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An Innovative
Adaptation of General
Purpose Accounting
Software for a Municipal
Social Services Agency
Idea Group Publishing
Andrew Schiff and Tigineh Mersha
An Adaptation of General Purpose Accounting Software 1
Andrew Schiff, University of Baltimore, USA
Tigineh Mersha, University of Baltimore, USA
EXECUTIVE SUMMARY
Organizations with unique characteristics and transaction processing
requirements, such as government agencies, often satisfy these requirements
by (a) acquiring software from vendors who have developed applications for
that particular type of organization, or (b) developing software internally
from scratch. When either of these approaches is taken, the development costs
are spread over a relatively small number of organizations, and the resulting
system can be very expensive. Also, due to the uniqueness of the application
and the relatively small number of users, it may take a long time to identify
and correct any processing errors. An alternative is to acquire generalpurpose software that has been developed for a wide range of organizations,
and to adapt it for the agency in which it will be installed. However, this
alternative approach is frequently not undertaken because it is often believed
that general-purpose software is unable to provide all of the information
required by the organization. When the required information can be provided,
though, general-purpose software can be less expensive and less timeconsuming to implement.
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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 includingBehavioral Research in Accounting, the Journal of
Management Systems, International Journal of Case Studies and Research, The C.P.A. Journaland the
Massachusetts C.P.A. Review. He is also the co-author or editor of two textbooks.
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.
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is prohibited.
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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.
BACKGROUND
One of the important roles of government is to provide a safety net to
certain sectors of society that need assistance. While a variety of services are
provided to needy families and children by social service agencies in the
United States, ensuring the safety and well-being of at-risk children has
always been a focus of attention among government officials, community
leaders and charitable organizations. Among the many programs designed to
serve the needs of children in most jurisdictions, foster care programs are the
most popular.
The primary purpose of the foster care program is to provide alternative
care to children who cannot remain at home due to maltreatment, abandonment or neglect. In the city on which this case study is based, the state develops
policies that govern the foster care program and also maintains administrative
oversight while local social service agencies are charged with the task of
administering the program in accordance with the law. This includes identifying care providers and arranging temporary and permanent out-of-home
placement for children believed to be in imminent risk.
Upon removing children from their homes in response to reported
incidents of maltreatment or neglect, social workers first explore the possibility of placing the children with relatives. Typically, relative care providers are
not paid for their services although they may receive food and medical
assistance for the children placed in their care. If relatives who are willing and
able to care for the at-risk children cannot be identified, the agency places the
children in foster homes.
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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.
The System Used to Pay Foster Care Providers
Upon placing a child with an individual or institutional care provider, the
child’s social worker completed a placement authorization and payment
(PAP) agreement form, indicating (a) when the child had entered the home
and (b) the authorized daily or monthly payment rate. This form was also used
to indicate the transfer of the child from a particular service provider’s home
or facility to another. Hence, each placement or removal of a child required
completing the PAP form.
A copy of the PAP form was then sent to the city’s Foster Care
Accounting Unit (FCAU) where a file was opened for the child and the
information was entered into the FCAU’s data system. The FCAU was
responsible for paying the foster care providers, and for maintaining historical
records of disbursements. The FCAU also maintained information about the
children receiving foster care, the type of care given to each child as well as
the care provider in order to be able to properly pay the caregivers.
On the basis of information contained in the PAP form, a payment
authorization form would be completed by FCAU and sent to a state agency
in another location where the checks were prepared. The checks were then
sent back to FCAU where they were reviewed and mailed to the caregivers.
Care providers expected to receive payment within 10 working days of
submitting the PAP form.
Institutional care providers were required to submit an invoice each
month to get their reimbursements. However, a different procedure was used
to generate payments for individual care providers. If a child remained in the
care of a particular individual care provider for more than 60 days, the
caregiver(s) would 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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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.
Problems with the Existing System
As indicated above, payment to caregivers was triggered or discontinued
by completing the PAP form for each foster care case by the social worker in
the field. At times, however, social workers did not complete these forms or,
if completed, the forms were not received in a timely manner by FCAU.
Meanwhile, a service provider could continue to receive checks even though
the child was no longer under his/her care which resulted in overpayments.
Getting refunds of the overpayments from individual caregivers was often
very difficult and involved incurring additional collection costs.
In addition to the regular “payroll” checks, manually prepared checks
were issued to caregivers to cover emergencies. To ensure that such payments
were included in the payment history to the provider, the amount for which
a check was cut manually would be entered into the computerized system with
the understanding that the computer generated duplicate checks would later
be voided. On occasion, however, these duplicate checks were erroneously
sent to caregivers and were cashed. Recovering the overpayments from
institutional caregivers was relatively easy since the overpaid amount could
be deducted from future invoices. However, it was not always possible to
recover overpayments from individual foster care providers. If the amount
was successfully recovered, it would often be after a long time and at a
significant additional cost.
