A recent audit showed that during a period of rapid growth, DCHS’s internal controls and compliance standards didn’t keep up, and that staff and providers need more tools and support to effectively do their jobs.
Over the last several months, DCHS has made progress in responding to every recommendation made by the auditor and launched a department-wide effort to strengthen operations and deliver greater transparency and accountability. This includes holding fiscal and contract trainings for staff and providers, assessing the hybrid payment model, reviewing policies, hiring a Contract Management Best Practices Manager, and more.
Below, we share a detailed update on all the progress we’ve made over the last several months.
Leveling Up: Beyond the Audit’s Recommendations
The audit’s recommendations, along with the King County Council’s recent ordinance requirements, gave the department a clear roadmap, but we’re pushing beyond to implement change from the ground up for long-term results.
New Contract Compliance Monitoring Policy: We implemented a new Contract Compliance Monitoring Policy that bolsters oversight, with clearer expectations for internal communication and collaboration between program and fiscal compliance staff, and helps ensure proper documentation, reporting, and improved compliance with DCHS contract terms and quick action when risks of non-compliance are identified.
External Analysis: DCHS teamed up with an external consultant to analyze strengths, gaps, and opportunities for our contract management and compliance practices. With help from the consultant, we’re now developing a strategy to implement stronger internal controls across the department.
Change Management & Team Alignment: We’ve formed cross-divisional workgroups, decision-making processes, and communication channels to drive change. Lead staff from each division within the department are informing new policies and standards to be implemented across all investments.
Progress on the Audit’s 10 Recommendations
The auditor made 10 recommendations for DCHS to complete. Over the last several months, DCHS has made progress on each recommendation, including:
- Holding contract and fiscal trainings for staff and providers
- Conducting the hybrid payment model’s risk assessment
- Having select staff complete anti-fraud training with more to come
- Bringing on a Contract Management Best Practices Manager
- Forming an inter-departmental workgroup with Public Health – Seattle & King County
- Reviewing several policies and procedures
For a more complete update, continue reading:
| Audit Recommendation | Update & Actions |
| Recommendation 1: 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 | An external consultant completed an assessment and gap analysis of: 1) Contract Set Up and Governance; 2) Post-Award Contract and Invoice Management; 3) Accounting and Reporting; 4) Fiscal Compliance; and 5) 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. |
| Recommendation 2: 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 | 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. |
| Recommendation 3: 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 | 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. |
| Recommendation 4: 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 | DCHS is conducting a risk assessment of the hybrid payment model expected to be completed by the end of the year. The assessment will look 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. |
| Recommendation 5: 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 | A full evaluation of the Best Starts for Kids (BSK) 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. |
| Recommendation 6: 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 | 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 30 provider staff. 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 and 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. |
| Recommendation 7: 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 | 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. |
| Recommendation 8: 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 | 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. |
| Recommendation 9: Develop, document, and implement checklists that help ensure staff adhere to all policies and procedures established in Recommendation 8. Due Date: December 31, 2026 | DCHS recently hired a Contract Management Best Practices Manager. This role will work to ensure new policies and procedures in Recommendation 8 have checklists, job aids, and training to support with consistent implementation. |
| Recommendation 10: 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 | 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. |
Status on the 19 Potential Improper Payments
The auditor referred 19 potential improper payments for DCHS to review. DCHS has completed review of 11 of the 19 cases and found that in all but one there was no loss of public funds or improper payments. DCHS is still collecting documentation for the other eight cases.
Moving to an External Investigator: To ensure a thorough and unbiased review, the Ombuds Office will now work with an external investigator to review all 19 potential improper payments. DCHS will support by sharing documentation needed to complete the investigation.
Reporting Results
Last year DCHS reached nearly half a million King County residents with services like affordable housing, behavioral health treatment, child care, education and employment opportunities for youth and young adults, support for veterans, and resources for people with developmental disabilities. Find out more about the work we do here.
DCHS publishes Annual Reports that track progress on key programs and initiatives. Learn more by visiting our webpage.