- I . ?Lliar- fwwrises [Le - ?t Us?? 37 is? LL I 1. Secretary ?eral . la. 2. Minister K?i ?7 . ?l I Quit) Early Years Schemes: Governance and Compliance Measures I understand the Secretary General has briefed you recently in relation to progress on Early Years compliance issues and that he promised to give you a copy of a detailed report provided to the Management Board, which was discussed at the Board meeting of 12 February. I attach the report, dated 30 January 2018. While it is the Executive Summary on pages 3 to 8 sets out the position briefly, and signposts the main issues by page number in the main text. We have added a short new piece on governance and compliance relating to the forthcoming Affordable Childcare Scheme at Tab A. The report provides an update on the key steps that have been taken since July 201? (when we last formally updated the Management Board] to advance the significant work that needs to be done on the existing schemes. As you know, we have been working intensively on measures to improve longstanding legacy issues relating to governance, compliance and financial accountability. But, we have made it clear that even with this work, our risk rating in this area is likely to remain firmly in the ?red' for some time to come. Our future risks will be significantly reduced by measures recently put in place, and measures we are advancing now, but a lot more work needs to be done over time. Looking forward, the new Affordable Childcare Scheme gives us an opportunity for a sustainable scheme, with a strong legislative base, a modern and robust governance and compliance framework, 3 clear communication of rules, and well-designed training and support forimmementation? the interim however, its design is also proving of assistance to our governance of the existing schemes. There is both learning from legacy issues which is informing the design of the new system, and some of the training and other material we are preparing for the ACS can be used we hope to upskill and support services for the 2018 [2019 schemes. We are still some distance away from addressing all of the legacy issues in the existing targeted schemes, but i think that the measures outlined in the report attached demonstrate reasonable progress made in recent months. Now that we have the senior staff in place in the Early Years Governance, Finance and Reform Unit, as approved by the Management Board, we hope to advance our work further at a pace. I am happy to discuss any aspect of the report with you, should you wish, and we will keep you informed of developments as our work proceeds. Bernie McNally Assistant Secretary eneral 14 February 2018 Early Years Finance, Governance and Reform Unit Brie?ng for DCYA Management Board on Early Years Compliance Issues 30?? January 2018 Contents Executive Summary 3 Purpose 3 Contest 4 Staffing updates for Early Yea rs Finance, Governance and Reform Unit 5 Key actions since July 2017 5 Other related developments 6 Progress on governance and compliance requirements for DCYA identified by Early Years Finance and Governance in July 2013'r 2 Section 1 8 New governance arrangements with Pobal CAR 8 2017 Update, Actions and Progress 9 Revision of rules 9 Summary of 20161201? compliance cycle 10 Pobal Compliance Service Offer 2017/2013 and recategorisation of non-compliance 13 Section 2 16 Overview of compliance cases 16 Overclaim cases 1? High risk cases 21 Audit Procedures 21 Compliance Framework 22 Section 3 23 Other issues: Programme Support Payment [Non-contact time) 23 Other issues: Development of ACS 24 Other issues: Development of Financial Guidance (RFT) 24 Page 1 of 54 Other issues: Early Years Capital 25 Other issues: Audit recommendations 25 Other issues: Outreach and communication 26 Key actions for 2018 26 Appendix 1: Summary of Risk Cases 28 Appendix 2: July 2017 Management Board Brie?ng 35 Appendix 3: Interfaces between DCYA and Pobai {extract from 2018 programme of work}. 53 Appendix 4: Com pliance Framework 54 Page 2 of 54 Executive Summary Purpose This brie?ng provides the Management Board with an update on: - Governance, compliance and ?nancial accountability in Early Years Care and Education and key changes since July 2017 when the Management Board was last updated - Incremental strengthening of the compliance function for childcare funded programmes in the 2017f20l 8 programme cycles - Key compliance issues and actions for 20 8 Approval will be sought from Secretary General in the coming weeks for: l. The proposed approach to progressing recoupment in overclaims cases 2. The compliance framework to be applied in the current compliance cycle (This will follow the MB discussion and a meeting planned with the CEO of Pobal next week.) Whilst steady progress is being made to address very serious legacy issues regarding childcare programmes, it cannot be overstated that the journey has really only begun. Continued, intensive efforts are required from DCYA and Pobal, over the next two to three years, to build or improve the required infrastructure and to then incrementally build upon it to meet all requirements. The Management Board's approval of signi?cant additional resources within DCYA was essential to meet the policy, operational, governance and regulatory requirements of this critical sector. These resources now require time to deliver on detailed business plans over 2018 and 2019. (Pobai has also indicated that further additional resources will be required to progress some of the most signi?cant issues across their compliance, audit and risk function.) Signi?cant progress has been made across a wide spectrum, and this is outlined in this report, but, overall, the Early Years Finance, Governance and Reform Unit considers its risk rating for governance, compliance and financial accountability to remain ?rmly in red, and that it will remain there for some time. Page 3 of 54 Future risk will be signi?cantly reduced by mitigations recently put in place, and mitigations that are being developed for introduction in the short and medium term, but, very serious legacy issues may remain live for some time and continue to pose significant risk in the medium term. Whilst every effort will be made to deal with these legacy cases in an efficient and timely manner, via an agreed approach, substantial risk will remain until they are fully closed off. (The context of the Early Years sector and schemes remains the same as set out in the July 2017 report to the MB. (The July 2017' submission in included as appendix The EY context section below therefore provides a short summary only on the EY sector and schemes. Context DCYA is responsible for a number of separate childcare funding programmes. The first and biggest is a universal programme known as the Early Childhood Care and Education scheme (ECCE), or ?free pre-school?. The other programmes are targeted and include: I Community Childcare Subvention (CCS) - Community Childcare Subvention Plus including the universal subsidy CCSU - Community Childcare Subvention Resettlement (CCSR) - Community Childcare Subvention Resettlement (Transitional) I Training and Employment Childcare (TEC) It is intended that the Affordable Childcare Scheme (ACS), when introduced, will replace the targeted schemes. In 2017, these childcare schemes benefited more than l50,000 children and cost approximately ?416.3m (note: this was initially pro?led for ?465.6m, representing an underspend of ?49.3m, including the incorporation of the monies returned by Pobal at year- end). The current 2018 allocation for all childcare supports by the DCYA is ?485m and should support 130,000 children. Page 4 of 54 Staffing update for Early Years Finance, Governance and Reform Unit The Early Years Finance, Governance and Reform Unit was initially established in February 2016 when Early Years was expanded from I PO to two P05. It has however experienced considerable staffing issues since establishement. Vacancies, and new staff settling into complex roles, have impacted significantly on the planned work program. The staffing of the Unit has been as follows: 1 P0 initially appointed February 2016 - vacancy since August 2017. Limited cover provided since then by EY Operations PO who is also covering for the EY Quality PO post (due to be ?lled April 18). The new P0 for EY Finance, Governance and Reform is due to be start on 29 January. 