenditures DSS-2652 that should not have been charged to its foster care programs according to the promulgated announcements and regulations of the New York State Standards of Payment for Foster Care of Children and the City Foster-Care Reimbursement Bulletin No. 92-5.

Audit Recommendations

We recommend that the Association remit $139,682 in excess funding to ACS, and include only allowable program expenses in its Report of Actual Expenditures DSS-2652. In addition, we recommend that ACS recoup $139,682 from the Association, and ensure that it complies with the report’s other recommendation.

The recalculated operating per diem rate after deducting the disallowed expenses did not result in any recoupment of funds from the Associaton’s Foster Boarding Home and Agency Operated Boarding Home programs. For the Special Needs Foster Boarding Home program, our disallowances resulted in an audit recoupment amount of $940 (shown in Appendix V and included in the $139,682 assessment).