Strengthening financial stewardship

Status update: Responding to the audit

Recommendation 1

Fiscal management

The Department of Community and Human Services should develop, document, and implement a strategy to strengthen internal controls for financial management that includes, at a minimum, 1) a clear vision of how financial stewardship relates to program goals, and 2) the role of compliance, fiscal, and program staff in supporting fiscal stewardship.

Due Date: June 30, 2027

Status

An external consultant completed an assessment and gap analysis of:

• Contract Set Up and Governance
• Post-Award Contract and Invoice Management
• Accounting and Reporting
• Fiscal Compliance
• Technical Assistance and Capacity Building

DCHS and the consultant are now working on a phased implementation strategy for improvements, including updated policies and procedures, training for staff and contractors, and a strong focus on the role of all DCHS staff in fiscal stewardship and accountability.

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Recommendation 2

Fiscal management

The Department of Community and Human Services should work with Public Health – Seattle & King County to develop, document, and implement a plan to identify opportunities for efficiencies in the financial oversight of organizations funded by both departments.

Due Date: June 30, 2026

Status

DCHS and Public Health - Seattle & King County established an inter-departmental workgroup focused on mapping out existing financial monitoring and risk assessment processes across both departments. The workgroup’s findings will inform our approach to department roles, timelines, and process changes.

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Recommendation 3

Fiscal management | Contract management

The Department of Community and Human Services should develop, document, and implement a plan to offer ongoing anti-fraud training for all staff. At a minimum, this training should include information on the impact of fraud, why people commit fraud, how to identify it, and how to report it.

Due Date: December 31, 2026

Status

DCHS had select staff complete anti-fraud trainings this summer and is now partnering with King County's Finance and Business Operations Division to research and select the most suitable anti-fraud trainings. Once selected, the department will pilot the training for key staff in early 2026 and revise it based on feedback. By mid-2026, anti-fraud trainings will be available for all employees to complete by the end of the year.

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Recommendation 4

Fiscal management

The Department of Community and Human Services should conduct and document the results of a risk assessment of its hybrid payment model that specifies how its response appropriately mitigates the risks of fraud and improper payments.

Due Date: June 30, 2026

Status

DCHS has completed the risk assessment of the hybrid payment model. This model is a type of contract where DCHS pays a set amount at a point of time based on contract budgets. The assessment looks at the model’s process and reconciliation timing and include recommendations for improvement that will be implemented as part of our next steps.

While new risk mitigation steps are developed, the Chief Financial Officer is required to approve new hybrid contracts.

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Recommendation 5

Contract management

The Department of Community and Human Services should develop, document, and implement a plan to monitor the effectiveness of the Best Starts for Kids capacity-building program in improving the financial capacity of grantees and use monitoring results to inform Recommendation 6.

Due Date: June 30, 2027

Status

A full evaluation of the Best Starts for Kids capacity building strategy is underway. DCHS is collecting data on financial capacity building supports and their impacts. This will help inform DCHS’ response to Recommendation 6 and for when planning begins for a potentially renewed Best Starts Levy.

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Recommendation 6

Fiscal management | Contract compliance

The Department of Community and Human Services should develop, document, and implement a plan for effectively communicating to grantees their role in financial stewardship and how they are supported and held accountable to that role.

Due Date: March 31, 2026

Status

Since the audit’s release, DCHS has held trainings for staff and providers:

• The Children, Youth, and Young Adults Division hosted a training on document review for Best Starts for Kids contract and fiscal management staff.
• Around 40 Best Starts for Kids contracted providers participated in a fiscal management best practices training.
• The Veterans, Seniors and Human Services Levy Summit held a financial stewardship training for approximately 40 providers.

DCHS will hold three financial stewardship training courses by the end of March 2026 that are responsive to Ordinance 19978 and Recommendation 6. Right now, we are:

• Identifying trainers and developing training content.
• Developing infrastructure to operationalize the trainings.

Training courses will be available to all DCHS contract agencies. The department will require Financial Management and Best Practices training for multi-year contract agencies receiving more than $50,000 in county-administered moneys during a single biennium, consistent with Ordinance 19978. DCHS plans to share more information about how contract agencies can fulfill this requirement by the end of March 2026.

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Recommendation 7

Contract management

The Department of Community and Human Services should enforce contract requirements related to subcontractors by ensuring, at a minimum, that 1) it has issued written approval for all subcontractors, 2) subcontracts contain language required by contract, and 3) it takes action to correct any improper payments that may have occurred related to unapproved subcontracts.

Due Date: March 31, 2026

Status

DCHS formed a cross-divisional workgroup to review current practices and develop new policies, procedures, and staff support tools for subcontract management. DCHS will make sure staff have resources to enforce subcontractor requirements and identify and report any improper payments. Because these policies and procedures will be part of a larger contract management framework, we’ll need additional training and improvements throughout 2026 and early 2027 for consistency in implementation.

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Recommendation 8

Contract management | Contract compliance

The Department of Community and Human Services should develop, document, and implement clear and consistent policies and procedures for:

1. invoice validation including, at a minimum, a) guidance on allowable and reasonable costs and b) staff duties to request and review supporting documents for high-risk costs, like subcontracts, stipends, and prepaid cards
2. contract amendments
3. stipend payments
4. prepaid card logs
5. when contract payments exceed actual expenditures
6. contract termination
7. funding eligibility of for-profit businesses as both grantees and subcontractors on community grants
8. documentation management including, at a minimum, the appropriate system(s) for collecting and storing documentation that is used to validate invoices and comply with contract terms

Due Date: March 31, 2026

Status

DCHS is reviewing policies and procedures from other government agencies, human services departments, and other contract-focused organizations to identify proven approaches and models that can be adapted for King County. The external consultant (see Recommendation 1) will provide guidance on policies and procedures. All of this will inform how we standardize contract and fiscal management.

Here’s what we’re working on now, with more planned for 2026:

• Procedures and checklists to support consistent invoice validation. These tools will specify staff roles, documentation standards, and review steps for higher risk expenditures like stipends and prepaid card logs. Interim controls are now in place to strengthen oversight while policies are being finalized.
• Policies on who DCHS can contract with, and protocols for contracting with for-profit entities.
• Procedures and checklists for contract- and invoice-related document collection and storage.

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Recommendation 9

Contract management

The Department of Community and Human Services should develop, document, and implement checklists that help ensure staff adhere to all policies and procedures established in Recommendation 8.

Due Date: December 31, 2026

Status

DCHS recently hired a Contract Management Best Practices Manager who will start in January. This role will work to ensure new policies and procedures in Recommendation 8 have checklists, job aids, and training to support with consistent implementation.

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Recommendation 10

Contract management | Contract compliance

The Department of Community and Human Services should develop, document, and implement a comprehensive staff training plan that covers policies, procedures, and checklists from Recommendations 8 and 9.

Due Date: June 30, 2027

Status

The new Contract Management Best Practices Manager will create a comprehensive staff training plan to fulfill Recommendations 8 and 9. DCHS will hold policy and procedure-focused trainings next year. As we receive additional guidance beyond Recommendation 8, we’ll develop a plan for contract management staff.