2010/02/26 institute for multicultural counseling and education services, inc. contract review

8/9/2019 2010/02/26 Institute for Multicultural Counseling and Education Services, Inc. Contract Review

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WENDY L.WATANABEAUDITOR-CONTROLLERMARIA M. OMSCHIEF DEPUTYFebruary 26,201Q

TO:

FROM:

COUNTY OF LOS ANGELESDEPARTMENT OF AUDITOR-CONTROLLERKENNETH HAHN HALL OF ADMINISTRATION500 WEST TEMPLE STREET, ROOM 525LOS ANGELES, CALIFORNIA 9001 2-3873PHONE: (213 ) 974-8301 FAX: (213) 626-5427

Supervisor Gloria Molina, ChairSupervisor Mark Ridley-ThomasSupervisor Zev YaroslavskySupervisor Don KnabeSupervisor Michael D. Antonovich /---Wendy L.Watanabe k ? ! ? ! $ ~ -

ASST. AUDITOR-CONTROLLERSROBE RT A. D AVISJOHN NAIMOJUDl E. THOMAS

SUBJECT: INSTITUTE FOR MULTICULTURAL COUNSELING AND EDUCATIONSERVICES, INC. CONTRACT REVIEW - A DEPARTMENT OFCHILDREN AND FA MILY SERVICES AND MENTAL HEALTH SERVICEPROVIDERWe completed a program and fiscal review of Institute forulticultural Counseling andEducation Services, Inc. (IMCES or Agency), to determine the Agency's compliancewith two separate County contracts. The Agency contracts with the Department ofChildren and Family Services (DCFS) to operate the Wraparound Approach Services(Wraparound) Program and the Department of Mental Health (DMH) to provide mentalhealth services.

BackaroundUnder the DCFS Wraparound Program, IMCES provides individualized services tochildren and their families such as therapy, housing, educational and social assistance.Under the contract with DMH, IMCES provides mental health services, which includeinterviewing program participants, assessing their mentalealth needs and developingand implementing a treatment plan. The Agency's headquarters is located in theSecond District.DCFS paid IMCES on a fee-for-service basis at $4,184 per child a month (lessplacement costs) or approximately $292,000 and $455,000 for Fiscal Years (FY) 2007-08 and 2008-09, respectively. DMH paid IMCES on a cost reimbursement basis

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Board of SupervisorsFebruary 26, 201 0Page 2

between $1.70 and3.50 per minu te of staff time ($102 210 per hour) approximately $1.2 millionor FYs 2007-08 and 2008-09, respectively.

The purpose of the program review of the mental heappropriateness ofhe services provided basedn available documentation.hisincluded aeview of the Agency's billings, participant charnd personnel and records. We also interviewed a number of Agency's staff.The purposef the fiscal reviewf DCFS ' W raparound Programnd mental healtservices was to determine whetherMCES appropriately accountedor and spentWraparound and DMH funds providing the services outlineWe also evaluated the adequacyf the Agency's accounting recordand compliance with federal, State and County

Results of ReviewDMH Program ReviewIMCES properly recorded and deposited revenue andtaff assigned tohe DMHProgram possessed the required qualifications.n addition, IMCES ' salappropriately charged tohe DMH and Wraparound Programsnd the Agencymaintained personnel filess required.However, the Agencyid not always comply with County Specifically, IMCES:

Did not provide documentation toupport 665 (17%) of the 3,895 minutes The Agency subsequently adjusted theill accord ingly. As a result, oquestioned costs.Did not adequately describehe symptoms and behaviors exhibsupport the Agency's clinical diagnosis for seven47%) of the5 clients sampledntheir Assessments.Did not complete thelient Care Plans for ten (67%) of the 15 clients samplednaccordance with the County contract. Specifically,he Client Care Plans did notcontain specific goals.Did not complete six (17% ) of the 35 Progress Notesampled in accordance the County contract. Specifically, theix Progress Notes billedor men tal healtservices did not describe whathe clients or service staff atnd/oraccomplished towardshe clients' goals.


