A Richmond woman charged with swindling hundreds of thousands of dollars from a program for severely disabled children pleaded not guilty yesterday in federal court and faces a three-day jury trial in January. But allegations raised in a federal indictment this month against Iris F. Allen, who worked as the benefits manager for the state’s birth-injury program, are raising a storm of questions as well about operation of the program itself.

A state program for disabled children has inadequate internal controls over millions of dollars in benefit expenditures, according to an audit released yesterday. The regular annual financial audit of the Virginia Birth-related Neurological Injury Compensation Program showed the agency has a “significant deficiency” in procedures for verifying expenses and delivered services.