Another problem of the current payment system concerned the lack of
adequate automation to facilitate the management of the enormous amount of
information in the FCAU. For example, upon completing the data entry and
check preparation process, the state agency would send to FCAU lengthy
hard-copy printouts detailing historical information on each child as well as
on each care provider who received payment. There was no automated system
for verifying the accuracy of the information provided to the state agency for
check processing, and at times payment authorizations submitted by the
FCAU were rejected by the automated check printing system at the state
agency. Moreover, there was no automated procedure for verifying that
checks that were issued at the state agency tallied with the amounts authorized
for payment by FCAU.
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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.
SETTING THE STAGE
Many of the shortcomings outlined above were noted in an audit of the
FCAU conducted in the late 1990s. More specifically, the audit report
disclosed the following shortcomings:
1) Delays in processing provider payments,
2) Inadequate documentation to confirm that payments had been made to
foster care providers,
3) Insufficient procedures to verify that children listed on invoices were
actually in the care of the providers submitting the invoices, and
4) Duplicate payments to providers.
The administration of the social service agency was diligently seeking
to improve the effectiveness and efficiency of the service delivery system. It
sought, and acquired, outside funding sufficient to develop an automated
system for managing the foster care payment process and to purchase the
required hardware. The FCAU and the manager of finance also wished to
introduce new technologies to manage this process. Consequently, the
authors were requested to assist the head of FCAU to create a system to be
installed within the FCAU which would:
1) Provide online access to data about children who had been placed in the
foster care system and the type of care that each child received,
2) Provide online access to data about foster care providers,
3) Automatically calculate the amount to be paid to each provider for each
child every month,
4) Maintain online historical information about payments both by child and
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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.
The individual payment amounts were based upon the period of time for
which each child received foster care, and the type of care received. The
payment amounts would then be sorted and accumulated by foster care
provider, and the check made payable to the provider. This made the FCAU’s
request specially challenging because, in contrast to a typical payroll system,
there would not be a single paycheck made payable to each “employee” (the
child), but instead a grand total check would be made payable to a provider
for all of the “employees” (children) under the provider’s care. Moreover, in
contrast to a typical accounts payable system, payment history would have to
be accumulated and made available not just for each “vendor” (provider), but
for each unique line item (each child) included in one or more payments.
CASE DESCRIPTION
Three approaches to developing a foster care payment-processing system were considered. The first approach was to create a system from scratch
using an RDBMS, such as Microsoft Access. The second approach was to
acquire a system from a vendor who had developed software for this particular
type of organization. The third approach was to select a general-purpose
accounting software package and modify it to meet the specific needs of the
FCAU.
The last of these three approaches was chosen for several reasons. First,
it was believed that developing a custom system from scratch would take
substantially more time and resources than acquiring and modifying generalpurpose software, which was already available. Moreover, the time that
would be required to develop a custom system could not be estimated with any
reasonable degree of precision. The cost of software developed for government social service agencies was significantly (as much as 10 times) greater
than that of general-purpose accounting software. This was well beyond the
budget of the FCAU. Finally, the transaction processing and reporting
requirements of the FCAU system closely resembled those which could be
met by general-purpose accounting software.
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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.
System Design
As mentioned above, individual payment amounts were based upon the
length of time and the type of care provided to each child, but the checks were
made payable to the providers. In order to accomplish this, the Great Plains
payroll module and the accounts payable module were used. This was done
because no single module was able to perform these functions, and to provide
online historical information about payments both by child and by foster care
provider, entirely by itself.
First, the accounts payable module was modified to capture critical
information about each foster care provider, including the provider’s identification number, address and phone numbers. Figure 1 shows the main screen
for entering this information into the accounts payable module (called
Provider Maintenance), after it had been modified from the standard accounts
payable format. Additional addresses were entered in a screen that was
accessed by pressing the Address button on the main screen. (Further
information that might be needed for a typical accounts payable application,
and which would be accessed by pressing the other buttons, was not required
by the FCAU.)
Next, the payroll module was modified to capture critical information
about each child, including:
a) The child’s case number,
b) The type of foster care being provided (emergency, institutional, etc.),
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c) The date the child was placed in foster care,
d) The rates to be paid for basic care and any special services, such as
education or medical care,
e) The child’s foster care provider, and
f) The federal or state program under which the child was eligible for
funding.
