Innovative Adaptation of General Purpose Accounting Software for a Municipal Social Services Agency

An Innovative Adaptation of General Purpose Accounting Software for a Municipal Social Services Agency

Andrew Schiff and Tigineh Mersha

Idea Group Publishing

IDEA GROUP PUBLISHING An Adaptation of General Purpose Accounting Software 1331 E. Chocolate Avenue, Hershey PA 17033-1117, USA Tel: 717/533-8845; Fax 717/533-8661; URL-http://www.idea-group.com

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g n i h s i l b u An Innovative Adaptation ofPGeneral p u o r G a Purpose Accounting Software for a e d I t h Municipal CopyrigSocial Services Agency Andrew Schiff, University of Baltimore, USA Tigineh Mersha, University of Baltimore, USA

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Andrew Schiff, Ph.D., C.P.A. is an Associate Professor of Accounting at the Robert G. Merrick School of Business, University of Baltimore. He received his Ph.D. from Rutgers University. Prior to joining the University of Baltimore, Dr. Schiff held a variety of positions including internal audit manager, assistant controller and controller for organizations ranging in size from $6 million to over $600 million per year. Dr. Schiff has published in a number of academic and professional journals including Behavioral Research in Accounting, the Journal of Management Systems, International Journal of Case Studies and Research, The C.P.A. Journal and the Massachusetts C.P.A. Review. He is also the co-author or editor of two textbooks.

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Tigineh Mersha, Ph.D., is a Professor of Management at the Robert G. Merrick School of Business, University of Baltimore. He received his MBA and Ph.D. from the University of Cincinnati. Prior to starting his academic career in 1982, Dr. Mersha held managerial positions in Ethiopia and at the Walnut Hills-Evanston Medical Center in Cincinnati. He has been a full-time faculty member at the University of Baltimore since 1984. He has taught graduate and undergraduate courses in production and operations management, service operations management, and quality and productivity improvement. His research interests include service sector management, quality and productivity improvement, and managing operations in developing countries. Dr. Mersha has published in many academic and professional journals.

g n i h s i l b u EXECUTIVE SUMMARY P p uandsatisfy Organizations with unique characteristics transaction processing o r requirements, such as government agencies, often these requirements G a evendors who have developed applications for by (a) acquiring software from d I t that particular typeh of organization, or (b) developing software internally g i r from scratch. When either of these approaches is taken, the development costs y p are spread Co over a relatively small number of organizations, and the resultingng system can be very expensive. Also, due to the uniqueness of the application i h and the relatively small number of users, it may take a long time to identify s i l generalb and correct any processing errors. An alternative is to u acquire P of organizations, purpose software that has been developed for a wide range p u o be installed. However, this and to adapt it for the agency in which it r will G alternative approach is frequently not undertaken because it is often believed a e d that general-purpose software is unable to provide all of the information I t h required by the organization. When the required information can be provided, g software i r y though, general-purpose can be less expensive and less timep o C to implement. consuming Copyright © Idea Group Publishing. Copying without written permission of Idea Group Publishing is prohibited.