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Board of SupervisorsFebruary 26,010Page 3

DMH and DCF S Wraparound Fiscal ReviewIMCES shouldeturn $56,676 in excess Wraparound PrograCFS. At theend of eachCFS Wraparound Programear (PY), the Agency is allowed to runspent fundsp to ten percentf their program expenditures for Program use.he Agency is required to return any fundsn excess of ten pethe County.or the PY endingpril 30, 2008, IMCES ' unspent totaled $78,918 androgram expenditures totaled222,422. As a result,MCES isallowed to reserve $22,242 (10%f $222,422) for future Wraparoundse and isrequired toeturn $56,676 ($78,918 - $22,242) in excess funds to DCFS as requirethe County contract.In addition, IMCE S charged DMH $201,652 andCFS $76,200 ($54,000 forY 2007-08 and $22,200 for PY 2008-09)or unpaid donated services whichnallowableexpenditures per the County contract. As a result, IMCESprogram expenditures forhe Wraparound andMH Programs and repayhe Countyfor excess amounts received.MH pays IMCES a negotiated rate foreimbursement contract. At thend of the contract year,f the Agency's reexceed the actual expenditures on their Cost Report,he Agency mus t repay DMH forthe excessmou nt received.The details of our review along with recommen dationsor corrective actionattached.

Review of R eportWe discussedhe results of our review with IMCES ,MH and DCFS.n their attachedresponse, IMCE S agreed to maintain documentation to supporthe service minutebilled but disagree d with a fewf the recommen dations. IMCES heAgency's Assessm ents, Client Carelans and Progress Notes weren compliance the County contractnd the DMH Provider Manual.Our findingsere based on the County contract requirementsthe Agencynd DM H staff on several occasions. For the case n theirletter, the Progress Notes did not describehat the client or service staff atteand/or accomplished towards thelient's goal. In addition, MH agreed withurfindings and recomme ndations.IMCES indicated that the donated services chahe Wraparound and DMHPrograms are allowable expenditures since trecognized atair value. IMCES appropriatelyecognized the donated services accounting records.owever, the County contractnd the federal cost principornon-profits governed by the Officef Managem ent and Budget, Circular-122, do notallow Agencieso charge donated servicess program expenditures.


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Board of SupervisorsFebruary 26, 201 0Page 4

costs associated to the donated services shoulde removed from the DMH 1s andDCFS1Cost Reports. DMH andCFS indicated that they will request repaymtotal disallowed expenditures.We thank IMCE S managem ent for their cooperationnd assistance during eview.Please calle if you have any questionsr your staff may contac t Donhadwick at(213) 253-0301 .

Attachmentc: William T Fujioka, Chief Executive OfficerDr. Marvin. Southard, Director, Departmentf Mental HealthPatricia S. Ploehn, Director, Departmentf Children and Family ServicesTara Pir,h.D.,Board President and Executiveirector, IMCESPublic Information OfficeAudit Comm ittee


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DEPARTMENT OF MENTAL HEALTH AND WRAPAROUND PROGRAMSINSTITUTE FOR MULTICULTURAL COUNSELING& EDUCATION SERVICEFISCAL YEARS 2007-08 AND 2008-09BILLED SERVICES

ObjectiveDetermine whether Instituteor Multicultural Counse ling and Enc.(IMCES orgency) provided the services billed in accordance iththe Department of Mental Health (DMH ).VerificationW e reviewed 35 billings totaling,895 minutes from 86,660 service Medi-Cal billings from January and February 2e reviewed the Assessments,Client Care Plans and Progress Notes m aintainedn the clients' chartsor the selectedbillings. The 3,895 minutes represent services 5 program participants.ResultsIMCES didot provide docum entationo support 665 (17%)f the 3,895 minutessampled. Thegency adjusted the billings accordinglyhe day the sample asprovided to the Agency . As a result, there areo questioned costs.In addition, the Agency did not always complete Assessments,lient Care Plans Progress Notesn accordance withhe County contract requirements.AssessmentsIMCES didot adequately describe the symptom s and y the clientto support the Agency 's clinical diagnosis for seven he 15 clients sampledntheir Assessments. An Assessment is a diagnostic tool useo document the clinicalevaluation of each client and establish the client'sheCounty contract requires Agencies to followhe Diagnostic and Statistical ManufMe ntal Disorders (DSM ) when diagnosing clients.Client CarelansIMCES didot complete the Client Care Plans foren (67%) of the 15 clients samp lednaccordance withhe County contract. Specifically, the Clienid not containspecific goals.

