Key points and summary

 


               Texas Department of Human Services
                      701 West 51st Street
                    Austin, Texas 78714-9030
                          512-450-3011


              PRS Administration and Bookkeeping of
             Local County CPS and Children's Monies 

             Report Nos. 95-010 & 95-011 (Combined)


Selected quotes from the reported addressed to The Honorable
Maurice Dickey, Chairman of the Board of the Texas Department of
Protective and Regulatory Services dated August 17, 1995:

The accompanying report raises serious concerns regarding the
overall environment in which these financial and accounting
services are provided.  In our opinion, PRS faces a greater than
acceptable risk that material errors or irregularities may occur.

                            Findings

Controls intended to ensure children's and county child welfare
board funds are properly handled and accounted for by PRS staff
require improvement statewide.

Fundamental weaknesses included lack of appropriate segregation of
duties, insufficient supervisory review of work performed, and an
absence of written standard and procedures for local bookkeepers. 
These control weaknesses place PRS and its staff vulnerable to the
risk of both intentional and unintentional misappropriation of
funds.

The absence of established minimum standards has contributed to
poor accounting controls and practices, including the following
noted during our review:

*    Bookkeepers do not always adequately obtain and maintain
     receipts for purchases;
*    Supplies of pre-signed checks on could child welfare board
     accounts are maintained;
*    All negotiable instruments are not restrictively endorsed
     immediately upon receipt;
*    Bookkeepers do not always deposit funds in a timely manner. 
     Our test revealed instances of unendorsed checks held
     undeposited for over a month, and restrictively endorsed SSI
     lump sum checks undeposited up to one year;
*    Bookkeepers do not always perform proper monthly
     reconciliations of accounts.  Our review disclosed bookkeepers
     do not always reconcile sub-ledgers by individual child to the
     control account and sub-ledgers sometimes do not agree to
     control account balances; and
*    some band account balances exceed the $100,000 FDIC limitation
     and are not otherwise secured.

Regional CPS staff do not always manage children's monies uniformly
and in accordance with issued policy.  Our review revealed regional
staff do not consistently apply income toward cost of care,
establish savings accounts as required, maintain children's funds
in interest bearing accounts, monitor resources limits, or release
funds in a timely manner for children who have left care.  

Regional management of SSI lump sum awards is inconsistent
statewide.

PRS has encountered difficulties in establishing policy regarding
children's trusts.  Developing an acceptable trust instrument is a
significant issue not yet resolved.

PRS policies and procedures governing financial and accounting
child welfare contract do not adequately address roles and
responsibilities nor provide necessary safeguards against error or
irregularity.

The county foster care payment reimbursement process is inefficient
and outdated.  A duplicative billing and payment system is created
which increase the risk of payment error and places additional time
and work demands on limited bookkeeping staff resources.

Statewide policy and guidelines for managing and administering
local county CPS and children's funds are not adequate.

Local CPS bookkeeping activities do not receive adequate audit or
review coverage.

PRS has not established standardized job classifications for staff
who are responsible for performing bookkeeping duties.  Appropriate
performance plans, formal training and continuing education are not
always provided to bookkeeping staff and their supervisors.

A coordinated, statewide approach to automating bookkeeping
activities is needed.

During the course of our review, we identified several issues which
warrant further examination:

*    Impact of changing statutes and requesting SSA approval of
     debts to permit recoupment of prior cost of care should be
     pursued;
*    PRS does not reflect children's private funds in the agency's
     general ledger and agency wide financial report;
*    No statewide policy exists regarding retention of financial
     records for county child welfare boards and children.