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g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P up o r BACKGROUND G a e One of the important roles of government is to provide a safety net to d I t h certain sectors ofg society that need assistance. While a variety of services are i r y provided to needy families and children by social service agencies in the p o United has C States, ensuring the safety and well-being of at-risk childrenng always been a focus of attention among government officials, community i to h s leaders and charitable organizations. Among the many programs designed i l bprograms are the serve the needs of children in most jurisdictions, fosteru care P p most popular. u o The primary purpose of the fosterr care program is to provide alternative G a care to children who cannot remain at home due to maltreatment, abandone d I ment or neglect. In the city on which this case study is based, the state develops t h g i the foster care program and also maintains administrative policies thatrgovern y p oversight while social service agencies are charged with the task of o thelocal Cadministering g program in accordance with the law. This includes identin i h fying care providers and arranging temporary and permanent lout-of-home s i b placement for children believed to be in imminent risk. u P p Upon removing children from their homes in response to reported u o r incidents of maltreatment or neglect, social workers first explore the possibilG a Typically, relative care providers are ity of placing the children withe relatives. d I not paid for their services although they may receive food and medical t h gchildren placed in their care. If relatives who are willing and assistance for r the i y p able o for the at-risk children cannot be identified, the agency places the Cto carein foster children homes. This case presents a successful use of the latter approach. It describes how a general-purpose accounting software package was successfully adapted to meet the information processing needs of the foster care program in a large municipal government agency located on the Eastern seaboard of the United States. The primary contribution of this case is to explain the agency’s information processing needs and how the application software was modified to meet them, since it is often believed that general-purpose software cannot be customized to meet the needs of organizations which are not typical merchandising, manufacturing or service businesses. Therefore, this case should be useful as a reference for others who are involved in, or who are considering, similar projects. In addition, as will be discussed briefly below, this approach yielded the additional benefits of significantly reducing the time and the cost required for system development.

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Two types of foster home resources are available: individual foster homes or institutional care facilities. Among the 4,000 children in the city’s foster care system, approximately 80 percent are placed in individual foster homes. Both individual foster care providers and group care facilities receive payment for caring for the children placed with them. The payment rates vary depending on the age and medical condition of the child. Caregivers who take care of children with special needs receive higher payment for their services. Annual payments by the city to foster homes and institutional facilities total about $75 million. Much of this funding comes from the state, although federal funding is also available to cover some of the costs of caring for the children placed in the foster care program.

g n i h s i l b u P p u o r G a e d I t h g i r y p o C g n i h s i l b u P p uCare Providers o The System Used to Pay Foster r G or institutional care provider, the Upon placing a child with ana individual e d a placement authorization and payment I child’s social worker t completed h gform,dailyindicating (PAP) agreement (a) when the child had entered the home i r y and (b) the authorized or monthly payment rate. This form was also used p o Cindicate the transfer of the child from a particular service provider’s home to or facility to another. Hence, each placement or removal of a child required completing the PAP form. g n i A copy of the PAP form was then sent to the city’s Foster Care h s i l Accounting Unit (FCAU) where a file was opened for the child and the b u P The FCAU was information was entered into the FCAU’s datap system. u responsible for paying the foster care providers, historical o and for maintaining r G records of disbursements. The FCAU also maintained information about the a e children receiving foster I care, care given to each child as well as dbetheabletypeto ofproperly t h the care provider in order to pay the caregivers. g i r ybasis of information contained in the PAP form, a payment Onp the o authorization C form would be completed by FCAU and sent to a state agencyng in another location where the checks were prepared. The checks were then i h s sent back to FCAU where they were reviewed and mailed to the lcaregivers. i b days of Care providers expected to receive payment within 10 u working P p submitting the PAP form. u o r Institutional care providers wereG required to submit an invoice each a month to get their reimbursements. However, a different procedure was used e d I to generate payments h for t individual care providers. If a child remained in the g i care of a particular individual care provider for more than 60 days, the r y caregiver(s) Copwould be placed on what was called a “payroll system.” Placing the caregiver in the payroll system enabled automatic generation of payment