A U D I T O R - C O N T R O L L E RC O U N T Y O F L O S A N G E L E S


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Institute for Multicultural CounselingEducation Services, Inc. Paae 2Pronress NotesThe Agency did not comp leteix (17%) of the5 Progress Notes snaccordance withhe County contract. Specifically,he six Progress Notes mental health services did not describe what r service staff attand/or accom plished towardshe clients' goals.

RecommendationsIMCES management:1. Monitor billingso ensure that billing errors are detected.2. Ensure thatssessments, Client Care Plans and Progress Notes arecompleted in accordance with the County contract.

STAFFING LEVELSObjectiveDetermine whetherhe Agency maintained the appropriate services.We did not perform test workn this section as thegency did not provide servicerequired staffing ratios for thisarticular program.

RecommendationNone.

STAFFING QUALIFICATIONS0biectiveDetermine whether IMCE S' treatmenttaff possessed the required oprovide the services.VerificationWe reviewedhe California Boardf Behavioral Sciences'ebsite and/or the personnelfiles for 10 of 35 IMCES treatmenttaff who provided services to DM HJanuary and February 2009.



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Institute for Multiculturalounselinn & Education Services, Inc.ane 3

ResultsEach employee in our sample possessedhe qualifications required heservices billed.

RecommendationNone.

UNSPENT WRAPAROUND REVENUEIMCES' Wraparound Approach Services (WraparouChildren and Fam ily Services (DCFS ) indicateshat the Agency is allowed unspent fundsp to ten percent of their program expendituror future Wrapa rounProgram usend return any fundsn excess of ten percent tohe County. Forheprogram year ending April 30, 2008, IMCES ' $24,918 and program expenditures totaled $276,422.year, IMCES charged the Wraparound Program or donated services,were unallowable expenditures perhe County contract. As a result, reduce their program expenditures by $54,000 222,422 ($276,422 - $54,000) andreport $78,918 ($24,918$54,000) in unspent revenue.In addition, perhe County contract, IMCE Ss allowed to reserve22,242 (10% of$222,422) for future Wraparound use ands required to return $56,676 ($22,242) in excess funds to DCF S.

RecommendationsIMCES management:3. Reduce the Wraparound Program expenditures for the contract yearending April 30, 2008 by $54,000 innallowable expenditures.4. Reserve $22,242o ensure thathe funds are used torovideWraparound Program services in subsequent years.5. RepayCFS $56,676.

ObjectiveDetermine whether cash receipts and revenue he Agency'sfinancial records and deposited timelyn their bank account.n addition, determwhether therere adequate controls over cash and other



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Institute for Multicultural CounselingEducation Services, Inc. Pane 4

VerificationWe interviewed IMCES managementnd reviewed the Agency's financial ealso reviewed their March009 bank reconciliation.ResultsIMCES maintained adequate controlso ensure that revenue was pronddeposited in a timely manner.

RecommendationNone.

COST ALLOCATION PLANObiectiveDetermine whether IMCES ' Cost Allocation Plann compliance wiheCounty contract and the Agency usedhe Plan to approp riately allocateexpenditures.VerificationWe reviewed the Agency's Cost Allocation Plan, their financial records .ResultsIMCES ' Cost Allocation Plan was prepared in che County contractndthe costs were appropriately allocatedo the programs.

RecommendationNone.

EXPENDITURESObiectiveDetermine whetherMH and Wraparound Program related under their County contracts, properly documentednd accu rately billed.



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Institute for Multicultural CounselingEducation Services, Inc. Page 5

VerificationW e interviewed Agency personnel, reviewed finannd documentation tosupport five Wrap around expenditures totaling2,597 and 15 DM H expenditurestotaling $1 8,692 between August 2008nd March 2009.

