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Audit (A-07-12-03182)

07-08-2014
Not All of Kansas's Controls for Its Child Care Subsidy Program Claims Were Effective

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Summary

The Kansas Department for Children and Families' (State agency) controls for claims processing and for client eligibility determinations were not always effective. Of the claims processing controls we tested, the State agency's controls for preventing payment to providers that had not maintained adequate client attendance records were not effective. However, the State agency's controls for preventing payment to providers who were caring for their own children, for preventing payment to providers in excess of amounts established by the State, and for documenting supervisor approval of excess rates and excess units were effective. Of the client eligibility controls we tested, the State agency's controls for verifying client age and client citizenship were not effective because the controls relied largely on self-declarations by applicants of citizenship and age eligibility. The State agency's controls for verifying family income and for verifying need-for-service eligibility were effective. All of the State agency's controls for provider eligibility that we tested were effective. We tested the controls for the performance of provider background checks, for the maintenance of required provider forms, and for the completion of provider rate agreements.

The State agency required the applicant to declare his/her citizenship and age. Unless the information provided in the application about citizenship status or age was questionable, State policy required the agency to accept the applicant's statement. Eligibility policies for citizenship and age that rely on self-declarations and do not require that an applicant present documentary evidence present a greater potential for false claims. Moreover, the State agency did not exercise sufficient oversight over claims processing because it did not ensure that providers maintained attendance records to support childcare claims payments. Without sufficient written policies and procedures and oversight, the State agency's Child Care Subsidy program is vulnerable to fraud, waste, and abuse.

Of the 100 claims reviewed, we determined that 75 claims showed evidence of ineffective controls for claims processing and for client eligibility. We estimated that $40.9 million ($26.1 million Federal share) of the Child Care Subsidy program claims could have had one or more of the control deficiencies we identified. These deficiencies left the Child Care Subsidy program vulnerable to fraud, waste, and abuse.

We recommended that the State agency improve its controls for client eligibility determinations and for claims processing to ensure that payments for the Child Care Subsidy program are made for eligible clients. Specifically, the State agency should take steps to (1) ensure that providers maintain accurate attendance records to support the childcare payment amounts that they claim for reimbursement by the State agency, (2) require that citizenship and qualified alien status of all applicants be verified and documentation of that verification be maintained in all case files, and (3) require that the age of all clients be verified and documentation of that verification be maintained in all case files.

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