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g n i h s i l b u P p u o r Problems with G the Existing System a e As indicated above,d payment to caregivers was triggered or discontinued I t by completing theh PAP form for each foster care case by the social worker in g i r the field.y At times, however, social workers did not complete these forms or, p if o completed, the forms were not received in a timely manner by FCAU. CMeanwhile, a service g n provider could continue to receive checks even though i h s i the child was no longer under his/her care which resulted in overpayments. l b u Getting refunds of the overpayments from individual caregivers was often P p very difficult and involved incurring additional costs. ucollection o r In addition to the regular “payroll” checks, manually prepared checks G a were issued to caregivers to cover emergencies. To ensure that such payments dehistory I t were included in theh payment to the provider, the amount for which g i r a check wasy cut manually would be entered into the computerized system with p the understanding that the computer generated duplicate checks would later Co be voided. On occasion, however, these duplicate checks were erroneously g n i h sent to caregivers and were cashed. Recovering the overpayments from s i l b institutional caregivers was relatively easy since the overpaid amount could u P be deducted from future invoices. However, p it was not always possible to u recover overpayments from individualrfoster If the amount o becareafterproviders. G was successfully recovered, it would often a long time and at a a e significant additional Iofdthe current payment system concerned the lack of t cost. h Anotherig problem r y adequate automation to facilitate the management of the enormous amount of p o in the FCAU. For example, upon completing the data entry nandg Cinformation i check preparation process, the state agency would send to FCAU lengthy h s i l as well as hard-copy printouts detailing historical information on each child b u Pno automated system on each care provider who received payment. There was p u for verifying the accuracy of the information provided to the state agency for o r G check processing, and at times a payment authorizations submitted by the e FCAU were rejected byIthe automated check printing system at the state d t h agency. Moreover, there was no automated procedure for verifying that g i r y checks that were issued at the state agency tallied with the amounts authorized p o by FCAU. for Cpayment checks to the individual foster parent every month. As a result, individual care providers were not required to submit monthly invoices. Such payments would continue until the state office that was printing the checks was advised that the child was no longer in the care of the foster parent.

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When authorized payments were rejected by the state system that was printing checks or when caregivers called demanding payment, FCAU personnel were compelled to spend substantial amounts of time manually searching through hard-copy printouts sent to them monthly by the state agency. This was done in order to (a) identify the cause(s) of the error(s); (b) answer questions from foster care providers who had not been paid at all or who believed that their checks were short; (c) identify, correct and resubmit transactions that have been rejected by the system; and (d) search for potential duplicate payments. This process was cumbersome, time-consuming and ineffective.

g n i h s i l b u P p u o r G a e d I t h g i r y p o C g n i h s i l b u P p u SETTING THE STAGE o r Gabove were noted in an audit of the Many of the shortcomings outlined a e FCAU conducted in theId late 1990s. More specifically, the audit report t h disclosed the following g shortcomings: i r y p Delays in processing provider payments, C1)2)oInadequate documentation to confirm that payments had been made to foster care providers, g n 3) Insufficient procedures to verify that children listed on invoices were i h s i actually in the care of the providers submitting the invoices, and l b u 4) Duplicate payments to providers. P p u oagency was diligently seeking r The administration of the socialG service a to improve the effectiveness and efficiency of the service delivery system. It e d I t sought, and acquired, outside funding sufficient to develop an automated h g i r the foster care payment process and to purchase the system fory managing p required hardware. The FCAU and the manager of finance also wished to o C introduce new technologies to manage this process. Consequently, the g n h authors were requested to assist the head of FCAU to create a system toibe s i l b installed within the FCAU which would: u P p u o 1) Provide online access to data about children who had been placed in the r G foster care system and the type of care that each child received, a e d 2) Provide online access to data about foster care providers, I t h 3) Automatically calculate the amount to be paid to each provider for each g i r y childp every month, o 4) Maintain C online historical information about payments both by child and

