A Washington State Auditor’s Office audit found the Department of Children, Youth and Families lacked adequate internal controls and failed to comply with state
A Washington State Auditor’s Office audit found the Department of Children, Youth and Families lacked adequate internal controls and failed to comply with state law or agency policies in several areas, including unlicensed child care and child abuse and neglect investigations.
The accountability audit, released Monday, examined DCYF operations from July 2024 through June 2025. Auditors focused on areas identified as having the highest risk of fraud, loss, abuse or noncompliance.
The audit also followed up on issues identified in previous reviews, including weaknesses involving fuel cards that allowed misappropriations to occur.
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Auditors examined child care licensing requirements, child abuse and neglect investigations, investigations of unlicensed child care programs, vendor payments and monitoring of Caregiver Support contracts.
The review also examined the agency's handling of gift cards and followed up on previous findings involving fuel cards, purchase cards and volunteer drivers.
Problems found in unlicensed child care investigations
One of the audit's three primary findings involved DCYF's investigations of unlicensed child care programs.
The State Auditor’s Office found the department did not have adequate internal controls and did not comply with state law and its own policies regarding those investigations.
The finding was identified in the audit as 2025-001.
Audit flags child abuse and neglect investigations
Auditors also identified problems with DCYF's handling of child abuse and neglect investigations.
According to the audit, the department did not have adequate internal controls and did not comply with state law and its own policies governing those investigations.
That issue was identified as finding 2025-002.
Gift card controls also cited
A third finding focused on gift cards distributed by the department.
Auditors found DCYF did not have adequate internal controls and did not comply with its own policies and operating guidelines for distributing gift cards.
The audit examined corrective actions taken following a previous finding involving gift cards, as well as the department's compliance with its gift card policies.
The issue was identified as finding 2025-003.
The audit covered the period ending June 30, 2025, and focused on areas the State Auditor’s Office determined represented the highest risks to the agency.
Previous scrutiny over DCYF oversight
The latest findings come after months of scrutiny over DCYF’s financial controls and oversight of Washington’s subsidized child care system.
In March, KOMO News reported that a separate State Auditor’s Office review estimated about $37 million in questionable child care subsidy payments in 2025. Auditors identified weaknesses in the system used to detect improper payments, including instances in which providers did not provide attendance records, billed for services that were not supported by attendance records or lacked required signatures from parents or guardians.
That audit did not find evidence of fraud. DCYF later told KOMO News it had not referred the findings to the Office of Fraud and Accountability because the cases did not rise to the level of suspected fraud or intentional deception. The agency emphasized that an overpayment does not automatically constitute fraud.
KOMO News previously reported that state auditors had been unable to fully audit federal child care spending for four fiscal years because DCYF lacked provider-level documentation needed to trace individual payments. The auditor's office said that made it impossible to determine whether previously identified problems with internal controls and compliance had improved or worsened.
State Auditor Pat McCarthy told KOMO News in January that DCYF was among the highest-risk agencies in state government because of its size, scope and the vulnerable population it serves. At the time, auditors said they had not found evidence of fraud.
DCYF also disclosed earlier this year that it identified 1,372 child care overpayments totaling about $2.1 million from July 2024 through June 2025. KOMO News reported that many of the overpayments involved missing attendance records or overbilling for hours or days.
The concerns prompted action in Olympia. Lawmakers approved a budget provision this year directing an independent review of fraud, waste and abuse prevention practices across state government. The measure followed legislative debate over oversight of DCYF and other state programs.
Editor’s note: The latest accountability audit is separate from an earlier State Auditor’s Office review that examined federal child care subsidy payments and identified an estimated $37 million in questionable payments.
