FFY2010

1. FFY2010 EAP Annual Training Section 1.0 Control Environment Includes Program Management, EAP Business Strategy Model (BSM), Internal Control Framework (ICF), State Plan, Policy Development Process (includes PAC and EACA Input),Local Plans & Contracts, EAP Start up ProceduresandAgency & Coordinators Responsibility August 12 & 13, 2009 St. Cloud Minnesota Holiday Inn

2. Program Management 1. Control Environment • Relates to management & employees establishing & maintaining an environment throughout the organization that sets a positive & supportive attitude toward internal control & conscientious management.

3. Program Management Incremental Development Of EAP Business Models & Strategies • A number of concepts have been developed over time • Each added to EAP improvements & made a good program even better • Lately we have tried to more fully integrate these concepts into whole comprehensive approach • We are not yet done, further work is ahead

4. Program Management The Minnesota Model Reminder • EAP employs a “Coordinated Responsibility Model” • The Model assumes households, vendors, and the program all have a role in assuring heat for low-income households during the winter. • Program responsibility includes providing heating payment supplements, case management and advocacy for households, and maintaining influence with vendors. • Energy Vendor responsibility is to be as flexible as possible so energy payments leverage the highest possible level of service to the household. • Household responsibility is to make reasonable and planned payments for energy service, access government aid when necessary and communicate with vendors and government service providers.

5. Program Management EAP Management Approach Proven Process Including Project Plans Tools Continuous Improvement

6. Program Management Formal & Documented Project Plans • Built with stakeholder input • PAC • EACA • JAD • State Staff • Policy makers • Puts a well-understood and accepted process in place for reaching the project’s results

7. Program Management Approach by Advanced Strategies, Inc. • Used to develop eHEAT • Trained all EAP State Staff • Developed Internal Plans • Master Plan • Project Plans • Conducted JADs • Issues Management • Broadened application

8. Program Management Project (Effort) Definitions • Intentions: Goals or outcomes intended • Values: Principles, standards and ideals incorporated into the project or effort • Focus: What’s included and excluded • Context: Situations existing around the project, not part of it but can affect it

9. Business Strategies Model (BSM) Program Management

10. Why Do We Need a BSM? Provides a Shared Vision Gives people a sense we are all serving the same goals ... we are all working together Helps build a high-performing team Helps provide consistent messages to key stakeholders Helps guide day-to-day decisions and actions Program Management

11. Vision What happens if we don’t have a shared vision? We each have a vision that underlies our behavior If it is not shared – we appear to be Out of sync Disorganized Inefficient Inconsistent Selfish Ultimately not worthy of confidence Appear unreliable (different responses from different individuals) Program Management

12. The Business Strategy ModelHandout in Folder Program Management Intentions Values Means Environments • Definitions • Why does your unit or organization exist? • What guides the behavior of your organization? • What products or services do we provide? • To whom do we provide them? • What factors outside our organization must we monitor and adjust to? • How should we organize ourselves to meet our intentions, within our values?

13. EAP & PAC BSM Shared Program Management EAP & PAC BSM are same except means, but share: Intentions Values Means (Offerings & Markets) Environments

14. PAC BSM - Background How we got here: Developed for the program by the State Staff Extracted PAC specific content from a combination of program BSM and PAC effort definition Program Management

15. EAP BSM – Intentions Maintain affordable, continuous, and safe home energy for low-income Minnesota households. Program Management

16. EAP BSM - Values 4 categories: Overall Regarding Households Regarding Collaboration Regarding Policy Directio Program Management

17. EAP BSM - Values 1. Overall a. Affordable, safe, and dependable energy b. Advocacy c. Good stewardship of resources d. Being realistic about limitations e. Quality f. Partners and Partnerships (see Coordinated Responsibility Model) g. Understanding the program in the context of broader public policy and other needs of low-income Minnesotans h. Being the compass but not the map i. Reward positive, proactive behavior by all energy stakeholders Program Management

18. EAP BSM - Values 2. Regarding Households Program Management a. Dignity and privacy b. Participation (see Coordinated Responsibility Model) c. Empower people to make informed decisions regarding their energy use and needs d. Serving the most in need – balancing total number of participants makeup of participants, and levels of service

19. EAP BSM - Values 3. Regarding Collaboration Program Management a. The responsibility to provide a safety net b. Working towards the same goals c. Stakeholders personal commitment and accountability d. Represent our own personal perspective, the views of our stakeholder group, and the world from multiple perspectives e. Actively coordinate across programs and departments 19