The samp led expenditures were generally allowabaccurately billedo DMH and DCFS. However,n June 2008,MCES charged DMH$201,652 and DCFS $22,200or donated services providedy the Agency's bmem bers. The County contract doesot allow Agencies toharge donated servicesprogram expenditures. As a result,he Agency needso reduce their pexpenditures for the Wraparound and DMH Programs aor excessamounts received.During the contract year, DM H paysMCE S a negotiated rateor their costreimbursement contract.t the end ofhe contract year, if the Agency's reexceed the actual expenditures on theirost Report, the Agency must repay orthe excess amou nt received.As indicatedn the Unspent Wraparound Revenue sectioMCE S is required reserve their unspent Wraparound revenuend repay DCFSor excess fundst theend of their contract year.or the contract year ending April 30,009, IMCES needsreduce their Wraparound Program expendituresy $22,200 and repay heexcess amoun t received beyondhat needs to be reserved athe Agency.

RecommendationsIMCES management:6. Revise their DMH Fiscalear (FY) 2007-08 Cost Report to reduce thereported programxpenditures by $201,652 in unallexpenditures and repay DMH for any excess amounteceived.7. Reduce the Wraparound Program expenditures by $22,200 for contract year ending April 30, 2009 and repayCFS for any excessamount received.8. Ensure that onlyllowable program expenditures are billed to theDMH and DCFS Wraparound Programs.



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Institute for Mu lticultural Counseling & Education Services, Inc. Page 6FIXED ASSETS

ObjectiveDetermine whether fixed asset depreciationosts charged to the DMH and WrapPrograms were allowable underhe County contract, properly ndaccurately billed.VerificationWe interviewed Agency personnel and reviewed to fixed assets. In addition, we reviewed the fixed assets with deprec iation f$664 that the Agency chargedo the DMHnd Wraparound Programsn FY 2007-08.ResultsIMCES ' depreciation costs were allowable, properlnd accura tely bil

RecommendationNone.

PAYROLL ANDERSONNELObjectiveDetermine whether payroll expenditures were o the DMH andWraparound Programs. In addition, determine whether personnas required.VerificationWe traced the payroll expenditures for 12 employees49,516 to the payrollrecords and time reportsor the pay period ending March 31lsointerviewed and reviewed personnel files forhe 12 employees.ResultsGenerally, IMCES ' salariesere appropriately charged to the DPrograms and the Agency maintained personnel files asequired.

RecommendationNone.



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Institute for Multicultural Counselinq& Education Services, Inc.aqe 7COST REPORT

Objective~ e t e r m i n ewhether IMCES'Y 2007-08 Cost Report reconciledhe Agency'sfinancial records.VerificationW e traced the Agency's FY 2007-08 Cost Report tohe Agency 's general leResultsThe Agency 's total expenditures listed on theirost Report reconciled tohe A gency'saccounting records.owever, as previously indicated,he Agency charged Dunallowable expenditures duringY 2007-08. IMCE S needs to reY 2007-08Cost Report by $201,652 and repay DMH for an

Recommendation9, IMCES ensure thatheir Cost Reports are accurate and include onlyallowable expenditures.

PRIOR YEAR FOLLOW-UP0biectiveDetermine the status ofhe recomm endations reportedn the prior monitoring completed by the Auditor-Controller.VerificationW e verified whether the outstanding recomm endationsY 2004-05 monitorreviews were implemented. Theeport was issued on December 9,200 5.ResultsOur prior monitoring report contained four recomMCES implementthree recomm endations and didot implement one recomm endation.indicated, the outstanding recomm endation relatcontained inthis report.

Recommendation10. IMCES management implement the outstanding recommefrom our prior monitoringeport.



