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An Audit Report on On-site Financial Audits of Selected Residential Foster Care Contractors

October 2019

Summary Analysis

Two of the five residential child care contractors (providers) audited, Sheltering Harbour and Beacon of Hope Foster Care and Adoption Agency, had significant weaknesses in their financial processes. Those providers did not always accurately report the funds that they expended providing 24-hour residential child care services for fiscal year 2018. Three providers, Silver Lining Residential, LLC, South Bay Bright Future, Inc., and Texas Baptist Home for Children, had financial controls in place to help their operations maintain a sound fiscal basis.

Two of the three child placing agencies audited—Beacon of Hope Foster Care and Adoption Agency and South Bay Bright Future, Inc. —did not always conduct quarterly supervisory visits of foster homes as required and did not always document the results of those visits.

Additionally, Beacon of Hope did not always ensure that foster parents were paid in accordance with Department of Family and Protective Services (Department) requirements.

All five providers complied with the Department’s background check requirements. Specifically, the providers had current background checks as of April 30, 2019, for all individuals who were in positions that provided access to children and required those checks.

 Jump to Overall Conclusion

Sheltering Harbour (provider), a general residential operation, had significant weaknesses in its controls over its financial processes, including a lack of oversight and weaknesses in its processing of expenditures and inadequate financial policies and procedures. Additionally, it did not maintain supporting documentation for all expenditures. As a result, the provider did not always accurately report the funds that it expended providing 24-hour residential child care services for fiscal year 2018.

Jump to Chapter 1-A 

The provider conducted background checks in accordance with Title 26, Texas Administrative Code, Chapter 745, for employees and subcontractors who were in positions that provided access to children as of April 30, 2019.

Jump to Chapter 1-B 

Beacon of Hope Foster Care and Adoption Agency (provider), a child placing agency, had significant weaknesses in its controls over its financial processes, including a lack of oversight and weaknesses in its processing of expenditures and inadequate financial policies and procedures. As a result, the provider did not always accurately report the funds that it expended providing 24-hour residential child care services for fiscal year 2018.

Jump to Chapter 2-A 

While the provider conducted required quarterly supervisory visits and two unannounced visits at each foster home tested, it did not consistently conduct and adequately document foster home monitoring visits in accordance with all requirements in Title 26, Texas Administrative Code, Section 749.2815.

Jump to Chapter 2-B 

The provider conducted background checks in accordance with Title 26, Texas Administrative Code, Chapter 745, for employees and foster parent families, including household members 14 years of age or older, frequent visitors, and caregivers who were in positions that provided access to children as of April 30, 2019.

Jump to Chapter 2-C 

Silver Lining Residential, LLC (provider), which is a general residential operation, had financial controls in place to help its operation maintain a sound fiscal basis. Those controls included creating an annual budget, obtaining an audit of financial statements, and regularly updating its governing board about its financial position. However, it should strengthen other financial controls, including oversight of its general ledger and cost report.

Jump to Chapter 3-A 

The provider conducted background checks in accordance with Title 26, Texas Administrative Code, Chapter 745, for employees who were in positions that provided access to children as of April 30, 2019.

Jump to Chapter 3-B 

South Bay Bright Future, Inc. (provider), a child placing agency, had financial controls in place to help its operations maintain a sound fiscal basis. For its fiscal year 2018 cost report, the provider reported expenditures that were allowable and supported.

Jump to Chapter 4-A 

The provider conducted unannounced visits as required at all applicable foster homes tested. It also obtained the signatures of each foster parent present during each visit for all foster homes tested. However, it did not consistently conduct and adequately document monitoring visits in accordance with all requirements in Title 26, Texas Administrative Code, Section 749.2815.

Jump to Chapter 4-B 

The provider conducted background checks in accordance with Title 26, Texas Administrative Code, Chapter 745, for employees and foster parent families, including household members 14 years of age or older, frequent visitors, and caregivers who were in positions that provided access to children as of April 30, 2019.

Jump to Chapter 4-C 

Texas Baptist Home for Children (provider), a child placing agency, had financial controls in place to help its operation maintain a sound fiscal basis. For its fiscal year 2018 cost report, the provider reported expenditures that were allowable and supported. In addition, it accurately reported most expenditures tested in accordance with cost report requirements.

Jump to Chapter 5-A 

The provider complied with most requirements for monitoring foster homes in Title 26, Texas Administrative Code, Section 749.2815. The provider conducted all required monitoring visits and adequately documented those visits as required.

Jump to Chapter 5-B 

The provider conducted background checks in accordance with Title 26, Texas Administrative Code, Chapter 745, for employees and foster parent families, including household members 14 years of age or older, frequent visitors, and caregivers who were in positions that provided access to children as of April 30, 2019.

Jump to Chapter 5-C 

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