View Audit Report on the Oversight of Contracted Day Care Centers by the Administration for Children's Services
View Audit Report on the Compliance of Seamen's Society for Children and Families with Its Day Care Contracts With the New York City Administration For Children's Services
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ACS DID NOT ACT ON MISSING BACKGROUND CHECKS AND DEPARTMENT OF HEALTH CERTIFICATION OF TEACHERS

FAMILY DAY CARE HOM E OPERATORS DID NOT CARE FOR CHILDREN IN A SAFE ENVIRONMENT

The Administration for Children’s Services (ACS) has provided ineffective oversight of its 493 contracted day care centers, according to two audits released today by New York City Comptroller William C. Thompson, Jr. The audits revealed that the lack of a comprehensive and coordinated approach by the ACS monitoring units responsible for overseeing fiscal and programmatic requirements may place many children in jeopardy.

“I am troubled that the Administration for Children’s Services has not ensured that our children, the City’s most vulnerable residents, are cared for in a safe environment,” Thompson said. “Our auditors found that ACS Resource Area Unit Staff identified deficiencies - such as broken and missing furniture, defective heating units and missing security systems - throughout the system that were left unresolved. It is unconscionable for ACS to allow these situations to persist for so long.”

The Comptroller added: “Mothers and fathers who leave their children in the care of City contracted day care centers should be able to do so without fear. But that is not always the case. ACS must swiftly work to address the safety and financial issues we have brought to its attention.”

As part of its oversight, ACS is required to perform an annual evaluation of each of its contracted day care centers to ensure compliance with the New York City Health Code, as well as with social services and administrative requirements.

In the first report, Audit on the Oversight of Contracted Day Care Centers by the Administration for Children’s Services, auditors randomly selected 50 of the 260 day care sponsors that ACS had contracts with in fiscal year 2001. The 260 sponsors ran a total of 493 day care centers throughout the five boroughs at a cost to the City of $440 million.

The first audit sampling found that ACS failed to perform an annual evaluation at 20 percent of the sampled day care centers. Half of these day care centers had already been classified by ACS as “needing the most assistance.”

The first audit also noted that during fiscal year 2001, ACS identified 321 deficiencies while performing 180 field visits at the 50 sampled day care centers. A review of ACS files revealed that 230 (72 percent) of the 321 deficiencies remained unresolved at the end of FY 2001. Among the issues unresolved were 11 instances of missing background checks and Department of Health certification of teachers; 23 instances where centers had either lower or higher than approved enrollment; 15 instances where centers were cited with vacancies for the positions of Director, Assistant Director, group teacher or teacher’s aide; and eight instances where teachers were not certified.

Financial inconsistencies also were found during this audit. Forty-three percent of the sampled sponsors who collected private tuition failed to include those funds in their financial statements, a violation of the ACS Interim Audit Guidelines. In seven instances, centers were found to have unresolved problems relating to delays in payment to employees, late submission of payroll taxes, and bills not being paid on time. In addition, 24 percent of the sampled sponsors used CPA firms that were not on the Comptroller’s Pre-Qualified List, as required by the ACS Interim Audit Guidelines.

The Comptroller’s Office made 14 recommendations in the first audit that include:

1. Consider reorganizing the monitoring units to improve communication and to hold those in charge accountable for all programmatic matters of day care centers, including performing annual program evaluations, day care center visits, and responding to the centers’ program needs.
   
2. Update and develop clearly written procedures and establish a strong internal control structure to ensure that day care centers and sponsors are properly evaluated, that fiscal deficiencies are identified and resolved, and that day care centers and sponsors receive appropriate assistance in resolving fiscal deficiencies.
   
3. Determine whether the CPA firm selected by a sponsor is from the current Pre-Qualified CPA list. If not, the fiscal unit director should send a reminder to the sponsor with a copy of the list.
   
4. Determine whether each center had private tuition students and ensure that this information is accurately reflected in annual audit reports prepare by the CPA firms.
   
5. Develop and implement a centralized automated tracking system that includes all the day care centers and sponsors, complete with defined milestones, to ensure that each center and sponsor complies with applicable contract requirements.

ACS agreed with 10 of the recommendations and partially agreed with the remaining four. ACS stated “A major reconfiguration of ACS Child Care is now underway and as a result of this reconfiguration, the responses to these recommendations may change.”

In the second audit, Audit on the Compliance of the Seamen’s Society for Children and Families with its Day Care Contracts with the New York City Administration for Children’s Services, the Comptroller’s Office reviewed two ACS contracts with the Seamen’s Society for Children and Families (Society), a non-profit organization that provides day care, foster care, family support, counseling and youth development services on Staten Island to more than 7,500 children annually. The audit focused on the Society’s contracts to provide day care services to 60 pre-school children at the Edwin Markham Childcare Center and 233 children at 30 family day care homes in fiscal year 2002.

The second audit disclosed a number of troubling problems regarding family day care homes, including that operators did not always ensure that children were cared for in a safe environment. The Comptroller’s Office wrote ACS Commissioner William C. Bell regarding the immediate concerns these findings raised.

The audit noted that, in one family day care home, a child receiving care was left with the operator’s 16-year-old daughter while the home operator was at a neighbor’s house. (Health code regulations state that no person under18 can be left in sole charge of children in a day care service.) At the same time, the house smelled of natural gas and the stovetop burner was left at a high setting, with no cooking utensil on the burner.

At another home, a 5-month-old infant was left sleeping in a bed, unattended, surrounded by pillows - an unsafe practice. There were no cribs at the site though the Society was equipped to provide the homes with cribs for children under one year of age. As well, auditors walked into another site and down a flight of stairs unnoticed, noting that the unlocked door leading to the basement where day care services are provided. Other site inspections found nonfunctioning smoke detectors, and an icy walkway.

Auditors pointed out that, in another family day care home, the operator’s assistant caring for the children did not have the necessary background checks and medical clearances. The Society only became aware of this unauthorized individual as a result of the unannounced inspection by the auditors. Moreover, the files at the Society for several of the family day care home operators, including assistants and household members, lacked evidence of completed background checks, up-to-date medical clearances, and certificates showing the completion of the required annual training.

In addition to asking ACS and Seamen’s to investigate the identified problems, the Comptroller’s Office made 15 other recommendations, including:

1. Conduct unannounced inspections at the family day care homes not visited by the auditors. Conduct unannounced visits to all family day care homes more frequently.
   
2. Ensure that home operators and assistants get the required 15 hours of training yearly.
   
3. Periodically review the Society’s personnel files to ensure that required documents, such as background investigations, medical clearances and training, are maintained.

ACS and the Society generally agreed with the audit’s findings and recommendations and have taken steps to investigate the conditions and missing documents. In response to the audit, ACS said it “looks forward to working with your office to improve the delivery of services to the children of New York City.”

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