In ChildFriendly Pro's November 2025 Lunch & Learn, Irfanali Moledina, Managing Partner at RMI LLP in Calgary, said Affordability Grant auditors typically sample-test about four of twelve monthly claims against attendance records, bank deposits, signed leases and authorized time sheets, and that errors can push testing to six months and raise audit fees.
What the session covered
As Moledina described it, Alberta's Affordability Grant pays licensed child care programs based on the attendance they submit for each child, by full-time or part-time status and age group, and programs receiving the grant can be required to have the grant data audited. Moledina described this as a special audit: the auditor verifies grant revenue and enough qualifying expenses to cover the grant amount, rather than auditing the whole entity. He said revenue testing is the largest part of the engagement. The auditor reconciles monthly claims to government payments and bank deposits, checks that fees follow the agreement, and tests attendance hours and age classifications, including for non-subsidized children. On the expense side, Moledina estimated that rent and wages cover the grant in about 90% of cases. According to Moledina, the grant agreement requires centers to keep child photos, signed enrollment forms, parent contact details, payment summary reports and claim summary reports for a minimum of six years. He said over-claimed funding is clawed back from future submissions, so record quality affects cash flow and the audit fee.
Why do attendance records cause the most Affordability Grant audit findings?
Moledina called attendance records the most important part of the audit and the area where RMI LLP has seen the most issues. He explained that every Affordability Grant claim is built from attendance sheets, so auditors test whether each child was present, whether the child was full-time or part-time, and whether the child sat in the correct age category. He gave two examples from past audits. In one, a child had a birthday and was not moved to the proper age category, which changed the funding and left money owed back after the audit. In another, a child left the center but stayed on the attendance sheet and was claimed every month, creating an overpayment. Moledina said audits look at periods that are often more than a year old, so a single error can mean repaying one to two years of funding for that child. He said the government recovers the amount by deducting it from the next submission, which he described as a significant cash-flow hit, and recommended reviewing attendance against payment summaries regularly.
What payroll and lease records do auditors need for qualifying expenses?
Moledina said that for rent, auditors request the lease and match it to rent payments recorded in the accounting software, such as QuickBooks, and to the payments leaving the bank. In his account, the lease must be signed by both parties; unsigned drafts do not support the expense, while free-rent periods or landlord subsidies are acceptable if explained. For payroll, he said auditors check how staff were paid, not only that they were paid. Time sheets must match hours reported, show breaks, and categorize sick and vacation time. Each time sheet needs a formal authorization: a signature and date if manual, or a dated digital approval if online. Staff records must show pay rates and mid-year changes, include the employee's SIN, and align with payroll provider data. Moledina recommended third-party payroll providers such as Ceridian, ADP or Payworks because their portals hold the backup auditors request. He added that departing employees need documented offboarding, and that day home agencies without payroll are tested on payments to each contracted day home.
How can a child care center lower its Affordability Grant audit fee?
Moledina said audit fees are quoted on the assumption that records are accurate. Firms bill for time, so missing documents, unreconciled bank accounts and unexplained discrepancies increase the fee and can delay filing. He said government deadlines are tight and that extensions, while previously generous, are becoming stricter. His action items were: reconcile all accounting records before the audit starts, have documents ready when the auditor's first request list arrives, and respond quickly to the second request once samples are selected. He recommended accrual accounting, explaining that audit standards record revenue and expenses when earned rather than when paid, so grant funding for a fiscal year's final month is recorded in that period even though it arrives the following month. He described a separate bank account for grant funds as optional but helpful when a third-party bookkeeper is used. Centers should prepare for walkthroughs, keep insurance documents, and read the grant agreement. Moledina said special grant audits should not cost the $25,000 to $40,000 some operators have been quoted.
Affordability Grant audit checklist from the session
| Time | Key point | What centers should do |
|---|---|---|
| 06:37 | Moledina: auditors sample-test claims, for example four of twelve months of submissions and government income. | Keep every monthly claim, its payment and its attendance backup filed by month. |
| 07:08 | Moledina: step one is a monthly fund reconciliation of claim submitted vs. government payment vs. bank deposit. | Reconcile each month's Affordability Grant claim to the deposit before year end. |
| 08:39 | Moledina: errors expand testing from four to six months, which raises the audit fee. | Document a clear explanation for every discrepancy before the auditor finds it. |
| 10:26 | Moledina: leases must be signed; rent in the books must match bank payments and the lease. | Store the fully signed lease and explain any free rent or landlord subsidy. |
| 15:09 | Moledina: time sheets need authorized signatures; exits need documented offboarding. | Have a director sign and date, or digitally approve, every time sheet. |
| 18:46 | Moledina: grant records must be kept for a minimum of six years after the agreement dates. | Retain child photos, signed enrollment forms, contacts, payment and claim summaries. |
| 19:46 | Moledina: missed age-category changes and departed children still claimed lead to clawbacks. | Update age groups on birthdays and remove withdrawn children from attendance immediately. |
| 22:05 | Moledina: audits follow accrual accounting, recording items when earned, not when paid. | Ask your accountant to move the books from cash to accrual accounting. |
| 27:41 | Moledina: some operators were quoted $25,000 to $40,000; special grant audits review only grant data. | Ask whether a special audit, not a full audit, meets your grant requirement. |
| 35:27 | Moledina: in software, individual staff logins create the approval audit trail. | Give each staff member their own login and never share user IDs. |
How ChildFriendly Pro automates this
The session described attendance sheets, signed forms and time-sheet approvals gathered by hand from emails and phones when auditors ask. At 37:12, Wayne Chen from ChildFriendly Pro described its digitally signed forms, a claim summary report and payment summary built for Affordability Grant requirements, and QuickBooks Online sync, with individual staff logins recording who approved each entry.
Next steps
- Register for the next Director Lunch & Learn
- Licensing logs and audit-ready report exports
- Alberta child care software for Affordability Grant reporting
- Book a ChildFriendly Pro demo
