Finding:
The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure payments to child care providers for the Child Care and Development Fund Cluster programs were allowable and properly supported.
Questioned Costs: ...
Finding:
The Department of Children, Youth, and Families did not have adequate internal controls over and did not comply with requirements to ensure payments to child care providers for the Child Care and Development Fund Cluster programs were allowable and properly supported.
Questioned Costs: Assistance Listing #
93.575
93.575 COVID-19
93.596 Amount
$415,579,473
Status: Corrective action in progress
Corrective
Action:
The Child Care and Development Fund (CCDF) program was previously managed by the Department of Social and Health Services and the Department of Early Learning. Since the program transitioned in 2019, the Department has been making efforts to strengthen internal controls over payments to child care providers and other CCDF grant requirements.
The Department implemented grant-level management of all federal funds, including the CCDF grant. The Department allocated the CCDF grant to eligible clients and allowable activities in compliance with 45 CFR 98.67.
As part of the audit resolution process, the Department of Health and Human Services (HHS), Administration for Children & Families (ACF), which oversees the CCDF program at the federal level, reviews all the State Auditor’s Office (SAO) findings and issues management decision letters. The Department received a management decision letter dated October 3, 2023, from HHS for finding 2021-033 (2020-038) where ACF did not sustain the disallowance of questioned costs for prior findings and stated:
“Although the Department’s internal controls were lacking, the ACF has not identified any funds that were expended on ineligible activities.”
The ACF recommended:
“…that the Department work with the auditors to determine an appropriate methodology that can be tested to ensure child care payments comply with Federal regulations.”
The SAO has taken issue in the past several audits and maintained that the program is not auditable without child-level data. The Department is committed to collaborating with SAO to determine an appropriate methodology that identifies a sampling unit for accurately testing compliance. During the audit period, the Department did not have the staff and resources to develop and maintain the business process redesign, as well as the information technology initiatives necessary to meet the level of assurance as recommended by the SAO.
In response to the auditor’s recommendations, the Department submitted a budget request for the 2024 supplemental budget.
The enacted budget included funding to implement the Department’s budget request beginning in state fiscal year 2025, specifically:
“Funding in this subsection must be expended with internal controls that provide child-level detail for all transactions, beginning July 1, 2024.”
The Department is working with a developer to assist with building out the required databases between the Social Service Payment System and the Agency Financial Reporting System to allow transfers between funding sources to include child-level data related to the expenditures.
The Department looks forward to working with SAO to resolve the child-level data concerns in the audit of the CCDF grant programs.
The conditions noted in this finding were previously reported in findings 2023-058, 2022-041, 2021-033, 2020-038, 2019-035, 2018-034, 2017-024, 2016-021, 2015-023, 2014-023, 2013-016, 12-28, 11-23, 10-31, 9-12, and 8-13.
Completion
Date:
Estimated December 2025
Agency
Contact:
Stefanie Niemela
Audit Liaison
PO Box 40970
Olympia, WA 98504-0970
(360) 725-4402
stefanie.niemela@dcyf.wa.gov