Frequently Asked Questions about federal child care funds in Washington state

As the authority on auditing public funds in Washington state, we’ve prepared the following FAQ to address some of the most common questions people may have about federal child care funds. Our goal with this FAQ is to be transparent and informative about the role of the Office of the Washington State Auditor on this issue of public concern. State Auditor Pat McCarthy also released two statements earlier this month on this topic:

• Here's where things stand around child care fund audits in WA
• Washington Auditor Pat McCarthy addresses issue of child care subsidies

Who’s responsible for auditing child care funding in Washington?

The Office of the Washington State Auditor examines how state agencies manage funding for child care programs that support working families. We audit financial transactions and compliance with laws, rules and policies at the state agencies that manage the funds. We do not physically inspect child care centers as part of this process. 

How often are child care funds audited in Washington state?

Child care funds are audited annually. 

Every year our Office examines whether the state agencies responsible for spending federal funds on child care – and on many other things – have followed federal laws and rules about how to use those funds. This audit is called the Statewide Single Audit because of its comprehensive nature, allowing for a single examination of the state’s use of federal funds. 

States conduct these audits and report the results to the federal agencies that “grant,” or distribute, the federal funds. Ultimately it’s up to the federal agencies to decide what to do regarding those funds if audits find a state agency is not following the rules.

Do you audit every single dollar or transaction?

No. Our Office uses statistical sampling methods to select a number of payments or transactions, then analyze them to determine whether the state agency took the necessary steps to ensure funds were spent appropriately. These samples offer an accurate picture of what is going on across an entire program. Sampling is a common accepted practice used by auditors across the country and around the world to ensure efficient, actionable audits.

Do you audit individual child care centers? If not, why not?

Our job is to audit state agencies and local governments’ financial transactions to ensure they are following laws, rules and policy. We do not audit the finances of private businesses or nonprofit organizations.

I’ve heard your Office was unable to audit a majority of child care funds over the past few years. Why is that, and what have you done about it?

We have been unable to audit payments to providers as part of the federal Child Care and Development Fund federal audit for fiscal years 2021, 2022, 2023 and 2024. Our audits found that the state Department of Children, Youth and Families did not track its spending with a level of traceability that complied with federal requirements. Therefore we were unable to determine whether that money was spent according to federal rules.

As a result, we called into question the entire program’s spending for each of those fiscal years. In our most recent Statewide Single Audit, that meant questioning $416 million spent through the federal child care program.

We question costs when an agency does not have adequate documentation to support its expenditures, or it has not complied with grant requirements. Doing so does not necessarily indicate fraud.

Why have I never heard about SAO’s audits of child care funding before now?

We share our audit findings as widely as possible every year by bringing them to the attention of members of the media and a variety of stakeholders. State agencies see our findings and provide responses to them, which we include in our reports. 

We also publicize our audit results on our social media channels, in email newsletters and in public presentations. Here are a few examples of news reporting on our federal audit:

Audit finds more problems with how WA spent federal COVID aid | Cascade PBS
Washington’s $1.1 billion blunder: Audit uncovers massive mismanagement of federal COVID funds
Audit: 11 Washington state agencies potentially mishandled $1.17 billion in COVID-19 aid | The Daily Chronicle

How can you be sure there is no fraud, since you haven’t been able to audit the program?

Being unable to audit these federal funds is a serious and troubling matter. But expressing serious concerns is not the same as reaching a verdict. Determining fraud requires criminal evidence and can only be done by enforcement agencies in conjunction with the judicial system. As auditors, we took the strongest position we are able to take: we “disclaimed” the entire program. We stated loud and clear that we couldn’t audit the programs, and we shared that information widely. 

We are a reporting agency, not an enforcement agency. The responsibility for correcting problems uncovered by audits lies with the leaders and managers of the agency, as well as with federal entities who distribute the funds. 

If your Office suspects fraud during an audit, what do you do about it?

In the case of federal child care funds, we would refer the information to the Department of Social and Health Services, which is the state agency that investigates potential child care fraud. Their website, Office of Fraud and Accountability | DSHS, has more information.

Who sees these audits? Are they confidential?

We publish our audits at sao.wa.gov.

The Statewide Single Audit is more than 1,000 pages long and can be found not only on our website, but also on the website of the state’s Office of Financial Management. 

Since 2018, our Office has produced a high-level graphic summary of the audit, highlighting issues we think are of the greatest public interest. In recent years that has included items related to federal child care subsidies.

Where can I find these audits and summaries?

Here are some quick links to the summaries, which contain within them a link to each year’s thousand-page-plus full audit report:

•    Summary of 2024 SWSA (Infographic)
•    Summary of 2023 SWSA (Infographic)
•    Summary of 2022 SWSA (Infographic)
•    Summary of 2021 SWSA (Infographic)
•    Summary of 2020 SWSA (Infographic)
•    Summary of 2019 SWSA (Infographic)
•    Summary of 2018 SWSA (Infographic)

What if I want to check on child care centers myself? Can I audit them?

It is the position of the State Auditor’s Office that it is inappropriate and unsafe for private citizens to physically visit child care locations in order to “audit” or “inspect” them. It can feel threatening to the children, parents and providers, and result in unnecessary confrontations. The most appropriate method is to share your concerns with your elected representatives, who provide oversight of state government and its management. 

You can find out who your representatives are by going to the Washington Legislature website and using the “Look up your legislative district” tool. From there you can find direct contact information for the state House and Senate members who represent you.

If you have evidence of fraud at a child care center, please contact the Office of Fraud and Accountability at the state Department of Social and Health Services. Their website, Office of Fraud and Accountability | DSHS, has more information.