0 2 APs started in June and September 2017 (previous AP appointed in February 2016 transferred in summer 2017) 1 AP on secondment from a Childcare Committee, started summer 20] 7 I 3 started in May and July 2017 2 E05 (or equivalent) started in October 2017 1 C0 started in December 20] 7 As can be seen from this, 100% of the team are less than nine months in post. One new AD, two new EOs positions, and one ED vacancy will be ?lled as soon as possible. Records from the Unit will show that on establishment, the Unit invested signi?cant time on diagnosing the problem and considering a plan of action. The recent turnover of staff has naturally involved an element of re-diagnosis. Nonetheless, the following section summarises progress made within the Unit itself and where relevant across the wider EY division. Key actions since July 2017 This section provides a short overview of some of the key actions undertaken by DCYA Early Years division since July 2017 in relation to governance, compliance, and ?nancial accountability. Each is explained in more detail later in the report. [Please note the staffing situation described above.) I Successful business case made to MB for additional resources. - Comprehensive SLA agreed with Pobal and signed in Q4 2017. New governance arrangements with Pobal. Additional staff approved for Pobal?s Compliance, Page 5 of 54 Audit and Risk service (CAR). Ongoing discussions re strengthened Audit role to supplement compliance activity. Please see detail on page 6. Agreement with Pobal on its Compliance Service Offer, _Further information is awaited from Pobal prior to ?nal sign off), detail on page 10. Agreement in principle with Pobal on Compliance Framework, - ?d?tail on page 19. Further revisions of programme rules with EY Operations to clarify requirements of providers and strengthen compliance, detail on page 7. Consultants appointed for development of ?nancial toolkit for service providers, detail on page 21. Integrated working with, and advice to, ACS team, detail on page 2 l. Constructive r? effective relationships developed internally with EY Operations Unit and EY Projects to optimize learning and change required. A number of formal and informal team building initiatives to develop shared ownership of issues and collective vision for the future. ?13m in Programme Support Payments provided to services to assist with their administrative burden, detail on page 20 Development of Early Years Capital and School Age Capital schemes to assist services with critical infrastructure improvements and capacity building, detail on page 22. Elm in funding provided to 60 services to support their sustainability (on a once off basis). All audit requests met and ongoing action being taken to implement all previous audit recommendations. Other related developments Other related developments being progressed across the Early Years Division which will have positive implications for a robust early years governance and compliance environment Page 6 of 54 0 National Early Years Strategy (due to go to Government July 2018} 0 Review of Systems and Structures RFT to issue in Q2 2018, drafting in progress) 0 Independent Review of Cost of Delivering Childcare Crowe Howanh appointed Q4 2017. Report due June 20 8) I ACS Bill to begin second stage on 31 January. RFT for ACS IT system to be published in coming days. I Further successful Estimates process completed. Additional investment received to assist providers provide sustainable, quality services. (80% increase in budget over three years) 0 Improved financial management within EY, including more accurate pro?ling etc. Requirements for DCYA as identi?ed by Early Years Finance and Governance in July 201 7: Summary update To assist direct comparison against the July 20? report to MB, the following is an extract of that report setting out critical responsibilities of DCYA in the governance and compliance domain. A January 2018 update is provided in the second column. Content is not exhaustive but indicative ofmore signi?cant actions that have been taken across the EY division. July 2017 Report to MB January 2018 Update 1 Ensure that suitable resources are in New staffallocated to Early Years in 2016. 20]? and 2018. place internally overa sufficient timeline Staff retention and wellbeing supported through the above. to adequately scope and design new more realistic workload. distribution of risk etc. schemes. revise existing ones {including Various initiatives to team build across units and to improve creating strong and clear rules. contracts. the integration and collaboration between units. sanctions etc.) Expertise procured where required cg ITEF. Crowe Horwath 2} 2 Develop new schemes and reform Additional staff approved to enable Work to be done in existing schemes in accordance with sustainable manner and to standard required. public sector Spending codes. relevant ACS beingdeveloped circulars and codes of practice and ECCE, CCS and TEC rules and contracts reviewed and standards. improved Plan for ECCE to be put on a statutory footing in the medium term. Results ofall audits informing action. 3 Communicate these rules and obligations Three revisions ofrules in the last eighteen months with the sector in a professional. Ongoing review of Rules and Contracts with assistance from collaborative and respectful manner experts where required National roadshow events held in 8 locations. Dedicated Communications Unit being established. Early Years Forum in place and being strengthened. Number ofConsultative groups in place to advise DCYA and Pobal on provider view. Crowe Horwoth procured to advise on supports required by sector to implement strengthened ?nancial rules. Page 3? of 54 Review and oversee a highly effective compliance and sanction regime SLA signed with Pobal. Pobal work programme for 2018 being agreed. Pobal Compliance Service Offer being ?nalized Compliance Framework close to sign off. Improved performance management of Pobal in development Proposals in development to link Programme Support Payments and Capital Grants to compliance outcomes. This has been ?agged to the sector. Support community and private early years services to meet governance requirements 3 leads appointed to DCYA to assist with various aspects ofthis work Crowe Horwarth appointed to ?work on ?nancial guidelines and 2) conduct the independent review ofcosts. Eilim in Programme Support Payments formerly non- contact time payments) provided to sector to assist with administrative burden Further increase in Budget 2018 to assist sustainability and quality Review the funding of services to ensure that base funding is adequate to enable services invest in the necessary administrative and governance infrastructure The independent Review of Costs commissioned and being overseen. This will inform ACS and other. Spending Review completed by ACS and REU teams. Elm in sustainability supports provided in 20?. Process included detailed analysis of?services business model. Sustainability policy being developed by the DCYA at this time. Continue to manage the high level ofrisk that exists as active measures are taken in the short and medium term to address the Active maintenance ofrisk register Biannual reporting to ME Case management ofidenti?ed high risl-ts cases ongoing many serious issues Section 1 New governance arrangements with Pobal Compliance, Audit anti Risk (CAR) Since July, Early Years Finance, Governance and Reform Unit has met with Pobal Compliance, Audit and Risk (CAR) on a number of occasions and has agreed a new regular schedule of meetings to ensure that compliance issues are addressed ef?ciently and lines of communication remain clear. This includes thematic meetings focused on particular compliance issues, and quarterly high-level strategic meetings related to compliance. in addition, DCYA will host quarterly oversight and management meetings at Assistant Secretary/{CEO level between DCYA and Pobal. The Secretary General will attend the next meeting scheduled for Wednesday 315? January 20l8. A multi annual SLA was agreed with Page 8 of 54 Pobal in 2017. Pobal costs for Programme of Work 20l8 are currentl}r under discussion. A chart of interfaces between Poba] and DCYA is included as Appendix 3. 2017 Update, Actions and Progress Revision of rules Rules for DCYA Childcare Funding Programmes have been revised twice in 2017 (most recently in October 2017] in order to ensure that the requirements of service providers are made clear. Of particular importance in terms of compliance is emphasizing the need for service providers to keep adequate attendance records, which should include times in and out for each child. The rules now also make clear that: ?Where it is found that the chitldcore provider has not kept records or where records are to establish the days and durations of attendance the Department may withdraw ?ttnre payments from the provider and/or require repayment ofony overci?oim of monies otreoofv poidfor the period concerned. Page 9 of 54 Summary of2016/2017 compliance cycle The ?nal quarterly compliance report from Pobal of the 2016/2017 cycle covers the period from May-August 2017. It also provides summaries of non?compliance across the various funded schemes for the entire compliance cycle 201610017. The outcomes are set out in the tables and diagrams below: (Please note that where one area of major non-compliance is found out of all areas assessed, this is categorized as major non-compliant. COMPLIANCE OUTCOME SUMMARY - NOVEMBER 2016 TO AUGUST 2017 Programme Contracts Major non- Minor non- Compliant Reviewed compliant compliant (number of (number of (number of contracts} contracts) contracts) ECCE 1,644 742 307 595 CCS 386 205 68 113 CCSP 272 118 75 79 TEC 560 169 213 178 Total 2,862 1,234 663 965 ECCE compliance I Compliant Minor non- compliant I Major non- compliant CCS compliance Compliant I Major non- Minor non- compliant compliant Page 10 of 54 outcomes CCSP compliance Compliant Minor non~ compliant Maior non- compliant TEC compliance outcomes Compliant Minor non- compliant . Major non- compliant Signi?cant factors resulting in major non-compliance include: absent or inadequate attendance records on site and PIP requiring updating (CCS and CCSP) and the service not meeting minimum enrolment requirements (ECCE). Many of these issues arose in the 20 I 59016 cycle also. Page 11 of 54 -- 7 . Major Non-compliant services November 2016 to August 2017 No records on site I Absentfinadequate fee