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AttachmentPage 1 of 5


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AttachmentPage 2 of 5institute For Multicultural CounselingEducation Services.I.M.C.E.S.)County ofos AngelesAuditor-Controller KeviewPage 2 of 5

Responses and Action PlansBilled Services# 1Although we were told this item was removed from the finding recommendations based onproviding proper IS documentation, IMCES will monitor our IS input closely in order to avoidpossible errors also we would ensure thatroper documentation is provided for services.#2In regards to the recommendation #2: "Ensure that Assessments, Client Care Plans and ProgressNotes are completed in accordance with the County contract" we would like toespectfullydisagree with these findings as we believe that the Auditor's view of utilization of DSM-IV wassubjective. IMCES supports assessments utilizing diagnostic material straight from the DSM-IVand the diagnostic criteria qualifLing each client for the diagnosis given is clearly demonstratedin the documentation of the Initial Assessment. Regarding client case plans, our care plans aresupported by symptoms documented in thenitial Assessment and each goal is S.M.A.K.'I'.;specific, measurable, attainable, realistic and timely making it very clear to each client what ourservices arentended to help them with and providing ed h staff with direction in their serviceprovided to the client. Regarding Progress Notes, it is clear that each service provided toclientele directly benefited that client's progress toward their goal in the care plan. There wasone isolated situation which was taken out of context regarding a client who, ironically, happensto be a client with a significant success story where the client even complimented IMCES to theBoard of Supervisor. This client had been homeless for 30 years, suffering fi-om severefunctional impairments which were a hazard to himself and the community. IMCES FSP teamwere able to support this client in improving his level of functioning from a place where he spenthis days and nights sitting on the streets, harassing tourists and store owners to theoint that hehas been successful in maintain housing consistently over a 12 month period of time. This clienthad an immediate, unforeseeable, one time need after his release from jail (during which time helost his SSI coverage) which our clinical staff provided a targeted intervention which wasallowed through proper documentation in the intesvention section of the client care coordinationplan.We believe after reviewing the notes sampled by Auditor Controller that IMCES is in completecompliance with our County contract and the DMH Provider manual. IMCES constantly strivesto maintain the highest levels of competency and excellence in our training of staff as well asservice delivery to the underserved population we service. Our plan for the hture will entail acontinuation of thisttitude and commitment as well as increasing the already high number oftrainings and quality supervision to our staffegarding each aspect of clientare anddocumentation of this careccording to theounty and State requirements.


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Institute For Multicultural Counseling& Education Services. (I.M.C.E.S.)County of I,os AngelesAuditor-Contsoller ReviewPage 3 of 5

Unspent Wraparound RevenueIMCE S was presented withn opportunity to benefit from contribution We did consult with appropriate authorities includingPNA uditors who are specializingn thenon profit organizations financial managem ent. Also,ur DM H contract under finanrequirement; page 16 itemindicates thathe agency can use Statement of financialAccounting Standards (SPAS) as a principle of financial recording.e followed the exactprocedure of docum entation by recording both the revenue and expendituhe countyauditor acknowledgedhis principle of recordings acceptable method.# 3MCES managem ent followedhe accounting and financial reporting rf the SFAS116 related to donated services.n response to the subjectudit recommendation, the $54,000charged tohe Wraparoun d Program represents the fair market was recognizedn the period in which the services were receivef financialAccounting StandardsSFAS) 116 definesontiibuted services as those that ".enhance non financialssets or require specialized skills, are providedy individuals possessinthose skills, and would typicallyeed to be purchasedf not providedy donation. Servicesrequiring specializedkills are providedy accountants, architects,arpenters, doctors,electricians, lawyers, nurses,lumbers, tcachers, and other professionals anContributed services and promiseso give serviceshat do not meet the above criteriare not tobe recognized." Also,he service hours were not onlyerfolmed and properly docum ented;DMH Program receivedhe benefit of all of theseesvices at the expense of hours volunteeredythe qualified individuals.Based on the foregoing SFA S description, IMCE S managem ent believesas approp riatelyrecognized the Donated Servicesnd was justified to includehe fair market valuef the chasgesin the Wraparoun d program expenditures. Therefore,MCES wo uld like to reque st Wraparou nd program expendituree considered as allowable expenditure.# 4MCES management agrees withhe auditor's reconlmendation to maintain 10% reserve subsequent years Wraparoun d programxpendituses. However, IMCES managementthe 10% reserve shoulde based on the $276,422 total expendituseseposted at the program yearending April0,2 008 . Therefore theesellre of $27,642 shoulde maintained by IMCE S.# 5ince IMCESs to maintain a rcservc of $27,642 for subsequent Wraparoun dndthe total excess revenue itad at 04130108 prog ram year endas $24,918, there will nnyavailable fundsor repayment to the D CFS.