20. EAP BSM - Values 4. Regarding Policy Direction Program Management a. Creative and flexible approaches b. Consistency c. Balance of simplicity and fairness d. Recommendations based on a sound community analysis e. More strategic than operational d. Timely and proactive in order to mitigate emerging problems

21. EAP BSM – Means Offerings Program Management Offerings (Program Products & Services) Energy bill payment Furnace repair or replacement Energy related crisis intervention Advocacy Outreach Referral Information Education Conservation, coordination and collaboration Demonstrate effectiveness of investment

22. EAP BSM – Means Offerings Program Management State Staff Offerings Oversight, monitoring and quality control Compliance with Federal and State requirements Policy Decision making Planning Training and Technical Support Stakeholder involvement and communication Program advocacy and information

23. EAP BSM – Means Markets Program Management • Markets (Customers) • Households, emphasizing low-income: • Families with children under age five • Families with members who are disabled • Seniors • EAP Director and Staff • Local Service Providers • Policy decision makers • Funders (e.g. HHS) • Energy Vendors • Mechanical Contractors • PAC members • Weatherization Assistance Program • Partner organizations • Community • Tax payers • Utility rate payers

24. PAC BSM - Offerings Program Management Direction Oversight Advocacy, education and outreach

25. BSM Environments Program Management External Internal

26. BSM Environments Internal Program Management

27. BSM Environments External Program Management

28. Program Management IntroductionInternal Control Framework (ICF)

29. Program Management Why Internal Controls? • All funds need good controls • Being good stewards of taxpayer’s funds • Office of Legislative Auditor (OLA) • Two years of “No Findings” for EAP • OLA is requiring the development of an Internal Control Framework

30. Program Management Pennsylvania • Other Info • 18 charged with stealing $500,000 in LIHEAP funds http://toddelliottkoger.blogspot.com/2009/07/18-charged-with-stealing-500000-in.html • PA Auditor Urges Action After Philadelphia LIHEAP Fraudhttp://liheap.ncat.org/news/june09/pa.htm • Auditor General Jack Wagner Urges DPW to Implement Recommendations to Eliminate Potential...http://www.reuters.com/article/pressRelease/idUS194062+10-Jun-2009+PRN20090610 • State to put safeguards in emergency heating programhttp://www.pennlive.com/midstate/index.ssf/2009/06/dpw_to_put_safeguards_in_emerg.html

31. Program Management Internal Controls? • GAO (Government Accounting Office)

32. Program Management Internal Controls • Most pieces were already done (incrementally without regard to ICF) • ICF provided the framework allowing the pieces to fit together • Local Plans, State staff meetings, this training, more in the future including all aspects of monitoring

33. Program Management Office of the Legislative Auditor (OLA) Top Audit Issues (Statewide) • Significant weaknesses in common internal control concepts. • Opportunities for fraud • Common areas of noncompliance • Emerging Issue – Internal Control Maturity • Assessing how well an agency identifies its risks, whether it documents and assigns its control procedures, and how it monitors the performance and effectiveness of the procedures.

34. Program Management Tone at the Top Agency management has the primary responsibility to design, implement, and maintain an effective internal control system. This goes from: • Governor • Commissioner • Deputy Commissioner • Program Director • Service Provider Executive Directors • EAP Coordinator

35. Program Management Tone at the Top (continued) Management shapes an organization's guiding values, disciplined business conduct, and operating policies forming the foundation of an agency's internal control structure.

36. Program Management State Directive Agency head must develop a plan for establishing, implementing and maintaining an effective internal control system. This plan at a minimum requires documentation of: • Internal control procedures over financial management activities, • An analysis of relevant risks, • Periodic evaluation of these control procedures To satisfy management that these procedures are adequately designed, properly implemented, and functioning effectively.