records Absentfinadequate attendance records I PIP updating required I Over-charging parents I Not meeting minumum enrolment requirements I Hi: - not meeting staff qualification requirements I SC - not meeting staff quali?cation requirements I Hi: - some children not attending HC roomfsession as appropriate I Charge for core ECCE hours which are ineligible I Service provision is not delivering sufficent free hours/daysfweeks I Not meeting staff ratio requirements (ECCE) Significant discrepancy between current PIP registrations and attendance It should be noted that direct comparisons between the 2015/2016 and 2016:2017 are not possible due to changes in the improved approach adopted in relation to compliance in both cycles such as revised criteria and new categorisations introduced. Nonetheless, these graphs show that there remains a significantly high amount of major non-compliance across all EY schemes, but notably in CCS with 53 percent of contracts reviewed ?nding major non? Page 12 of 54 compliant outcomes. Please see paragraph below for detailed discussion on categories currently used and planned changes. There have been improvements in the compliance cycle this year, particularly in the areas of ECCE, TEC and CCSP repayments. Incorrect ECCE, CCSP and TEC registrations are updated on P1P to reflect actual levels of attendance. There are noticeable improvements in the levels of incorrect registrations on the PIP system when comparing the previous two cycles (ECCE 40% reduction and TEC 31% reduction). This may indicate that the compliance function is acting as a deterrent factor and is encouraging services to be more vigilant during the initial registration process and subsequent updating requirements - This represents an incremental improvement, although levels of major non-compliance continue to be high. Pobal Compliance Service Offer 2017/2018 and re-categorisation of non- compliance Pobal?s Compliance Service Offer sets out Pobal?s proposed approach to compliance, as agreed with DCYA, for the compliance cycle starting in September 2017 ending in August 2018. The service offer details the number of compliance visits and revisits, which services will be prioritized for compliance visits, and how non-compliance should be followed up. Key elements of the 2017/2018 Compliance Service Offer include: Number of compliance visits is broadly similar coverage level to previous year with a cumulative total of 2,750 DCYA contracts across all programmes to be reviewed in 2017/2018 cycle. This includes visiting a minimum of 33% of ECCE services and a minimum of 50% of CCS contracts. Visits will be prioritized for services deemed major non-compliant in 2016! 17, newly registered childcare services, services who did not receive a compliance visit in 2015/16 or 201617, and ad hoc requests received from Early Years and DCYA during the course of the cycle, for example through intelligence received. It Introduction of a new compliance category, ?moderate non-compliant". The new compliance outcome will capture cases where there are lower levels of financial impact with a view to proportionality of outcome. Major non-compliance will now Page 13 of 54 refer to a .sr?gnyfeam risk to the ?nances of the exchequer, rather than any risk. It should result in fewer major non-compliance outcomes but it is thought to be more proportionate and fairer. DCYA requested that Pobal?s approach to compliance should actively address major non-compliance and issues identi?ed, rather than continue to identify issues with limited follow up. This is reflected in the development of the compliance framework. Increased efforts to capture and measure the financial impact of the compliance function. There are limitations to the IT systems in place in Pobal that make this an onerous task but its importance cannot be overstated. DCYA will support Pobal with ICT development of same once other IT priorities are addressed. Page 14 of 54 lie-categorisation of non-compliance: Categories of non-compliance have been changed for the last two compliance cycles to incrementally improve the compliance service offering and increasingly focus on risk to Exchequer funds. With a view to ensuring that serious cases of non-compliance are addressed, that compliance outcomes are equitable, and to foster a higher degree of respect for and adherence to the rules of the schemes, a re-categorisation of compliance outcomes was agreed for the 20l7f2018 Service Offer. During the 2016/2017 compliance cycle, compliance outcomes were grouped as follows: a Major non-compliant - Minor non-compliant - Compliant with special advisory Compliant DCYA and Pobal agreed to re-categorise for the 8 cycle as follows: I Major non-compliant - Moderate non-compliant 1: Minor non-compliant - Compliant Major non-compliance will now be reserved only where there is a signi?cant risk to the ?nances of the exchequer. Previously non-compliance which represented any risk to the ?nances of the exchequer had been considered major non-compliance in all cases. The 201W20l3 re-categorisation proposes that risk to the ?nances of the exchequer be dealt with across major, moderate or minor non-compliance based on a scale. For example, over 20% incorrect registrations on PIP will be considered major non?compliance, while 5 20% will be considered moderate, and - 5% minor. This presents a more preportionate consideration of the breach of the rules and risk to exchequer funds. Page 15 of 54 - - I - Th?refora the re? categorisation retains the protection of public ?nances, but ensures that the most severe cases are singled out as majorly non-compliant to be dealt with consistently in accordance with the compliance framework (below). The integrity of the re-categorisation is heavily dependent on the commitment to using the compliance framework to bring cases of major non-compliance to their end with the service either becoming compliant or funding being withheld or ceased. This is an area DCYA will have to work intensively on with Pobal to ensure appropriate action is taken. Progress in this area will be reflected in improved Pobal performance management and reporting which is under development. A downside to the re-categorisation is that the ability to compare to previous cycles will be limited. Similarly. targets for non-compliance cannot be set so it will be dif?cult to measure progress andfor positive impact to the changes. It is expected that the re-categorisation of compliance outcomes will lead to lower levels of major non-compliance in the sector than in previous cycles but a cautious approach to using this information will be adopted as the ?gures alone cannot be relied upon to show progress. However it should also be noted that the deveIOpment and proposed application of the compliance framework represents a new and stronger approach to compliance, and this makes comparisons with previous compliance cycles less useful. Section 2 Overview of compliance cases Page 16 of 54 Page 1? of 54 WW Page 18 of54 Page 19 of 54 Page 20 of 54 High risk cases There are at present 15 ongoing high risk cases which have been identi?ed by Pobal CAR and are being actively managed by Pobal. They include cases where there is considerable risk to the ?nances ofthe exchequer, up to and including potential fraud. At present, Pobal conducts relatively few audits of childcare services. Audits typically only take place in the context ofa risk case. such as outlined elsewhere. Pobal's existing resources in respect of bene?ciary risk audits comprise a full-time Audit Risk Manager and a full- time Verification Of?cer who are collectively responsible for: 0 Conducting audits across a range of Pobal pregrammes, i.e. both DCYA and non- DCYA funded programmes. 0 Corporate internal audit and risk management duties (which are internal to Pobal). Audits are intelligence led, and services are usually identi?ed for audit either by concerns being identi?ed during a regular compliance visit to a service, or by information being received from the service themselves, either in the form of voluntary disclosures or in formation provided by whistle-blowers. Page 21 of 54 On 22"d January 2013, Pobal wrote to DCYA seeking approval for an additional two staff members to progress risk audits, given the current workload ofearly years risk cases. Compliance Framework DCYA and Pobal have been working over an extended period to agree a compliance framework to ensure a robust and consistent approach to identification and treatment of non- compliance in the sector. The compliance framework will adequately reflect effective compliance and enforcement of non-compliance, provide a framework for progressing overclaims, and processes for dealing with audit and risk cases. The framework seeks to honour the need for effective compliance while being cognisent of DCYA responsibility to provide accessible, affordable and quality childcare. The compliance framework aims to provide a clear process through which non-compliant cases are managed to either become compliant or ultimately be excluded from DCYA funded programmes. This clearly sets out the processes which occur when a service is found to be non-compliant including communications with the service, supports offered, follow up actions, revisits, assessments and decision points. It also sets out clearly the roles and responsibilities of the actors in the framework (DCYA, Pobal and the Community Childcare Centres). While