Audit 328062

2023-006 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance (DHS-2550) report and the Social Service Fund (DHS-2556) report on a quarterly basis. DHS provides reporting instructions including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested for activities allowed or unallowed and allowable costs/cost principles: • Two claims were included in the DHS-2550 reports as eligible expenditures but were not eligible for federal reimbursement. • For three timesheets tested, the payroll costs were allocated on an incorrect full-time equivalent (FTE) split on the DHS-2550 and DHS-2556 reports as the FTE split was updated during 2023 for non-payroll costs but not for payroll costs. • Two timesheets were included in the DHS-2556 reports for Social Service Time Study Random Moment Time Study (SSTS RMS) Participants Payroll Expense rather than Non SSTS RMS Participants Payroll Expense. • One timesheet was included in the DHS-2556 report as an eligible payroll expense but was not eligible for federal reimbursement. • One claim was included in the DHS-2556 report as an eligible expenditure but was not eligible for federal reimbursement. Questioned Costs: $343,656. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. DHS determines the rate of reimbursement for costs reported; the amount of questioned costs represents actual costs and does not reflect the amount reimbursed to the County for this grant. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the County implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the County correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reported incorrectly. View of Responsible Official: Acknowledge

2023-007 Social Service Fund Reporting (DHS-2556) Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Heath and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the Social Service Fund (DHS-2556) report on a quarterly basis. DHS provides reporting instructions including information regarding eligible and ineligible costs. Condition: The DHS-2556 second and fourth quarter reports overstated “Other Expenses” by $104,180 for expenses not related to the Social Service program and, therefore, not eligible to be included in the reported balances. Questioned Costs: $104,180. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. DHS determines the rate of reimbursement for costs reported; the amount of questioned costs represents actual costs and does not reflect the amount reimbursed to the County for this grant. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over preparation of the quarterly reports were not sufficient to identify the reporting errors. Recommendation: We recommend the County implement controls to ensure accurate reporting to DHS in accordance with federal program guidance and DHS instructions. We also recommend the County correct and resubmit incorrect reports. View of Responsible Official: Acknowledge

2023-006 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance (DHS-2550) report and the Social Service Fund (DHS-2556) report on a quarterly basis. DHS provides reporting instructions including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested for activities allowed or unallowed and allowable costs/cost principles: • Two claims were included in the DHS-2550 reports as eligible expenditures but were not eligible for federal reimbursement. • For three timesheets tested, the payroll costs were allocated on an incorrect full-time equivalent (FTE) split on the DHS-2550 and DHS-2556 reports as the FTE split was updated during 2023 for non-payroll costs but not for payroll costs. • Two timesheets were included in the DHS-2556 reports for Social Service Time Study Random Moment Time Study (SSTS RMS) Participants Payroll Expense rather than Non SSTS RMS Participants Payroll Expense. • One timesheet was included in the DHS-2556 report as an eligible payroll expense but was not eligible for federal reimbursement. • One claim was included in the DHS-2556 report as an eligible expenditure but was not eligible for federal reimbursement. Questioned Costs: $343,656. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. DHS determines the rate of reimbursement for costs reported; the amount of questioned costs represents actual costs and does not reflect the amount reimbursed to the County for this grant. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the County implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the County correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reported incorrectly. View of Responsible Official: Acknowledge

2023-007 Social Service Fund Reporting (DHS-2556) Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Heath and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the Social Service Fund (DHS-2556) report on a quarterly basis. DHS provides reporting instructions including information regarding eligible and ineligible costs. Condition: The DHS-2556 second and fourth quarter reports overstated “Other Expenses” by $104,180 for expenses not related to the Social Service program and, therefore, not eligible to be included in the reported balances. Questioned Costs: $104,180. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. DHS determines the rate of reimbursement for costs reported; the amount of questioned costs represents actual costs and does not reflect the amount reimbursed to the County for this grant. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The County’s controls over preparation of the quarterly reports were not sufficient to identify the reporting errors. Recommendation: We recommend the County implement controls to ensure accurate reporting to DHS in accordance with federal program guidance and DHS instructions. We also recommend the County correct and resubmit incorrect reports. View of Responsible Official: Acknowledge