Figure 2 shows the main screen for entering this information into the
payroll module (called Child Maintenance), after it had been modified from
the standard payroll format. The rates to be paid for basic care and any special
services were entered in a screen that was accessed by pressing the Pay Codes
button. The federal or state program under which the child was eligible for
funding was entered in a screen that was accessed by pressing the Tax Info
button. (Additional information that would be needed for a typical payroll
application, such as marital status and exemptions, was not required by the
FCAU.)
After the above information was entered for each provider and each
child, the payroll module was used to calculate the amount to be paid to the
child’s provider for the length and type of foster care given each month. This
was accomplished through a modification of the data entry procedure and
screen normally used to record information about hours worked and payroll
dollars earned. The modified data entry screen, which is shown in Figure 3,
contained three rows of information for each child within a monthly pay
period. This included, on the left side of the screen, the child’s case number
Figure 1: Provider Maintenance Screen
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Figure 2: Child Maintenance Screen
Figure 3: Payment Entry Screen
and name, the provider’s identification number, the pay period start and end
dates, the type of foster care being provided (DSS Code), and the state or
federal program under which the child was eligible for funding (Pay Stat). On
the right side of the screen, spaces for recording a code and the rate to be paid
for basic care or for a special service, the number of days for which this care
was provided, and the calculated payment amount, were presented three
times. These spaces were presented three times because basic care and up to
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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.
Transferring the Payment Information to Accounts Payable
Next, a short program (macro) was written and included in the software
package to transfer payment information for each child from the payroll
module to the accounts payable module. A feature of the Great Plains
software called Open Integration Modules was used to reformat the data
produced by the payroll module so that it could be properly read by the
accounts payable module. The items of information that were transferred to
the accounts payable module were:
a) The child’s case number,
b) The provider’s identification number,
c) The code for basic care or for a special service,
d) The number of days for which the basic care or special service was
provided, and
e) The calculated payment amount for the basic care or special service.
These five items were transferred for each child from one to three times
since, as noted above, basic care and up to two special services might be
recorded for a child during the monthly computation of payments to foster
care providers. The accounts payable module then reorganized this information by foster care provider. This made it possible to print one check to a
provider for all of the children under the provider’s care, to list the details of
each individual payment on the check advice, and to maintain a historical
record of payments by provider which could be accessed online. As mentioned previously, both the payroll module and the accounts payable module
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.
System Implementation and Operation
Implementation of the new system required several steps. First, it was
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.
CURRENT CHALLENGES FACING
THE ORGANIZATION
The above system eliminated the need for FCAU personnel to search
through hard-copy printouts to correct and resubmit transactions that had
been rejected, since possible errors (such as a child case number that had not
been entered into the payroll module) could be detected and corrected
immediately online. Because historical information was also available online,
the above system also made it possible for FCAU personnel to quickly
respond to questions from foster care providers about payments received and
not received. The ability of the payroll module to record payment history by
child made it possible to detect:
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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,
by sorting on provider within child within pay period. Searches for duplicate
payments could be performed before the checks were printed, either through
visual inspection or through a macro written for this purpose. Thus, duplicate
payments could be virtually eliminated.
These features, along with its other transaction processing capabilities,
enabled the new system to achieve all of the objectives listed above that had
been established by the FCAU. There were also benefits in the form of time
and cost savings. In contrast to similar systems that had been installed in other
municipalities, this project was scheduled to be completed over a period of
months rather than years, and for less than 25% of the cost of using software
which had been custom developed for government social service agencies.
Moreover, the payroll module was able to accumulate payments based on the
federal and state programs under which funding was to be received. The
accumulated totals made it possible for the FCAU to invoice the related
federal and state agencies with a higher level of accuracy than had previously
been possible.
The organization found successful implementation of the new system
somewhat more challenging than initially expected. This was primarily due
to employee turnover at FCAU. The supervisor of FCAU was the most
computer literate person in the unit. It was this individual who was first
trained in using the system, with the understanding that he would provide inhouse training to other members of the unit. This was designed to cut costs and
facilitate an “on-the-job” approach to staff training. However, the supervisor
resigned unexpectedly, thereby causing a temporary setback in getting the
system up and running as scheduled. It was necessary to wait until a new
supervisor was hired, at which point it was possible to resume the process of
staff training and system operation. This process is currently ongoing.
FURTHER READING
Boockholdt, J. (1999). Accounting Information Systems: Transaction Processing and Controls,5E. New York, NY: Irwin/McGraw-Hill, Inc.
Collins, J. (1999). How to Select the Right Accounting Software. Journal of
Accountancy, August, 61-69.
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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.
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