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EXECUTIVE SUMMARY:
At the request of the Administration for Children and Families, we audited child care claims at the North Carolina Department of Health and Human Services' Division of Child Development for the period January 1, 1996 to March 31,1999. The objective of the audit was to determine whether the state was paid for unallowable At-Risk, Child Care and Development Block Grant, Child Care and Development Fund, and Social Services Block Grant (Other Grants) child care claims. Our stratified random sample of 230 Other Grants’ child care line items showed that 26 did not meet the requirements for federal financial participation (FFP). As a result, the state was reimbursed $18,275,715, FFP in unallowable Other Grants’ child care payments. In our opinion, the unallowable payments resulted from the state’s inadequate review of a consultant’s identification of children who were determined to be eligible for a specific grant. Each grant had different requirements; yet, the state’s accounting system did not identify which grant program was used to pay for a child’s care. In addition, the state’s inadequate instructions to the counties resulted in insufficient documentation to support eligibility factors and the need for services. In addition to procedural recommendations, we recommended that the state refund the $18,275,715, FFP overpayment. State officials generally disagreed with our findings and recommendations.