the compliance framework provides for withdrawal of DCYA funding from persistently non-compliant providers, the approach of the framework is focused on raising the Page 22 of 54 level of compliance through building a culture of compliance, and providing education and support for services to become compliant. The compliance framework has been in development in Early Years Finance, Governance and Reform Unit for a number of months. Pobal had previously expressed serious concern about how the compliance framework would Operate in practice. However the draft compliance framework has been considerably revised and Pobal have agreed in principle with the current draft, which is attached at appendix DCYA Early Years Finance, Governance and Reform Unit are continuing to work with Pobal to ?nalise the compliance framework. As a general principle, it has been agreed that the 2016:2017 compliance cycle can be seen as ?year zero? with the introduction and application of the new compliance framework in the 20172?2018 compliance cycle as ?year one.? it is intended that major non-compliance in 2017/2018 will result in a warning to the service as well as support from the to become compliant. Continued major non-compliance in the 2018/20?? compliance cycle will result in withdrawal of the PSP payment, and it is intended to recommend the exclusion from childcare schemes of persistently major non- compliant services in the 201912020 compliance cycle. However, it should be noted that DCYA retains the right to withdraw funding in particularly serious or high risk cases at any point in the compliance framework. Section 3 Other issues: Programme Support Payment [Non-contact time) In 20]? DCYA secured approximately ?18 million Programme Support Payment (PSP) for Early Years providers to assist with the administration and programme costs associated with the various childcare schemes. The first payment (?14.5m) was made available in June 2017 to Early Years providers across all schemes and represented a payment for an additional 7 days? work. The second payment was made available to all Early Years services who signed up to deliver measures to make childcare more affordable from September 20W. This payment provided for an additional 2? days on top of the first payment. 98% of services received the PSP payment in 2017. Page 23 oft-34 In particular, the second payment recognised the time providers need to spend familiarising themselves with the new affordable childcare measures, signing contracts, meeting regulatory and compliance requirements and assisting parents with understanding how they can bene?t. This is ofparticular importance as the PSP is intended to support administrative duties, which includes compliance with programme rules. The rules for PSP have already indicated the possibility ofrecouping the PSP in cases omen-compliance.? Other issues: Development of ACS Early Years Finance, Governance and Reform have been working with the ACS team to develop the compliance regime which will accompany AC8. This has included informing the development of the ACS rules on variations in attendance, and providing feedback on the draft on compliance issues. Early Years Finance, Governance and Reform have also been working with the ACS team on the development of the ACS compliance framework in parallel with the development of the compliance framework for the current programmes. This aims to ensure consistency in the transition to ACS, as well as ensuring that there will be incremental strengthening of compliance standards, with no step-back. As agreed in late 2015 with the publication of the IDG Report on Future Investment in Childcare, replacement of CCS and TEC with the ACS should be a signi?cant mitigation to protect Exchequer funding. Clearly however, intensive work is required in the coming months to design the schemes compliance. This is covered in the ACS Project Plan. Other issues: Development of Financial Guidance The core deficits in CCS governance identified in the Mazars report February 20l6 related to financial management procedures within CCS service providers. On foot of these recommendations, DCYA Early Years Finance, Governance and Reform Unit undertook to prepare an RFT for a financial management toolkit which would include a Financial Control Procedures Manual and standardised toolkit that can be applied by early years providers. This will be useful in terms of raising the level of compliance in the sector. building a culture of Page 24 of 54 compliance, lessening the administrative burden on service providers, and providing support to providers for whom ?nancial reporting and related tasks are proving dif?cult. This RFT was delayed somewhat by its combination with another RFT on Assurance Mapping, which is the responsibility of Early Years Projects. Crowe l-lorwath began this work on the 2m1 January 2018 and Finance, Governance and Reform Unit are represented on the oversight group. This work is expected to be completed in May?une 2018. Consequently, the ?nancial guidance and toolkits will not be available in the compliance cycle 2017:2018 and so no additional checks against these rules will be carried out. Crowe Horwath may indicate a need for training and if this is the case, consideration will have to be given to how this can be done in the shortest timeframe possible. Other issues: Early Years Capital 1n Q3f4 2017, Early Years Finance, Governance and Reform Unit worked closely with Pobal on the 2018 Capital Grants Programme. Signi?cant progress has been made to ensure that the 2018 programme can be delivered in a more timely and ef?cient manner than in previous years. It is proposed to take a more considered approach to governance and compliance issues, for example additional checks in relation to conflict of interest and a consistent approach to consideration of compliance outcomes at appraisal stage. Under the scoring framework for the 'capacity of the organisation', the 2017 Capital Grants Programme took into account a service?s compliance outcome, as well as any audit or veri?cation ?ndings, during the appraisal process. It is further proposed that in 2018 this link to compliance outcomes will be strengthened as an important element to consider before awarding capital grants of up to ?50,000. Early 1rears Finance, Governance and Reform Unit will work with Pobal CAR and the Capital team to progress this issue for implementation in 2018. Other issues: Audit recommendations All of Early Years Governance. Finance and Reform Unit?s work in the area of compliance has been informed by a number of audits and reports in BY, in particular a Mazars report on CCS from 2016, ongoing requests from the Comptroller and Auditor General, and an ECCE audit conducted by DCYA Internal Audit and revisited in 201?. This is reflected in the development of the compliance framework, strengthening of the programme rules, new Page 25 of 54 compliance service offer with Pobal, RFT on development of a ?nancial management toolkit and other improvements to the compliance and govemance environment outlined in this b?e?ng. Early Years Finance, Governance and Reform Unit continues to lead on behalf of all EY Units to follow up on all audit recommendations to ensure that they are implemented, and to work with the and Internal Audit on ongoing or new audits. The most recent audit updates were in July/?August and November 2017 and included a focus on compliance over-claims in particular. The actions in Early Years Finance, Governance and Reform Unit?s 2018 Business Plan (and referenced in the current Risk Register) reflect many of the ?ndings of these reportslaudits and are prioritised for progression in 2018 when the Unit is fully staffed. Other issues: Outreach and communication DCYA is seeking to do more in the coming year to build a strong culture of compliance in the Early Years sector. This will include the development of responsible financial and good governance practices. In order for the compliance framework to function, there must be the commitment to taking compliance outcomes and recommendations to their end, but correspondingly, there must also be the supports available to services to enable them to become compliant. it is proposed to clarify and if necessary strengthen the role on supporting good compliance as well as considering what options are available to improve communications between the Department, Pobal and the sector, possibly through training workshops or round-table discussions. Further analysis of this side of the compliance framework is needed and Finance, Governance and Reform Unit intends to progress this in 20l3. Key actions for 2018 1. Fill PO post, remaining AG and two E0 posts, and ED vacancy. Provide appropriate induction and training. 2. Further improved performance management of Pobal CAR with improved reporting against agreed actions Page 26 of 54 Lat-I 11. Compliance Framework agreed and in Operation. Agreed reporting in place. Provide written quarterly update to the Management Board and continue to update as requested Consideration of more robust and consistent audit function within Pohal. Agreement with Pobal on resources to strengthen the compliance offering and to progress audit, risk and over-claims. Progress all outstanding audit recommendations as much as possible. Work intensively with ACS team to ensure optimal governance and compliance for the new scheme. . In conjunction with other EY Units, improved outreach, communication and support on compliance to sector (through DCYA, Pobal and Work with Crowe Horwath on ?nancial toolkit and roll-out to sector For 2018:2019 compliance cycle. .Continued assistance to and cooperation with An Gerda Siochana and other investigations as appropriate. Page 27 of54 Appendix 1: Summary of Risk Cases Page 28 of 54 Page 29 of 54 Page 30 of54 Page 31 of 54 Page 32 of 54 Page 33 of 54 Page 34 of 54 Appendix 2: July 201?? Management Board Brie?