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Institute For Multicultural CounselingEducation Services.1.M.C.E.S.)County of LosngelesAuditor-Controller ReviewPage 4 of 5

ExpendituresIn Thisection, Auditor-Controller indicated that "the sampled expenditures were generallyallowable, properly documented and accurately billed to DMH and DCFS" however Auditorsrecommended that IMCES do not include donated services to the programs.IMCES was presented with an opportunity to benefit from contribution of professional services.We did consult with appropriate authorities including CPNAuditors who are specializing onhenon profit organizations financial management. Also, our DMH contract under financial recordsrequirement; page 16 item 2 indicates thathc agency can use Statement of financial AccountingStandards (SFAS) as a principle of financial recording. We followed the exact procedure ofdocumentation by recording both the revenue and expenditure. In fact theounty auditoracknowledged this principle of recording ascceptable method.# 6MCES management followed the accounting and financial reporting requirements of the SFAS116 related to donate services. In response to the subject audit recommendation, the $201,652charged to the DMH Program represents theair market value of the donated services that wasrecognized in the period in which the services were received. SFAS 116 defines contributedservices ashose that "...create or enhanceon financial assets or require specialized skills, areprovided by individuals possessing those skills,nd would typically need to be purchased if notprovided by donation. Services requiringpecialized skills arerovided by accountants,architects, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers, and otherprofessionals and craftsmen. Contributed services and promises to give services that do not meetthe above criteria are not to be recognized." Also, the serviceours were not only performed andproperly documented; the DMH Program received the benefit of all of these services at theexpense of hours volunteered by the qualifiedndividuals.Based on the foregoing SFAS description, IMCES managelnent believes that it has appropriatelyrecognized the donated services and was justified to include the fairarket value of the chargesin the DMH program expenditures and theMH FY 2007-08 Cost Report. Thcrcfore, IMCESwould like to request that the expenditure be considered as allowable expenditure.# 7-MCES management followed the accounting and financial reporting requirements of the SFAS116 related to donated services. In response to the subject audit recommendation, the $22,200charged to the Wraparound Program represents the fair market value 01he donated sei-vices thatwas recognized in the period in which the servicesere received. SFAS 116 defines contributedservices ashose that "...create or enhanceon financial assets orequire specialized skills, areprovided by individuals possessing those skills,nd would typically need to be purchased if notprovided by donation. Services requiringpecialized skills are provided by accountants,architects, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers, and otherprofessionals and craftsmen. Contributed services and promises toive services that do not meet


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AttachmentPage 5 of 5Institute For Multictlltural Counseling & Education Services. (I.M.C.E.S.)County of Los AngelesAuditor-Controller ReviewPage 5 of 5

the above criteria areot to be recognized." Also, the service hours were not only performed andproperly documented,he DCFS Program received the benefit of all of these servicest theexpense of hours volunteered by the qualifiedndividuals.Based on the foregoingFAS description, IMCES management believes that itas appropriatelyrecognized the Donatcd Services and was justified tonclude the fair market value of the chargesin the Wraparound program expenditures. In addition, a 10% reserve based on the total 2008-09expenditures of $382,912 was established at $38,291, therefore no excess amounts to be repaidto the DCFS.

#8IMCES management believes that it billed for allowable program expenditures to theMH andthe DCFS contracts. IMCES followed itsndependent Certified Public Accountant'srecommendation to record and recognizeonated Services in its financial reporting to itsfunding sources.MCES will ensure that only allowable expenditures are billed to therograms.Cost Report#9

As previously indicated IMCES followed the acceptable accounting principle andecorded bothrevenue and allowable expenditure.MCES will ensure that the cost reports areccuratelyreflecting the allowable expenditures.Prior year follow-up#loWe believe we have implemented all of the recommendations fiom prior monitoring report. Theone item indicatedhould not be an outstanding as it was caused by IS in error.

2010/02/26 institute for multicultural counseling and education services, inc. contract review

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