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g n i h s i l b u P p u o r G a e d amounts were based upon the period of time for I t The individual payment h g received foster care, and the type of care received. The i r which each child y p amounts would then be sorted and accumulated by foster careg o Cpayment n provider, and the check made payable to the provider. This made the FCAU’s i h s i request specially challenging because, in contrast to a typical payroll system, bl u there would not be a single paycheck made payable toP each “employee” (the p payable to a provider child), but instead a grand total check would be made u o r for all of the “employees” (children) G under the provider’s care. Moreover, in a contrast to a typical accounts payable de system, payment history would have to I t be accumulated andh made available not just for each “vendor” (provider), but g item (each child) included in one or more payments. i r for each unique line y Cop g CASE DESCRIPTION n i h s Three approaches to developing a foster care payment-processing sysi l b tem were considered. The first approach was to createu a system from scratch P p using an RDBMS, such as Microsoft Access. The second approach was to u o acquire a system from a vendor who hadrdeveloped software for this particular G a type of organization. The e third approach was to select a general-purpose d and modify it to meet the specific needs of the I accounting softwaretpackage h FCAU. rig y p The last of these three approaches was chosen for several reasons. First, o Cit was believed that developing a custom system from scratch wouldhitake g n substantially more time and resources than acquiring and modifying generals i l b purpose software, which was already available. Moreover, the time that u P would be required to develop a custom system could upnot be estimated with any reasonable degree of precision. The cost r ofo software developed for governG a ment social service agencies was significantly (as much as 10 times) greater e daccounting software. This was well beyond the I than that of general-purpose t h g Finally, the transaction processing and reporting budget of theriFCAU. y p requirements of the FCAU system closely resembled those which could be Cbyogeneral-purpose met accounting software. by foster care provider, 5) Automatically detect possible duplicate payments prior to disbursement, and 6) Print disbursement checks to foster care providers with supporting documentation indicating the children and the time periods for which payment was being made.

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The Selection Process To implement the last approach, the authors obtained information about various general-purpose middle-market accounting software packages through professional publications, vendor literature, and other sources. Three packages were identified which appeared able to meet the needs of the FCAU after appropriate modifications were made. These packages were Great Plains Dynamics, Solomon for Windows, and MAS 90. The authors then contacted the local value-added resellers (VARs) of these three accounting software packages. After demonstrations and discussions with the VARs, it was determined that one package, Great Plains Dynamics, could be modified in a way which would enable it to fulfill the transaction processing and reporting requirements of the FCAU. This package was then demonstrated to the FCAU administrators and staff, who also approved its use.

g n i h s i l b u P p u o r G a e d I t h g i r y p o C g n i h s i l b u P p u o r G a e d I t h System Design rigabove, individual y Asp mentioned payment amounts were based upon the o C of time and the type of care provided to each child, but the checks were length made payable to the providers. In order to accomplish this, the Great Plains payroll module and the accounts payable module were used. This was doneg n i because no single module was able to perform these functions, ands toh provide li foster care online historical information about payments both by child and by b u P provider, entirely by itself. p u First, the accounts payable modulerwas modified to capture critical oincluding G information about each foster care provider, the provider’s identia e fication number, address and numbers. Figure 1 shows the main screen dphone I t h for entering this information into the accounts payable module (called g i r y Providerp Maintenance), after it had been modified from the standard accounts o payable C format. Additional addresses were entered in a screen that wasng accessed by pressing the Address button on the main screen. (Further i h s information that might be needed for a typical accounts payable application, i l b and which would be accessed by pressing the other buttons,u was not required P p by the FCAU.) u oto capture critical information r Next, the payroll module was modified G about each child, including: ea d I t h g number, i a) The child’srcase y b) The type of foster care being provided (emergency, institutional, etc.), op C

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g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P up o r G a c) The date the child was placed in foster care, e dfor basic care and any special services, such as I t d) The rates to be paid h i education org medical care, r y p e)o The child’s foster care provider, and Cf) The federal or state program under which the child was eligiblengfor i funding. h s i l b u P Figure 2 shows the main screen for entering this information into the p u payroll module (called Child Maintenance), after it had been modified from o r G the standard payroll format. The rates to be paid for basic care and any special a e services were entered in that was accessed by pressing the Pay Codes da screen I t h button. The federal or state program under which the child was eligible for g i r ywas entered in a screen that was accessed by pressing the Tax Info funding p o button. (Additional information that would be needed for a typical payrollg Capplication, such as marital status and exemptions, was not requiredh byin the s i l FCAU.) b and each u P After the above information was entered for each provider uthepamount to be paid to the child, the payroll module was used to calculate o r Gof foster care given each month. This child’s provider for the length anda type e was accomplished through a modification of the data entry procedure and d I t h screen normally g used to record information about hours worked and payroll i r y dollars earned. The modified data entry screen, which is shown in Figure 3, p o contained C three rows of information for each child within a monthly pay Figure 1: Provider Maintenance Screen

period. This included, on the left side of the screen, the child’s case number

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Figure 2: Child Maintenance Screen