{Sf' .?Jfl .?II'szi EARLY YEARS (BY) CARE AND EDUCATION GOVERNANCE AND FINANCIAL ACCOUNTABILITY FOR CHILDCARE FUNDING PROGRAMAIES MANAGEMENT BOARD BRIEFING - JULY 201'? CONFIDENTIAL V5 23TH JUNE 2917 Page 35 of 54 Table of Contents PURPOSE 37 5; (ICE EXPANSION SEPTEMBER 2017 39 i STRENGTHENING OF 8; FUR CHILDCARE FUNDING 2016 EDI 7 2018 CYCLES 39 CHILDCARE FUNDING DRAFT (IN DEVELOPMENT) 49 APPENDIX II EARLY STRUCTURE I-IIGI-I PROCESS 50 201$ 2017 02 FINDINGS 16 Page 36 :1de 1. PURPOSE To provide the Management Board (ATE) with an update on: a. development of the EY Governance function within b. incremental strengthening of governance ?nancial accountability for childcare funding programmes in 2016 201T /2013 programme cycles (and beyond as a) above is strengthened); c. signi?cant changes to childcare funding progranunes since january 2017 and import for governance 8.: ?nancial accountability arrangements; and d. risks and mitigations 1 CONTEXT There are currently ?ve separate childcare funding programmes: one universal programme, Eer?r Chifdt?aarf Cunt and Education (ECCE) otherwise known as ?free pre-school?, and four targeted programmes (Le. the Community Childcare Subvention (CCS), the Community Employment Childcare (CEC), the After- School Childcare (ASC) and the Childcare Education and Training Support (CETS) Programmes). The 5 childcare schemes bene?ted more than 100,000 children in 2016 and cost approximately ?340m. The current annual expenditure on childcare supports by the DCYA is ?466 million. This expenditure has increased by 79% since 2015. The number of children expected to bene?t from the childcare schemes is expected to exceed 150,000 in this coming programme year. The schemes were introduced in a piecemeal fashion by the Departinent of justice, Equality and Law Reform and the Of?ce of the Minister for Children in response to particular needs at different times, in response to particular needs of other Government Departments and their clients (Le. Departments of Education and Skills and Social Protection) and when governance and compliance requirements were less clear. Schemes are operated on an administrative basis i.e. they are not underpinned by speci?c legislation. Therefore, the mechanisms now available to the Department to ensure proper control of public funds are limited to contracts with services containing rules of the schemes. Childcare services? adherences to the contract rules are assessed by a compliance programme. The design of the current schemes, particularly CCS, compounded by weak record keeping and ?nancial procedures within services, facilitates over-claims and makes it different to provide adequate assurance that funding is used for the purpose for which it is provided. Early Years? Unit has made strong progress in 2016 and to date in 2017 in improving the focus of Pobal?s compliance checks and on strengthening the rules imposed on services delivering the Department?s funding programmes through 2016 and 2017. Notwithstanding progress made, the most signi?cant governance issues identi?ed by internal audit reports (including the 2016 Mazars? audit of CCS services) and Pobal?s Compliance Reports (including the Page 3? of 54 are systemic in nature and can only be addressed through legislative provision, strong rules, sanctions and contractual requirements. Governance arrangements should be inherent to schemes and put in place during the design phaso. Furthermore, it must be recognisaed that many early years services, because of their small size, or the voluntary nature of their Boards, ?nd it very challenging to meet public sector assurance prerequisites and it is dif?cult for DCYA and Pobal to en force all rules due to poor administrative and control arrangements. Similar to other childcare systems in the developed world, the Irish childcare sector faces signi?cant challenges. The EY system is experiencing societal change and rising expectations from Government, parents and providers. The sector is diverse and complex, partly due to the fact that it has evolved organically and incrementally over the last two decades. The regulatory environment has changed signi?cantly since 2011 creating a much greater burden on providers and increasing the cost base of services who wish to meet higher standards. The labour market has also changed signi?cantly with increasing female labour market participation requiring some increase in supply of childcare, whilst the childcare workforce is losing graduates and staff to other sectors that provide higher rates of pay. Improving access to quality, affordable childcare is a policy imperative for the Department, driven by of the European Commission, commitments in the Programme for Government and labour market requirements. It is extremely challenging to balance this expansion with need to strengthen accountability for public funds, particularly within the context of existing schemes that have been operating for several years. From a governance and compliance perspective, DCYA needs to:- 1. Ensure that suitable resources are in place internally over a suf?cient timeline to adequately scope and design new schemes, revise existing ones (including creating strong and clear rules, contracts, sanctions etc.) 2. Develop new schemes and reform existing schemes in accordance with public sector spending codes, relevant circulars and codes of practice and standards. 3. Communicate these rules and obligations with the sector in a professional, collaborative and respectful manner 4. Review and oversee a highly effective compliance and sanction regime Support community and private early years services to meet governance requirements 6. Review the funding of services to ensure that baSe funding is adequate to enable services invest in the necessary administrative and governance infrastructure 7. Continue to manage the high level of risk that exists as active measures are taken in the short and medium term to address the many serious issues. Page 33 of 54 3. CCS CONTINUATION AND EXPANSION SEPTEMBER 201'.ll Since Budget 2017, of?cials at the Department of Children and Youth Affairs and Pobal (SACS Administrator) have been working intensively to introduce the SACS and signi?cant progress has been made. Given the sheer complexity of this development, the Department will now not fully introduce SACS until a later date [and when the IT system is available). Therefore, a proposal was submitted to DPER subsequently approved that, from September 2017, Government should take a ?rst and very signi?cant step to making childcare more affordable for thousands of families throughout Ireland by making a number of enhancements to the existing targeted childcare schemes. This would honour many of the broad principles of SACS (including the payment of universal and targeted childcare subsidies) and deliver on the underlying objectives of SACS. These enhancements include: 1. The introduction of a new universal band within the CC5 (CCS Band A 2. An increase in existing subsidy rates for the CC8 (Le. Bands A, and B) and the introduction of a new CCS band (Band and 3. An increase in subsidy rates for some of the TEC Schemes. The enhancements to CCS proposed (which are presented in greater detail below) will not result in additional costs over and above the ?48 million identi?ed for 2017 and the (31 50 million envisaged for the SACS in 2018. The submission to DPER advised of the risks associated with the continuation and expansion of CCS including the inherent design weaknesses; the incremental strengthening of the governance arrangements put in place at the lime of the submission; and the planned interim and longer term mitigations proposed. DPER sanction is conditional on strengthening the scheme governance arrangements. 4. INCREMENTAL STRENGTHENING OF GOVERNANCE 8: FINANCIAL ACCOUNTABILITY FOR CHILDCARE FUNDING PROGRAMMES 2016 201'? 2018 PROGRAMME CYCLES The Early Years childcare programmes, Early Years Care and Education (ECCE), Community Childcare Subvention (CCS) and Training and Employment Childcare (TEC), are subject to a compliance regime currently implemented by Pobal on behalf of the Department. Compliance of?cers review circa 2,750 contracts per year, to check compliance against programme rules. Various audit reports have found concerning levels of inadequacy with ?nancial and compliance rules, particularly with CCS. Page 39 of 54 Fraud may be facilitated where the design of a scheme does not provide for a process to appraise the ?nancial, administrative and structural fitness of recipients of state handing, where rules are inadequate or unclear; where sanctions and reporting mechanisms are not in place to facilitate veri?cation and compliance procedures; and the consequential compliance programme is not resourced appropriately. A programmatic approach has been adopted to addressing systemic governance and ?nancial accountability weaknesses within the childcare sector and will incrementally mitigate the risks and challenges presented. The main components of the draft Compliance Framework in development are detailed in Appendix I. 4.1 2016' .2017 Programme Cycle -Issnes Presenting and Actions Taken In 2016, the Early Years Unit incrementally strengthening addressed weaknesses in the governance and ?nancial accountability of the Early arrangements in the childcare sector through a number of interventions including the restructuring Years Unit to enable a focus on governance and compliance. Key system changes includes 0 Enhanced EY Operations and EY Projects Units to enable better focus on governance, compliance and programme rules. I Additional resources from Childcare Committees Ireland (CCI) with specialist knowledge and experience have recently been assigned to assist with sustainability, communications and training on the Tusla Quality Regulatory Framework. I Service Level FrameWork and detailed work programme agreed between Pohal and DCYA. 0 Progress on development of the ACS. 0 Independent Review of Costs in preparation). 