Audits find misdeeds in two child nutrition operations

In separate audits released today, the state Comptroller’s office has found misdeeds afoot in two child nutrition programs — on in Nashville, the other in Clarksville.

The news releases are below, along with a statement from the Department of Human Services disagreeing with some of the auditors’ comments.

News release from state comptroller’s office
An investigation by the Tennessee Comptroller’s Office has uncovered significant problems related to the Academy for Kidz (AFK) child care center in Nashville, Tennessee. Comptroller investigators are questioning $83,881 in federal reimbursements paid to the center for feeding children.

Academy for Kidz is a for-profit child care center that is licensed by the state to care for a total of 56 children. AFK feeds children their breakfast, lunch, and an afternoon snack. All of these children qualify for free meals. Meal reimbursement claims are filed each month with the Tennessee Department of Human Services (DHS) which administers the federal Child and Adult Care Food Program on behalf of Tennessee.

Comptroller investigators question the legitimacy of all $83,881 paid to AKF from July 1, 2014 through September 30, 2015. Investigators found that meal reimbursement claims reflected an inaccurate amount of children served. The AFK owner would prepare meal count records indicating that all children enrolled were present each day for the month. For multiple months in a row, AFK claimed 100 percent attendance and meals served to all enrolled participants.

Additionally, daily sign-in/sign-out attendance records were not accurate and, in many instances, were falsified. In some cases these sheets were photocopied for the entire month. Other sheets were dated on Sundays when the day care was closed. Investigators also noted white-out was used on these records to conceal the actual child count.

Comptroller investigators also cited inadequate monitoring by the Tennessee Department of Human Services. DHS is responsible for monitoring and addressing the occurrence of fraud, waste and abuse within the Child and Adult Care Food Program. Several problems were not noticed by DHS during an on-site monitoring visit in January 2015.

“The Comptroller Office’s continues to find problems with the food programs administered by the Department of Human Services,” said Comptroller Justin P. Wilson. “Effective monitoring is essential to uncovering fraud within these programs. The monitoring in this situation did not detect obvious irregularities.”

The findings and recommendations in the investigative report have been reviewed with the district attorney general for the Twentieth Judicial District.

To view the investigation online, go HERE.

News release from state comptroller’s office
The Tennessee Comptroller’s investigation of the Cherry Tree Food Program in Clarksville, TN raises questions about $181,135.59 spent by the nonprofit. Much of that money personally benefited the former executive director.

Cherry Tree is primarily funded by the federal Child and Adult Care Food Program, which is administered in Tennessee by the Department of Human Services (DHS). As of July 1, 2015, Cherry Tree supported 267 daycare homes and 23 daycare centers in Tennessee by assisting them in filing monthly claims for meal reimbursements. Cherry Tree is reimbursed for its administrative expenses.

Comptroller investigators are questioning $181,135.59 spent by Cherry Tree between October 1, 2012 and June 30, 2015. These expenditures were not approved by DHS in Cherry Tree’s annual budgets. Many of these unauthorized payments benefited the former executive director. The offices for Cherry Tree were located in a portion of the former executive director’s personal residence.

These expenses include:

· $38,792.31 for a gazebo, new water heater, wrought iron handrails, replacement of windows and vinyl siding, installation of tile floors, installation of kitchen and bathroom sinks, ceiling fans, electrical work, and various other maintenance and repairs to the former executive director’s home.

· Unauthorized lease payments totaling $17,900 to the former executive director or her family.

· $47,426.70 in unauthorized payments and questionable reimbursements to the former executive director

· $57,072.98 in other unauthorized and questionable disbursements including charges for hotel rooms, air travel, rental cars, furniture, fuel, and electronics.

· $10,043.60 in food and beverage purchases at both stores and restaurants.

· $9,300 in unauthorized Christmas bonuses, and personal loans with a total outstanding balance of $600 paid to employees.

The findings and recommendations in the investigative report have been reviewed with the district attorney general for the Nineteenth Judicial District.

“The Tennessee Department of Human Services and Cherry Tree’s board dropped the ball in this case,” said Comptroller Justin P. Wilson. “DHS and the board should have reviewed disbursements to ensure they conformed to the approved budgets. A lack of oversight allowed these problems to continue for more than 2 1/2 years.”

To view the investigative report online, go HERE.

Statement sent to media by Department of Human Services:

“The Tennessee Department of Human Services (TDHS) had identified many of the issues noted in the Comptroller’s reports through our oversight and monitoring process and prior to the Comptroller’s audit staff review. One of the entities actually self-reported some of the issues to the department. The expenditures by Cherry Tree were not approved by the TDHS as stated in the Comptroller’s report. The TDHS had already taken steps towards correcting Cherry Tree and it closed in lieu of termination by the department. The TDHS had also started recouping funds from Cherry Tree prior to this report. It should be noted there was no evidence by the Comptroller’s office that children were not fed by the agency in question. The TDHS takes oversight and monitoring seriously and will continue to work with our partners at the state, local, and federal level. We respectfully disagree with the conclusion that TDHS is not providing proper oversight. In fact TDHS has increased oversight across the department since 2011. It is our impression that most of the program sponsors we work with generally share in the desire to fulfill the mission of the program and work to do so effectively.”- Stephanie Jarnagin, DHS spokesperson