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December 31, 2011
County Fiscal Audit Procedure Assistance- For information on DSS-1571 reporting and special tests and provisions related to contract procedures, internal control for information systems, indirect cost, prior approval of computer equipment and EPICS, please review the DSS Crosscutting Supplement found at
http://www.nctreasurer.com/LGC/compsup2011/crosscutting/dss-0-2011.pdf
A. The County Administration Accounting Unit will advise counties of adjustments affecting their administrative cost reports, DSS-l57l, Parts I, Part II and Part IV. Adjustments which may be made to submitted reports are of four types:
1. Reporting corrections of a routine, non-recurring nature primarily affecting personnel costs.
2. Adjustments resulting from periodic monitoring and exceeding allocations.
3. Adjustments resulting from scheduled audits by the Department of Health and Human Services.
4. Personnel non-compliance findings as determined by Department of Health and Human Services Regional Personnel reports.
Note: Counties submitting ‘Requests for reclass’ must include a statement which certifies that the reclass request being submitted is valid.
B. Occasionally, counties request reclassifications between funding sources. Some requests cannot be completed for various reasons. Reasons include:
1. Reclasses will not be completed from application codes identified as “admin” to application codes identified as “services” nor vice versa. For example, funds from application code 371 TANF CPSFCADT. SVC CO 100% Cnty cannot be reclassed to application code 226 TANF ADMIN 100% Fed.
2. Reclasses will not be completed when doing so will cause the fund to drop below a zero balance. For example, a county requests a reclass of $1,000 from application code 464 PERM PLAN 100% CNTY to application code 368 SPEC PERM PLANNING. If the balance in application code 368 is only $600, only $600 would be reclassed to 368. To do more would carry the balance of Special Permanency Planning below zero.
3. Reclasses will not be completed for any application codes to which the counties have access and can reclass themselves. Counties have the ability to reclass expenditures from certain application codes such as 074, 131, 340 and 483 (please check the available codes listed in section III-A and III-B of the Fiscal Manual). This allows for a more appropriate audit trail.
Also, using the Maximus software, counties have the capability of reviewing their expenditures before it is uploaded to the State, thus enabling county staff to move overages between funding sources before the information is submitted monthly. Counties should monitor their Funding Authorizations by using the XS411 (YTD Allocations-Expenditures) report and when funding is exhausted for a particular funding source, begin coding to another appropriate funding source.
1. General
Monitoring is a management device used to provide for standardized reviewing of local service delivery agencies, both departments of social services and provider agencies. The review consists of several components, one of which is the fiscal component. The basic purpose of this component is to help an agency (a) to avoid or minimize audit exceptions; (b) to achieve a higher level of compliance with state policies, standards and regulations; and (c) to establish corrective action methods.
In the Division, the monitoring process is the responsibility of the services program staff and is defined in detail in the Family Services Manual, Volume VI, Chapter VIII (Services Monitoring System).
2. Responsibility for Monitoring
a. Local support staff will monitor both county departments of social services and purchase of service provider agencies at the county level; to assess compliance with policy and to assist the local agencies to upgrade the level of compliance. Provider agencies are monitored by county department staff.
b. State office staff members (family services and Local Business Liaisons) are available to provide technical assistance to county staff.
Corrective Action and Fiscal Adjustment
State office staff will review each corrective action plan submitted by providers as required by policy. Improperly claimed expenditures resulting in fiscal chargeback’s to the provider agency (including county departments) that have been approved by the Division will be adjusted following an appeal period. The chargeback may be absorbed by the provider agency, adjusted in the next reimbursement payment made by the state office to the provider, or arrangements may be made to spread the adjustment over a period not to exceed the remaining months of the contract period or fiscal year, as appropriate.
1. For purposes of documenting an adjustment required in the audit process, which are shown in the DSS-1571 process, the counties must do the following:
a. Fax or mail a copy of the Manual forms appropriate, (DSS-1571, Part I, II, or IV), showing that the adjustment was made. The change must correspond to the required audit adjustment and noted as “Audit Finding Adjustment”.
b. A statement indicating that the audit adjustment has been made and the month of the report. This statement should be submitted to the DHHS audit coordinator.
2. References:
Family Services Manual, Volume VI, Chapter VIII.
Grants Administration, 45 CFR 74, Subpart J, dated 9 June 1981.
NC Administrative Procedures Manual for Block Grant Funds, Section .l000, dated October l, l982
Personnel non-compliance situations are usually identified through routine procedures conducted by staff under the organizational direction of the Office of State Personnel. The fiscal resolution of such matters is according to the process that follows.
1. The regional personnel office provides the Division with a copy of the memorandum sent to the county director wherein he is advised of the existence of an out-of-compliance personnel situation. At the request of the Division's Chief of Local Support, the Controller's staff then proceeds to calculate the amount of the total salary and fringe benefits applicable to the non-compliance period, broken down by local/non-local participation as well as by program charged. Simultaneously, the Local Support Manager is asked to investigate and report any extenuating circumstances that should be considered.
2. In accordance with standard procedures, the Chief of Local Support advises the county of their liability in the matter, as well as their option of appealing (within 30 days) the non-compliance disallowance.
3. The appeal consists of an informal process whereby the situation is reviewed and discussed at a meeting attended by the Division Director, the Chief of Local Support, the Local Support Manager, the County Director, and whomever else the County Director may consider appropriate. Or, if the county prefers, the actual meeting may be dispensed with in favour of an appeal conducted via correspondence. In any case, current policy provides for no further administrative appeal beyond the Director of the Division of Social Services.
4. Subsequent to the foregoing process, the Controller's staff implements (through the Administrative Expenditure Reimbursement system) adjustments as considered appropriate by the Chief of Local Support
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For questions or clarification on any of the policy contained in these manuals, please contact your local county office.
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