0 Review of services in crisis reporting sustainability issues preparation). Page 40 of 54 Pobal and the DCYA also identi?ed scheme speci?c risks to be addressed as a matter of priority in the 2016 17 programme cycle and these are summarizad below IOgether with action taken and residual risks:- Page 41 of 54 Inconsistenrfinatlequate record keeping. The quality ofattendancr: records I child roll books is a critical issue. Early Years Unit was made aware of a significant lack of consistency across the sector, preventing l?obal compliance of?cers from con?rming attendanCe levels. l. to l. ?fth-.1135 't i Detailed guidelines relating to the information that should be kept on child attendance (including time of arrival and departure} were issued to services in 2015, and compliance niles were clari?ed to ensure a finding of?rnajor non- compliant' where these records were inadequate. The Childcare i'ict 199] (Early Years services) Regulations 2(116 requires services to keep details of attendance by each pro-school child on a daily basis. The requirements referenced above have been directly incorporated in the grant funding agreements services must sign for the 2017-13 programme year. ?Nonveontact time" payments have been intmduccd in to provide for administrative work. Services must declare that they have recti?ed any non- compliance issues, including record keeping. Repeat non-compliance in the same category will lead to this payment being recouped. Issues raised in Zillt?: internal Audit report on CCH Following in 2011?. Internal .r'tudit unit commissioned an audit of a sample of services providing the (ICE programme. This audit indicated an overall fundamental weakness in project organisations? evidencing of comprehensive ?nancial oversight, including regular monitoring and assessment of ?nancial perfomiance. The audit also found that ?nancial control procedures in services were generally weak. and made a number of speci?c reconunendations, including that a ?nancial management toolkit and associated basic ?nancial models should be designed for project organisations to provide detailed guidance and support for the recording, tracking, reconciliation and reporting upon monies received and lodged. [at iarly Years Governance Unit is developing a tender that will seek professional support in the development of ?nancial management tools to assist services in reporting expenditure in a way compatible with grant funding requirements. The Childcare funding programme contracts have always required services to keep financial records up-to-clate - the 201118 IGrant Funding Agreements have been updated such that the Department will now be provided with annual ?nancial returns from all services: the revicw of which will provide assurance that services' ?nancial performance is acceptable. ?Non-contact Lime" payments are pnnided for services to meet the costs associated with reporting requirements. Since the audit report, the levels of subvention and the eligibility Criteria for the (JCS programme have been substantially expanded in light ofthe delayed rollout of the .v?tffordable Childcare Scheme and [iovemments commitment to impairing affordability of and access to childcare, Whilst progress has been made, it has not been possible to accelerate reform in the sector beyond the timetable envisioned in response to the audit; and the increased level of funding leads to a commensurate increase in risl-t. Compliance with governance requirements for grant?funding DIVER Circular I3f2ll'l-l- requires that all recipients of grant funding should provide accounts to the grantor. While The tender referenced as in preparation in relation to the development of ?nancial management toolkits for services will also include professional advice on the appropriate level of The work detailed above will take some tinte to complete. It has been necessary in issue the grant funding agreements for the Elli?- pmgra prior to the Page 42 of 54 Community Services have always been required to prepare audited annual accounts owing to their legal structure, the expansion of funding to services, in particular the expansion or? the (ICE pmgraanme to private providers in 20115 {to meet Governments commitment to improving access}, including sole traders. has raised the issue ofthe appropriateness of the oversight arrangements in place for these providers; particularly in light of the ?ndings of the above reference internal audit. ?nancial accounts that should be prepared and submitted by services. Following receipt of this advice, l'i?t' Governance unit \vill bring forward proposals in relation to monitoring and exception reporting on these; with associated protocols for followvup. Contractual requirements have been communicated through national madshows. receipt of advice on the proper form of ?nancial statement required. Services have expressed dissatisfaction at the consequent lack of clarity. Whilst implementing a more robust monitoring fmmeivorlt. it will remain dif?cult for the Department to identify poor practice or issues ofconcern at an early stage. High levels of non-compliance - l?obal's compliance programn'ie for 2015- 15 found 1.314 incidents of'li-lajor non- compliance' against 3,1109 contracts checked. This high level of non-compliance required thorough examination and detennination of follow-up action. The most signi?cant categories of non-compliance were: liCCli: I Document Retention inadequate {Silt} services I l'Il' not up-ttl-datt: (SIG services} I Minimum Staff Quali?cation Requirements (Zlil services} II Insuf?cient records: (123 services] CCS: .- li'llJ not up-to-date (63 services] I insuf?cient records: (28 services) I l"l'li Calculators not accurate services) I Documentation retention inadequate (116 services] I Documentation retention inadequate services) 0 Parent sign-in sheets not complete (236 services) A communication programme has been initiated with services to clarify the requirements ofcomplianCc visitors, particularly in relation to record?keeping Particular common issues have been identi?ed to Countyf'City Childcare Committees who have been tasked with engaging with services to improve complianCe. The pureess of examining staff quali?cations has been improved through the assignment of additional resources in E?i' Ops unit liesponsibility for ensuring staff compliance with regulatory qualifications requirements has been transferred to Tusln. Measures outlined at above. in relation to the standardisation ofrecords are subject to increased focus in the 2016?1? compliance programme. Services where compliance visits identify areas of potential failure have been subject to priority rc- visit during the ants-1? programme cycle. See point (r below for further in formation The compliance programme aims to review circa of contracts in visits that take place once per year. :1 signi?cant increase in Visitsf revisits may not be logistically possible in the context of current systems Gov is in discussions with l?obal on this issue}. {is such1 the overall level of ?impliance in the sector is not ltnuwn. The capacity of providers to meet compliance requirements is in doubt, particularly given Internal Audit ?ndings. For Eillo-l? the [iCCli Higher (:apitation rate eligibility requirements have changed in a fashion that makes compliance very dif?cult to assess. Substantial increases in funding through the programme, including a universal subsidy. are planned for September 201?. The de?nition of a strengthened compliance offering for 21!] 2013 is in development with Pubs]. The revised compliance offering for the 2017 Both: will require additional resources for l'JfI?t'r?i and CAR. (i Internal DC?t'r?t Compliance actions Early Years Unit had no process in place to follow up on compliance ?ndings or to use Compliance reports to re?ne scheme Contracts and rules. [all Protocols have been agreed with l?obal regarding the distribution of compliance ?ndings to {loontyg' City childcare for followvup action. Where signi?cant rislts are identified by Pobal compliance visits, cases are referred to Pohal?s internal Compliance, Audit and Risk unit for possible audits investigations, the nest compliance stage. liarly Years Governance has developed a compliance follow-up framework to inform the l?obal Service Offering for the 2111? I programme cvcle. The compliance follow-up framework de?nes a work?ow and unit responsibility to address compliance issues in a consistent and proportionate manner. The implementation of this framework will be incremental. Page 43 of 54 In relation to services where an alleged overclaiin is identi?ed, EY Gomernance Unit is working with Pobal and EY Operations Unit to put in place work?ows that will bring closure to these cases. The work involved in each case is likely to be substantial, and resources will need to be assigned appropriately. . II 4.2 201? 