Reports and audits

(a) Error report requirements (1) In general Section 658K(a) of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858i(a)) is amended by adding at the end the following: (3) Error reports (A) Rulemaking The Secretary shall issue regulations to, at a minimum— (i) ensure that, in calculating, preparing, and submitting reports of errors, under subpart K of part 98 of title 45, Code of Federal Regulations (or a successor regulation), in the administration of grant funds appropriated or made available under this subchapter, States include suspected and verified cases of fraud as improper payments; (ii) require any State with an improper payment rate that exceeds 6 percent, as reflected in a report described in clause (i), to submit to the Secretary for approval a comprehensive corrective action plan, as well as submitting to the Secretary subsequent reports describing progress in implementing the plan; and (iii) require each State to conduct case reviews and submit reports described in clause (i) to the Department of Health and Human Services according to a staggered 2-year cycle established by the Secretary such that each State will be selected once, and only once, in every 2 years, notwithstanding subchapter IV of chapter 33 of title 31, United States Code. (B) Availability The Secretary, on receiving a report described in subparagraph (A), shall post the report on a publicly available website. The Secretary shall also post on that website any corrective action plan that is described in this subchapter and approved for a State that is described in section 658E(e). (C) GAO review The Comptroller General of the United States shall— (i) review fraud and improper payments that— (I) involve funds described in subparagraph (A)(i); (II) are committed at the State, local or regional level, as appropriate; and (III) are covered in sources including reports described in subparagraph (A)(i) and corrective action plans submitted to the Secretary by States; and (ii) offer recommendations to the Inspector General of the Department of Health and Human Services and to the Secretary for additional oversight. (D) State In this paragraph, the term State means any of the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico.. (2) Interim final rule Not later than 1 year after the date of enactment of this Act, the Secretary shall promulgate an interim final rule amending sections 98.100 through 98.102 of title 45, Code of Federal Regulations, as in effect on January 12, 2026, to promulgate the regulations required under section 658K(a)(3)(A) of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858i(a)(3)(A)), as added by paragraph (1). (b) Audits Section 658K(b) of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858i(b)) is amended— (1) by striking paragraph (3) and inserting the following: (3) Submission of audit report and corrective action plans (A) Appeal of audit findings (i) Filing Not later than 60 days after the State receives the independent auditor's report under paragraph (2), the State may file with the Secretary an appeal of the audit findings contained in the report. (ii) Decision Not later than 120 days after the filing of the appeal, the Secretary shall issue a decision on the appeal, specifying whether any audit findings shall be removed from the report and, if so, which findings. The State shall use the updated auditor's report, after making the removals specified by the Secretary, for purposes of subparagraphs (B) and (C). (B) Submission of report and plan Not later than 30 calendar days after the State receives the independent auditor’s report under paragraph (2) or, in the event of an appeal under subparagraph (A), not later than 90 calendar days after the Secretary's decision is issued on the appeal, the State shall submit— (i) to the legislature of the State and, if applicable, to the Indian tribe or tribal organization involved— (I) a copy of the auditor's report; and (II) for approval, a corrective action plan to address each negative audit finding included in the auditor’s report for the current reporting; and (ii) to the Secretary, a copy of the auditor's report and (for approval by the Secretary) the corrective action plan. (C) Contents of corrective action plan The corrective action plan shall include the name of the contact person responsible for the corrective action, the corrective action to be taken, and the anticipated completion date, which shall be not later than 1 calendar year after the State received the independent auditor’s report under paragraph (2). If the State does not agree with 1 or more audit findings in the report or believes corrective action is not required, the corrective action plan shall include a detailed explanation of the reasons.; and (2) by adding at the end the following: (5) Inspector general report Not less often than every 2 years, the Inspector General of the Department of Health and Human Services shall prepare and submit to the Secretary a report on States that fail audits under this subsection, and shall include recommendations for States that need additional monitoring and technical assistance.. (c) Database on providers Section 658K of the Child Care and Development Block Grant Act of 1998 (42 U.S.C. 9858i) is amended by adding at the end the following: (c) Database on providers under Administration for Children and Families (1) State reports If a State, or providers in a State, receive Federal funding through a program administered by the Administration for Children and Families, the State shall provide annual reports to the Assistant Secretary of the Administration for Children and Families. Each such report shall name the individuals who served as providers under such a program but are disqualified by the State from receiving Federal funding through the program because the providers were found by a court to have committed fraud in carrying out the program. (2) Database The Secretary, acting through the Assistant Secretary of the Administration for Children and Families, shall maintain a database of the providers named in such a report. The Secretary shall list a provider in the database for the period of the provider's disqualification by the State. (3) Prohibition on funding listed providers The Secretary shall, when approving an application for Federal funding under such a program— (A) from a State, prohibit the State from using any of the Federal funding for a provider listed in the database; and (B) from a provider, prohibit the provider from receiving the Federal funding if listed in the database..