37. Program Management EAP & ICF • Why does EAP have a ICF? • OLA required EAP to have (in one day) or have a Audit finding • EAP took the “opportunity” to analyze and assess it’s existing business processes & controls & placed into ICF framework • What does existing program components, effort definitions, implementation plans and policies mean? • Asked how existing documents equated to internal controls • Incorporated existing documents into the ICF • Organized structure identified strengths and weaknesses • ICF is a evolving, living document EAP will be advancing in the coming year and maintain going forward

38. Program Management Internal Control Framework (ICF) • What is ICF? • How does it affect EAP?

39. Program Management What is ICF? The Framework is used assess the Internal Control Competency to determine how well an organization: • Identifies its risks • Whether it documents and assigns its control procedures, and • How it monitors the performance and effectiveness of the procedures

40. Program Management ICF outlines criteria EAP uses to: Frames State Office Operations • Management approach Determine competent Service Providers • Contract with Local Plan Monitor and evaluate program performance • Field Monitoring, Routine review, Ad Hoc Review Build the competency of the SPs • Training, Support, Corrective Action and T&TA

41. Program Management Frames within Framework (ICF) • Federal & State Controls • Rules and fiscal practices • GAO, OLA, MMB • Department of Commerce • Mission & Fiscal Control • EAP State Office • Program Policy & Procedure Requirement • Risk and quality controls • Fiscal allocation and auditing • Monitoring • T&TA • EAP Service Providers • Execute Program mission • Implementation of policies and procedures with a quality control environment • Manage SP specific risks

42. Program Management Internal Control Definition Defines internal control as a process, effected by individuals within an organization, designed to provide reasonable assurance regarding the achievement of these objectives: 1. Effectiveness and efficiency of operations, 2. Reliability of financial reporting, and 3. Compliance with applicable laws & regulations.

43. Program Management ICF Structure The three objectives are supported by the framework. The Framework, is comprised of five interrelated components that can react dynamically to changing conditions: • Control Environment • Risk Assessment & Management • Control Activities • Information & Communication • Monitoring

44. Program Management EAP Specific Control Examples 1. Environment (or Leadership or Tone at the Top) Ex: EAP SP’s leadership supports mission, structure and staffing to effectively process EAP Applications and deliver Crisis, ERR & A16 2. Risk Assessment and Management Ex: SP has and is aware of Disaster Plan so in case of flood or fire the harm to households reduce. 3. Control Activities Ex: SP understands, collects & maintains income documentation as a control the services reach the intended households. SP has proper segregation of duties for payment certification 4. Information and Communication Ex: SP makes policy & procedural Information is available to agency fiscal staff, mechanical contractors, vendors etc. to enable the program mission and controls to be consistently performed 5. Monitoring Ex: SP monitors timeliness of application processing and improves processes when possible

45. Program Management 1. Control Environment • “Tone at the top" is set set & demonstrated by an organization leader's actions & words • It is the foundation for all other components of internal control. It encompasses: • Integrity, ethical values & competence of all people in an organization • Management's philosophy & style • How management assigns authority, responsibility and organizes and develops its people • The attention & direction executive leadership provides

46. Program Management ICF Implementations 1. Control Environment • Local Plan, contracts establish documented understanding of ICF competencies • SP connects Business Strategy Model (BSM) & SP Mission • EAP Manual is use to guide SP policy and procedures development • SP participates in EAP management methodology including joint approach to development through EACA, JADs, training etc. and : • Understands Effort Definitions used to assure understanding of intentions and values • Understands and adopts administrative policies and procedures documentation • Service Providers participates in EAP training and trains staff to: • Promotes program compliance and consistency • Shares common mission, intention, goals, values and approach to program delivery • Assure policies are understood

47. Program Management 2. Risk Management • Involves the identification and analysis of relevant risks to achieve desired objectives • In the risk assessment process, management identifies: • Internal and external risks • Assesses the impact and the likelihood these risks might occur • Selects whether to avoid, reduce, share, or accept various risks • Considers controls to mitigate risk or to contain it to an acceptable level Risk Management detailed later in this training

48. Program Management ICF Implementations 2. Risk Management (Risk assessment & Mitigation) • SP conduct risk assessment & mitigation activities • State and SP conduct oversight activities including: • Data, file and other checks • Data & Technology practices (eHEAT user management) • SP make a maintain disaster plans • SP designs processes with proper segregation of duty in key areas • SP uses incident reporting process • SP uses error & fraud processes

49. Program Management 3. Control Activities • Consists of policies & procedures to help ensure management directives are carried out • Control activities occur throughout the organization at all levels in all functions.

50. Program Management ICF Implementations 3. Control Environment • SP processes have approvals & authorizations for benefit determination & payments • Separation of incompatible duties • SP conducts analytical procedures like quality controls including timely service • SP conduct and support verifications like: • Income eligibility and documentation • vendor registration & sound payment process for ERR contractors. • Household check points: • Benefit notification to assure accountability of service delivery • Appeals and compliant process • SP conducts reconciliations like allocation and FSR • Reviews of operating performance • SP assures security of assets