2018 Programme ycIe Piano-ed Mr'ogaobns B. Childcare Funding Programme Compliance Framework Signi?cant improvements have been designed and applied to the Childcare Funding Programmes Compliance Offering for the 2016 2017 programme cycle within resource constraints. Early Years? Governance has redesigned the Compliance Framework for the 2017 2013 programme cycle, taking account of the wider system in which the childcare funded progranunes operate; in the context of the revised Early Years3 organisational structure; the learning from the 2016 2017' compliance cycle; legal Page 44 of 54 advice; and the decision to expand CCS to deliver some of the ACS objectives. Appendix 1 provides a workflow overview of the draft DCYA Childcare Funded Programmes Compliance Framework. A process is underway to re?ne and agree the with Pobal and its implementation is dependent on Pobal?s capacity to deliver. C. Early Ygars Strategy Better Outcomes, Brighter Futures contains a commitment to produce Ireland?s ?rst-ever National Early Years Strategy. The National Early Years Strategy, which is expected to be published later this year, will take a whole-of?Government approach outlining Ireland?s vision for the coming decade in seeking to improve the lives of children from birth to 6 years. The Strategy will take account of the Right from the Start, the Report of the Expert Advisory Group on the Early Years Strategy. It will also be informed by bilateral discussions with the relevant Government Departments and by a range of stakeholder consultations, including one undertaken with children aged 3- 5 and an Open Policy Debate held in December 2016. The Strategy will address a range of issues affecting children in their ?rst years of life such as child health, parenting and family support, and early learning and development. With regard to early learning and development, the Strategy will seek improve access to high quality and affordable services for children from birth to 6 years. It will also seek to improve the infrastructure that supports these services and will focus on elements such as governance, quality development, regulation and standards, training and professional development and accountability and evaluation. D. Operationa Reform Progn. mme The DCYA is committed to the principle of good governance and oversight through subsidiarity, i.e. clarity with regard to departmental and third party responsibility and accountability, with action taking place at the appropriate level. Effective and ef?cient subsidiarity requires a strong centre with clearly defined policy, governance and oversight systems and structures. The Operational Reform Programme will address the number of internal and external governance, oversight, systemic and operating deficiencies that are a consequence of organic and incremental growth of the EY system, with the stated objective of reforming the operating model in its entirety. The Reform Programme will ensure that:- Page 45 of 54 The EY internal and external operating model is ?fit for purpose? to deliver the Early Years Strategy, ACS, and other funded and There is clarity in the manner in which the central policy, governance and oversight function of the Department interacts with other components of the operating model i.e. Pohal, County Childcare Committees and other funded national voluntary organisations, and in turn, how other components of the operating model interact with each other. A fundamental principle underpinning the Operational Review and Reform Programme is that the Department, Pobal, the County Childcare Committees and other funded entities must demonstrate that they have in place the structures, systems, processes and procedures to ensure the appropriate responsibility, authority and accountability to deliver to the EY Sector and to account for public monies. The reform program will assist in ensuring that the system is efficient, with clarity of role and strong performance management is provided for. The Review will assist the DCYA become absolutely ?r?r [ampere to respond ef?ciently and effectively to the likely continued increase in investment in EY and plan for a 10 year timescale. E. Affordable Childcare Scheme Governance and Financial Accountability Affordable Childcare Scheme Governance and financial accountability is being taken into account in the design of the Affordable Childcare Scheme (AC8). h??lyGovID will be used as the authentication mechanism to provide access the ACS. Applicants will be required to be SAFE 2 registered in order to make an application. Further hard and soft checks will be a feature of the ACS system. For example, will be automatically veri?ed through the PPSN checker for all applicants, including the secondary caregiver and all dependent children (note that heretofore the PPSN checker has been used for the primary caregiver and applicant child only) and, for the majority of applicants, family income will be verified through data exchange with the Of?ce of the Revenue Commissioners and the Department of Social Protection (ESP). Staffin EY Projects has been assigned to develop and implement a comprehensive Governance and Financial Accountability Framework for the AC8 to enable the DCYA to manage and control risk. The Framework will be designed to enable a process of continuous improvement. The initial Framework will be developed based on principles of good governance and public service requirements for monitoring and control, combined with knowledge of the sector gathered by the DCYA in the context of the legacy childcare schemes. Frameworks in other jurisdictions with similar childcare schemes are also being considered. Page 46 of 54 As surance Mapping A RFT is currently being ?nalised to procure expertise to support the development of a compliance and monitoring framework for the ACS, by undertaking an Assurance Mapping Exercise to: Assess the risks and controls within the ACS, as set out in the ACS Policy Paper and pending legislation 0 Determine the level of risks and controls (assurance) required II Indicate the extent and effectiveness of assurance provided within the ACS Business Requirements Documents and ICT Functional Requirements Speci?cations 0 Identify any gaps in internal control measures that need to be either ?lled or accepted Identify all mitigations available to the DCYA and the mechanism through which these can be provided. The Assurance Map and report will present the ?ndings, an assessment of the risks associated with those ?ndings and appropriate recommendations for the management of any open risks presented. These will include the risks associated with the acceptance of income details that are not delivered through data exchange with the Of?ce of the Revenue Commissioners and/or the DSP (cg. maintenance payments in the case of separated parents). AC3 Compliance ?forking Group This ?forking Group is currently being established. The lGroup will include EY Projects compliance staff, Pobal Compliance, Audit and Risk (CAR) staff, and EY Finance and Governance staff as required. The Working Group will oversee the Assurance Mapping Exercise and will produce the following Policy and Procedures documents. Policy and Procedures Documents The rules of the ACS are currently being developed. These will be in line with the ACS Policy Paper and Heads of Bill, and are currently the subject of consultation with the childcare sector and with EY Finance and Governance. When the rules have been ?nalised, a document will be prepared setting out in detail the rules of the ACS that need to be checked as part of monitoring and control procedures, including ?nancial management and governance. In this regard, it should be noted that the current proposals in relation to the rules will require additional administrative work on the part of the providers, and it may be necessary to consider some sort of IT support for providers to facilitate the gathering of data relating to, for example, hours of attendance. On the basis of the rules document, a further document will be prepared for the bene?t of providers and parents, clearly setting out the rules of the ACS, and what they will be expected to do in order to achieve Page 4? of 54 compliance. The document will also set out the consequences of non-compliance. This document is intended to ensure that all providers (and applicants) are aware of the requirements relating to participation in the ACS. Further documentation will be prepared in relation to developing the business processes that will inform the design and delivery of an IT system to facilitate compliance visits, setting out the procedures to be used by Pobal?s CAR Unit when carrying out compliance visits, and the development of procedures setting out the steps and actions to be taken following :1 ?nding of non-compliance including enforcement action where necessary. It is also proposed to develop processes for information/evidence gathering arising from compliance