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g n i h s i l b u P p u o r G a e d I t h g i r y p o C g n i h s i l b u P p u o r G a e d I t h g i r y Figure Co3:pPayment Entry Screen g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u and name, the provider’s identification number, thep payP period start and end u Code), and the state or dates, the type of foster care being provided (DSS o r Geligible for funding (Pay Stat). On federal program under which the child was a e d the right side of the screen, spaces for recording a code and the rate to be paid I t h for basic care or for a special service, the number of days for which this care g i r y was provided, and the calculated payment amount, were presented three p o times. These spaces were presented three times because basic care and up to C

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g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P pto Accounts Payable Transferring the Payment Information u o r Next, a short program (macro) was written and included in the software G a package to transfer paymente information for each child from the payroll d I t module to the accounts payable module. A feature of the Great Plains h g i r software called Open Integration Modules was used to reformat the data y p produced by the Co by the payroll module so that it could be properly read n accounts payable module. The items of information that were transferredg to i h the accounts payable module were: s i l b u P a) The child’s case number, p u b) The provider’s identification number, o r Ga special service, c) The code for basic care or for a e d for which the basic care or special service was d) The number oft days I h provided, and rig e) p Theycalculated payment amount for the basic care or special service. CoThese five items were transferred for each child from one to threehtimes g n i lismight be since, as noted above, basic care and up to two specialu services b Pof payments to foster recorded for a child during the monthly computation p u care providers. The accounts payable module then reorganized this informao r G tion by foster care provider. This made it possible to print one check to a a e provider for all of the children under the provider’s care, to list the details of d I t h each individualipayment on the check advice, and to maintain a historical g by provider r y record of payments which could be accessed online. As menp o tioned C previously, both the payroll module and the accounts payable module two special services might be recorded for a child during the monthly computation of payments to foster care providers. Information for all of the children under the care of one provider was entered into the above screen, which could be scrolled down to display additional lines for entering more data. After this information was recorded, it was saved into the payroll module and similar information for the next provider was entered. An additional benefit was that all of the information for a specific foster caregiver could be memorized as a template, thereby greatly reducing the amount of time required to enter this information in subsequent months (only the changes, if any, would have to be recorded). The payroll module also accumulated a historical record of payments by child, which was accessible online.

were used because no single module was able to perform all of the above

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functions, and to provide on-line historical information about payments both by child and by foster care provider, completely by itself. A flowchart of the major processing activities in the FCAU system is shown in Figure 4.

g n i h s i l b u P p u o r G a e System Implementation and Operation d I t h g i r opy of the new system required several steps. First, it was CImplementation

necessary to enter information about each child in the foster care system into the payroll module, and information about each foster care provider into the accounts payable module. Historical information about payments already made to providers for the children under their care would be entered through an automated process, after converting the information from the format of the existing system to the format of the new system. After this was accomplished, data about the length and type of care given to each child would be entered into the payroll module at the end of each month from invoices or other documentation supplied by foster care providers and/or social workers (such as a placement authorization and payment form). The payroll module would then calculate the amount to be paid for each child. Next, the key information about each payment discussed previously, i.e. the child’s case number, the child’s foster care provider, the amounts to be paid for each category of care, and the total payment for the child, would be transferred from the payroll module to the accounts payable module using the macro noted above. The accounts payable module would then reorganize this information by foster care provider and print the checks to the providers. These steps are illustrated in Figure 4. The FCAU installed and operated the new system on a local area network, which had been set up within the FCAU.

