2024-001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Prior Year Finding Number: 2023-006
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: 2405MN5ADM; 2024
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 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:
• One claim was included in a DHS-2550 report as eligible expenditures but was not eligible for federal reimbursement.
• One claim included in a DHS-2556 report was reported as a reduction of Intergovernmental Federal Revenue rather than a Services and Charges expenditure.
• For eight timesheets tested, the payroll costs were allocated on an incorrect full-time equivalent (FTE) split on the DHS-2550 and DHS-2556 reports.
• One timesheet was 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.
Questioned Costs: Questioned costs identified were less than $25,000.
Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are allowable and provide detailed information necessary for maintaining proper oversight over federal programs.
Total expenditures reported on the SEFA is $715,942, consisting of 1,419 transactions. The sample of 40 transactions totaled $88,180. 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 DHS’ ability to provide required oversight over federal programs.
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. The County indicated the FTE split was updated during 2024 for non-payroll costs but not for the payroll costs.
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
2024-002 Eligibility
Prior Year Finding Number: N/A
Year of Finding Origination: 2024
Type of Finding: Internal Control Over Compliance and Compliance
Severity of Deficiency: Significant Deficiency and Other Matter
Federal Agency: U.S. Department of Health and Human Services
Program: 93.778 Medical Assistance Program
Award Number and Year: 2405MN5ADM; 2024
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.
Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Medical Assistance. Specific eligibility requirements are included for participants’ citizenship verification, income limits, and assets. Minnesota Statutes § 256B.05 requires county agencies to administer Medical Assistance.
Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by Chippewa County to support the eligibility determination process. In the case files tested for eligibility, not all documentation to support participant eligibility was available, updated, or input correctly. The following exceptions were noted in the sample of 40 case files tested:
• One participant’s citizenship was not verified.
• Two case files did not calculate or document the participant’s income correctly.
• Two case files had an asset listed in MAXIS that did not match the documentation in the case file.
Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to participants in this program.
Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Chippewa County performs the “intake function” needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Participants receive benefits from the State.
The population consisted of 824 active MAXIS case files in 2024; the sample size was 40 case files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits.
Effect: The lack of updated information in MAXIS and lack of verification of key eligibility-determining factors increase the risk that program participants will receive benefits when they are not eligible.
Cause: Program personnel entering case file information into MAXIS did not ensure all required information was input or updated correctly or verified.
Recommendation: We recommend Chippewa County implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, Chippewa County should consider providing further training to program personnel.
View of Responsible Official: Acknowledge
2024-001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles
Prior Year Finding Number: 2023-006
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: 2405MN5ADM; 2024
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 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:
• One claim was included in a DHS-2550 report as eligible expenditures but was not eligible for federal reimbursement.
• One claim included in a DHS-2556 report was reported as a reduction of Intergovernmental Federal Revenue rather than a Services and Charges expenditure.
• For eight timesheets tested, the payroll costs were allocated on an incorrect full-time equivalent (FTE) split on the DHS-2550 and DHS-2556 reports.
• One timesheet was 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.
Questioned Costs: Questioned costs identified were less than $25,000.
Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are allowable and provide detailed information necessary for maintaining proper oversight over federal programs.
Total expenditures reported on the SEFA is $715,942, consisting of 1,419 transactions. The sample of 40 transactions totaled $88,180. 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 DHS’ ability to provide required oversight over federal programs.
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. The County indicated the FTE split was updated during 2024 for non-payroll costs but not for the payroll costs.
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
2024-002 Eligibility
Prior Year Finding Number: N/A
Year of Finding Origination: 2024
Type of Finding: Internal Control Over Compliance and Compliance
Severity of Deficiency: Significant Deficiency and Other Matter
Federal Agency: U.S. Department of Health and Human Services
Program: 93.778 Medical Assistance Program
Award Number and Year: 2405MN5ADM; 2024
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.
Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Medical Assistance. Specific eligibility requirements are included for participants’ citizenship verification, income limits, and assets. Minnesota Statutes § 256B.05 requires county agencies to administer Medical Assistance.
Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by Chippewa County to support the eligibility determination process. In the case files tested for eligibility, not all documentation to support participant eligibility was available, updated, or input correctly. The following exceptions were noted in the sample of 40 case files tested:
• One participant’s citizenship was not verified.
• Two case files did not calculate or document the participant’s income correctly.
• Two case files had an asset listed in MAXIS that did not match the documentation in the case file.
Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to participants in this program.
Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Chippewa County performs the “intake function” needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Participants receive benefits from the State.
The population consisted of 824 active MAXIS case files in 2024; the sample size was 40 case files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits.
Effect: The lack of updated information in MAXIS and lack of verification of key eligibility-determining factors increase the risk that program participants will receive benefits when they are not eligible.
Cause: Program personnel entering case file information into MAXIS did not ensure all required information was input or updated correctly or verified.
Recommendation: We recommend Chippewa County implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, Chippewa County should consider providing further training to program personnel.
View of Responsible Official: Acknowledge