results to enable the DCYA to review its policy in relation to monitoring and evaluation. Page 48 of 54 APPENDIX I CHILDCARE FUNDING PROGRAMMES DRAFT COMPLIANCE FOLLOW-UP FRAMEWORK (IN DEVELOPMENT) Fab-I1 maul-In, Audn: Ind Hill. Dir-alarm. In Mne- with I lepthm Stu-wic- OFf-r amid with a While. quarterly input bland (m all I mil-na- viuh Ind-Hahn By Pull-1m th- prm?qq: len 1111. MM MW.) minno- hammrk and whlt'octlanl an nun wm-I run-at hn' 'Legend Adm-?Int! by: i - Pubnl - GOV EEC murmur: tau-Manwmmuum-d man: Can-Mulmmd_ mm - mm Inn-h: Page 49 of 54 APPENDIX 11 - EARLY YEARS INTERM ORGANISATIONAL STRUCTURE - HIGH LEVEL PROCESS RESPONSIBILITY -- Oversight 1 1 0 Finance Bud et Mana ement 2 5 2.5 0 ECCE Payment Oversight Operational Reform Programme 1 1 Sustainability Interventions Management of Services in Crisis 2.5 2.5 0 Capital Grants Systems Governance Framework Design 8: Implementation 1.5 1 0.5 Compliance Framework Design implementation (existing schemes} 1 1 Totals 9.5 i' e: _me1memom@e_ Oversight 1 1 Policy 4 3 1 Programme Planning El. Operation Suite, EECE, AIM Contracts, TEC, Rules, Calendars, Duals, Higher Cap, AC5 Transition, 5 5 0 Compliance Management {operational} 1 PIP Process Development 4 4 0 Stakeholder Management [Better Start AIM 3: Quality, Tusia EY inspectorate Dversight 6 1 5 Quality, Regulations 8. Standards, Learner Funds 4.6 3 1.6 Parliamentary Affairs (Pas, Briefs, Speeches, FDI, Data Protection, Records Interdepartmental 8: EU Liaison 6 5 0 Totals 31 6 23 3.5 Oversight Affordable Childcare Scheme 14 13 1 Early Years Strategy 1 1 ECCE AIM 4 0 Totals 20 19 1 Page 50 of 54 Approved 3532.141 Am -. 22.1.Situ ?Vacancy,r 0.5 -1 3 I1. 3 Approved 1 5 11.2 5.4 In Situ 3 9 7 Vacancy 3 2 2.2 -U.5 a ca 3 a 3 Approved 1 5 1 In Situ 4 Vacancy 0 0 0 Page 51 of 54 APPENDIX - 2016 2013? Q2 SUMMARY COMPLIANCE FINDINGS ECCE 578 176 Total 929 2'77 50* 225 The compliance Endings span a broad range of non-compliance categorisations and it should he noted that Major non?compliance categorisations have an actual potential ?nancial impact on Exchequer funding, including: 1. PIP (Programmes Implementation Platform) related issues, i.e. incorrect child original registration datefleVel of service uploaded and failure to update the system to re?ect subsequent reductions in service levels, absences and leavers. to ECCE services not meeting the minimum staff quali?cation requirements. In relation to this matter, the change in approach which has allowed childcare services to submit evidence of staff quali?cations subsequent to the compliance visit has resulted in reductions in levels of non-compliance in this area 3. However the introduction of allowing services to operate both Higher Capitation and Standard Capitation (SC) ECCE sessions has resulted in an additional non?compliance categorisation i.e. setting - some children not attending HC roomeession as approved?. It has been noted that a number of services lack understanding of the new programme requirements which has resulted in a relatively high level of non-compliance in this area. 4. There has also been a sharp increase in the number of ECCE Services who were deemed Major nonv compliant for the minimum enrolment requirements in ECCE sessions1 as Pobal Compliance team now have access to the list of services with exemptions. (previously they assumed exemptions in all services with 5-3 ECCE children) All non?compliance issues identi?ed ini'olving PIP system registrations for the ECCE and TEC programmes are followed up with the services involved on an ongoing basis and where PIP records are not updated within a reasonable timescale, the compliance team are in forming our colleagues in Pohal?s Financial Operations Directorate with a view to ensuring the required adjustments are being made to subsequent dmwdowns by the affected services. CCS services where issues around PIP registrations during the 2016} cycle have been identi?ed have been contacted, requesting correction to the registrations and or completion of declarations which commit to the maintenance of adequate attendance records in order for compliance checks to be conducted. Page 52 of S4 Appendix 3: Interfaces between DCYA and Pobal (extract from 2018 programme of work]. Interface arrangements between Pobal and DCYA - Early Years Policies 8: Programmes Units lnte riaoe Interface Ohiective Frequency of into rfaoe Governance Oversight 8: Manag- DEYA Personnel Pobal Personnel Strategic Management Meeting annual Programme of Work 2. Finance Management Risk 3. Agree upcoming priorities ii any new business! change requests Governance 4 times a year (1 Secretary CEOIAssistant with OCYA Gene ralfAssistant Directors Secretory Genero? Secretary Pobal Early Years 1. Management 8.: monitoring of Every 6 weeks POs 3i APs Assistant CEO, Early Years Bi Young Peoples Operations Manager, Funder Relationship Manager. CAR Director Other Early Years Interf Operations/case 1. Operational Funding programmes EYPP APs Tia, Funder management 2. Case Managementlservices of Relationship Manager concern 3. Finance 8i Governance Capital Early Years Capital 8. School-Aged ad hoc [ave rage EYPP APs a HEO Early Years Young Childcare: 1. Planning 8. specification every 2 months) Peoples Operations TL, 2. Financial monitoring of expenditure Programmes TL, Funder Relationship Manager 1. Liaison up?dates on 3i VCOs ad hoc [average activities every Zmonths} 2. Funding to 3. Pianning 8. agreeing annual process DCYAfPobalfBetter Cross exchange Every Sweeks EYPP PO 3; AP TL, Funder Reps Co- Relationship Manager, ordination Better Start TL Compliance 1. Strategic meetings - overall 1. Quarterly PO Compliance Audit Risk compliance approach 2. Director, CAR TLs, 2. Operations meetings - compliance Funder Relationship outcomes, recommendations. Manager decisions and Individual risk cases AIM 1. CSIG - strategic management 1. EYPP Manager, Better 2. Project Team - operations 2. Start Manager. TL Operations System Cross agencyf department structure to 3-4 times a year EYPP PO 8: AP Funder Relationship Alignment Group oversee alignment of early years Manager. BetterStart supports/inspectionfcompliance Manager operations systems National Early Years Early years cross sectorforum 341 times a year Minister, Assistant ManagerfFunder Forum Secretary, Relationship Manager POSSEAPS Page 53 of 54 Appendix 4: 2018 Proposed Compliance Framework Page 54 of 54 General Compliance Framework This framework presents the high level processes which occur during a typical compliance cycle. This framework details the process. which should be followed in cases of major noncompliance. Supplementary. related frameworks on overclairns. audit. and risk are also attached. SIART Guantanamo View union Samba Wholly} ot provisiond outcome visit;- Approach Thu Commence framework based on an approach at rais'ng the traditionaly low level ofcon'olianco in tho soctor through education and support to build a cuhu?e of ccmpiatce. with sanctions and ulimately mchsion from DCtra tmoeo programm? as a resort tor :r rnajcr non cantata-ice. This retrace the need for to balance tho need to provide assurance that cachet-truer futds are properly accounted lot. at ml as ensuring access to nudity. atlordatnle chinsa rev This follows a three year plan. with 2013 as 'ycar onc' [clan-in: the revision at progernme rules. 201U2013 .. rot-sod rules Major non- cun-plmco ruulo inwarnln: and Support tromtne oco. 2013:9019 I'lldol nomrrolarico results in withd'awd of P5P. to achieve con'plance continues. 2019;2020 continued major non- oon'pianoe rtsults in the recon-I meridation manna service is. emludcd DCYA lunmd programmes. However. it ShaLId be noted that Insert-e: mo rlgl't to running a any time tor carious Estreaol' mnoorruimce. I quarterly END Con'otiant - Harriett . .. . IMIMNHMIHI lrl'orrn um. were; one oetaw] support: arcl prowling remedial action on non corrplancotsauao I of {Initially llml?lttl Po'oalhtorral - .. .. i rot-flow prunes: r- - Mm? I um:- ., Issues} i A I Rub-ormdmon; rm.dctol'n'tnoi m?m amount? hit-doll furtheran?unom {0qu Rotor to orerctal'n: practicum - [separate parald . prooeu] Home lune . r" p- canola-too resulted . Corr-we '1 M'd?m (duh; awraalru non- htomal rowan} corrulanoo No Go?hul ottoman: non- corral-anon lrln'rn DCYA .- Mam l'tl-rn . Hetertn risk ltleriliiloarial-r hone: MN procedures. submissionot Yea leridorno-r on not mt? (Don'pllaru: year 4L Iricrrn 061'! and rolmrt WC ,1 some - - provider [Compares tea 3} Provider not-r corrpl ant? [Cambrian year 31 No Yes - . - nut-annular? s. Dirt-1n Et' Burnt-manna: and Help nt'l recommend cor-.IJo is e1clurled lron?l ETA 'iu n-L'Iett program-net! END atria-treat Et-tD Info rmer! try Pohal DCYA continue Io pro-.ine 1. Poetic stimulant by provider? one a. oon'pla'roo vls? . d. mun 5.St.rsta1naollv Ill-I135}! Milo Scheduling tonsils The nature of the non-cormimce Inmeneea when Focal CM wil conduct a revisit to a service. Tn tne tolerating eases. Petal conduct. a revisit In the same compliance cycle: - oer-rho Is not In operation on the day at oomianca - Arlniuance to declined . Autoitlance gained or! no records are ayailatzle for - Attendance records not attenuate to allow co rrp'liancc to he coached t'wnere time ail-ms sentce opportunity to maintain rotates wricnwil determine a pauern of attendancel. For other cases or major nonvoon?plance. Pobal wil prioritise that sat-be tor a revisit in the next corr'pimce cycle.