DHS On-Site Review and Monitoring Financial Compliance Review Process
Financial Compliance On-site Reviews of DHS Service Providers are conducted based on the reasons noted below:
- State/federal mandates
- Recommendations by DHS senior management
- Recommendations by DHS Bureau of Financial Management
- Recommendations by DHS program staff
- Contract amount under $500,000 (not required to submit a certified audit)
- Findings or management comments included in the certified audit received by DHS
- DHS cyclical review schedule
- Results of risk assessment
- Director's Action Line (DAL) concerns
The following items are reviewed during a financial compliance on-site review of a DHS service provider:
- Internal accounting controls
- Fee-for-service program controls
- Fee-for-service billings
- Compliance with contract terms,
- Compliance with funding regulations, (e.g., Pa. State Bureau of
Drug and Alcohol Programs (BDAP), Labor and Industry, etc.)
- Personnel Action Plan for MH/D&A/MR service providers
- Current year agreements are monitored
- Board of directors composition and meeting minutes
NOTE: DHS deputy directors and monitors are notified before fiscal monitoring field work begins and are asked if they have any fiscal concerns or issues with the service provider.
DHS service providers undergo periodic reviews at intervals depending on various criteria. The following is the fiscal monitoring work schedule:
- Pa. State Bureau of Drug and Alcohol Programs (BDAP),
All drug and alcohol providers are monitored annually, beginning in November and finishing by March 31. Follow-up monitoring is required for those providers that have findings, or areas of concern. Follow-up monitoring begins in July and is completed by September 30.
- Workforce Investment Act (WIA)
Providers identified as high-risk as a result of the risk assessment are monitored beginning in January and finishing by April 30.
- Room and board/Client funds
Office of Intellectual Disability - Residential Service Providers. Client accounts are monitored every two years.
- All other service providers (including providers under Personnel Action Plan (PAP))
May be conducted on a cyclical review schedule or based on
recommendations from DHS management and program office staff.
DHS fiscal monitoring procedures are conducted as follows:
- Risk Assessment
The DHS Office of Adminstrative and Information Managment Services utilizes a risk assessment process to focus attention on providers that pose a greater financial risk to DHS. Service providers are classified as either high-risk or low-risk for purposes of measuring accountability. The factors used to determine risk are 1) is the provider required to submit a certified audit, 2) the amount of funding, 3) results of prior reviews and 4) if there are findings and recommendations included in prior audits or reviews. At a minimum, high-risk providers are monitored annually. Low-risk providers are monitored once every three years.
Financial compliance monitoring is conducted using a fiscal monitoring work program. All on-site reviews result in a report being submitted to the service provider, county manager, DHS director and DHS deputy director.
- Corrective Action Plan
If the on-site review identifies a "finding" or area of concern, the service provider is required to submit a Corrective Action Plan (CAP) within two weeks of the date of the report. The CAP must address how "control weaknesses" or compliance findings will be resolved and a timeline for implementing the CAP.
- Determination Letter
Once a CAP is submitted, the fiscal monitor will review it to determine if it appropriately addresses the findings identified in the report. If the CAP does not adequately address the findings, the fiscal monitor will request additional information. An acceptance letter is sent to the service provider once the CAP is approved.
- Technical Assistance
A technical assistance meeting is held annually for all service providers. This meeting addresses contracting, insurance, invoicing, new regulations, programmatic issues and contract compliance information. Additionally, technical assistance is provided on-site at any time for those service providers that request it.
The Personnel Action Plan (PAP)
All service providers receiving mental health, drug and alcohol and mental retardation funding through DHS are required to submit a Personnel Action Plan (PAP) each contract year. A review of the PAP is included in the procedures performed during the on-site review.
The PAP is reviewed to ensure conformity with governing regulations.
The PAP includes agency policies concerning:
- fringe benefit rates,
- merit salary increases,
- position abolishment,
- EEO/Affirmative Action and
- authorizations to create new positions.
The PAP also includes a current organizational chart and evidence of board of directors' approval.
Financial compliance county controller single audit and joint review
The county controller's single audit of DHS is conducted annually, February through April, by the county auditor of record and the county controller's office audit staff. The audit includes the following procedures.
- Reviews and evaluates DHS internal controls
- Reviews a sample of DHS contracts
- Reviews a sample of certified audits of DHS service providers
- Reviews a sample of invoices
- Reviews a sample of DHS fiscal compliance review files
DHS, in conjunction with the county controller's office performs joint on-site reviews of service providers.
The decision as to which service provider will be reviewed is made jointly by DHS and the controller's office.
A final report is issued to the service provider by the controller's office with instructions to submit a Corrective Action Plan within a specified period of time.