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g n i h s i l b u P p u o r G a e d I t h CURRENT g CHALLENGES FACING i r y ORGANIZATION CoThepabove systemTHE eliminated the need for FCAU personnel to search g n i h through hard-copy printouts to correct and resubmit transactions s that had i l b been rejected, since possible errors (such as a child case number that had not u P and corrected been entered into the payroll module) could bep detected u o immediately online. Because historical information was also available online, r G the above system also made it possible for FCAU personnel to quickly a e d respond to questions fromtfoster care providers about payments received and I h not received. Theiability of the payroll module to record payment history by g r y child made it possible to detect: p o C

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g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P up o r G a e d I t h g i r y Cop g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P up o r G a e d I t h rig y p Co Figure 4: System Flowchart

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a) whether the same provider was going to receive more than one payment for the same child for the same period of time, or b) whether two or more providers were going to receive payment for the same child for the same period of time,

g n i h s i l b u P p u o r G a e d I t hwithin child within pay period. Searches for duplicate g i r by sorting ony provider p o C could be performed before the checks were printed, either through payments visual inspection or through a macro written for this purpose. Thus, duplicate g payments could be virtually eliminated. n i h These features, along with its other transaction processing capabilities, s i l b enabled the new system to achieve all of the objectives listed above that had u P been established by the FCAU. There were also benefits in the form of time p u othat had been installed in other and cost savings. In contrast to similar systems r G municipalities, this project was scheduled to be completed over a period of aless than 25% e d I months rather than years, and for of the cost of using software t h gcustommodule which had been developed for government social service agencies. i r y Moreover, the payroll was able to accumulate payments based on the p o C and state programs under which funding was to be received. The federal accumulated totals made it possible for the FCAU to invoice the related federal and state agencies with a higher level of accuracy than had previouslyg n i been possible. h s i The organization found successful implementation of b thelnew system u P somewhat more challenging than initially expected. This was primarily due p u to employee turnover at FCAU. The supervisor ro of FCAU was the most computer literate person in the a unit.G It was this individual who was first ethe understanding that he would provide intrained in using the system, with d I t hmembers of the unit. This was designed to cut costs and house training toig other r facilitatep any “on-the-job” approach to staff training. However, the supervisor o resigned C unexpectedly, thereby causing a temporary setback in getting theng system up and running as scheduled. It was necessary to wait until a new iof h s supervisor was hired, at which point it was possible to resume thelprocess i bongoing. u staff training and system operation. This process is currently P p u o r FURTHER G READING a e Boockholdt, J. (1999). Accounting d Information Systems: Transaction ProI t cessing and Controls, 5E. New York, NY: Irwin/McGraw-Hill, Inc. h g i r Collins, J. (1999). How to Select the Right Accounting Software. Journal of y p o Accountancy, August, 61-69. C

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g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P up o r G a e d I t h g i r y Cop g n i h s i l b u P p u o r G a e d I t h g i r y Cop g n i h s i l b u P up o r G a e d I t h rig y p Co Cushing, B. and Romney, M. (1994). Accounting Information Systems, 6E. Reading, MA: Addison-Wesley Publishing Company. Great Plains Dynamics (1997). Payables Management. Fargo, ND: Great Plains Software, Inc. Great Plains Dynamics (1996). Payroll-USA. Fargo, ND: Great Plains Software, Inc. Mersha, T., Bartle, S. and Wilson, J. (1996). Case Flow Efficiency Improvement in a Social Service Agency. Proceedings of the International Association of Management Annual Conference, 14 (Addendum). Milakovich, M. E. (1995). Improving Service Quality: Achieving High Performance in the Public and Private Sectors. Delray Beach, FL: St. Lucie Press. The Taylor Group (1997). Great Plains Dynamics Open Integration Modules. Bedford, NH: The Taylor Group, Inc.