Audit 370389

Item 2024-007: Eligibility Identification of federal programs: Commodity Food Supplemental Program, Assistance Listing Number 10.565 (a program included in the Food Distribution Cluster) Federal award grant number: 204645 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to maintain documentation to support eligibility requirements for program recipients. Condition: During our testing of eligibility requirements, we noted that proper documentation was not available to provide proof of eligibility for program recipients. Cause: Management did not retain or maintain appropriate documentation. Effect: Improper control procedures can lead to individuals receiving food distributions when not meeting eligibility criteria. Questioned costs: None Context: The population subject to commodity supplemental food program eligibility requirements included over 250 individuals. The sample size of 60 was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted one application that was not on file, one application that was out of date, and one application that was not signed. We noted 19 applications where there was no indication that eligibility requirements were reevaluated on an annual basis. Repeat finding: No Recommendation: We recommend that SHN unify the procedures from pre-merger entities to have one set of controls and procedures as all findings relate to only one of the pre-merger entities. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.

Item 2024-004: Procurement Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568 and 10.569 Federal award grant number: 204645, 244603 and 244590 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.320) and SHN’s procurement policy require that micropurchases may be awarded without soliciting competitive quotations if SHN considers the price to be reasonable and small purchases require price or rate quotations to be obtained from an adequate number of qualified sources. Condition: During our testing of procurement requirements, we noted that for two of the small purchase disbursements selected for testing, there was no vendor selection form. The vendor selection form identifies the price and the method selected as well as requires review and approval. Without the form, the procurement documentation does not exist for small purchase disbursements. Cause: The exceptions noted above were due to a breakdown in SHN’s procedures to ensure that all procurements of goods and services are in accordance with the Uniform Guidance and its procurement policy. Effect: Improper procurement procedures can result in actions taken by oversight agencies which could impact future funding. Questioned costs: $37,043 Context: The population subject to procurement requirements included 66 micro-purchase vendors and ten small purchase vendors. The sample size of seven micro-purchase procurements and two small purchase procurements was determined using the guidance in the AICPA Audit and Accounting Guide— Government Auditing Standards and Single Audits. Repeat finding: No Recommendation: SHN should continue to improve its procedures to ensure that all procurements of goods and services are in accordance with the Uniform Guidance and its procurement policy. It is also recommended that support documenting the procurements be maintained. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.

Item 2024-005: Suspension and Debarment Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568 and 10.569 Federal award grant number: 204645, 244603 and 244590 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: SHN is required to verify that contractors are not suspended or debarred for all contracts for goods and services that equal or exceed $25,000 and are funded by federal awards (2 CFR 180.995). This verification may be accomplished by 1) searching the System for Award Management (SAM), 2) collecting a certification from the entity and 3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). Condition: During our testing of suspension and debarment, we noted that for two of the disbursements selected for testing, there was no check for suspension and debarment prior to the transaction occurring. Cause: The exception noted above was due to a breakdown in SHN’s procedures to ensure that all procurements of goods and services are in accordance with the Uniform Guidance and its procurement policy. Effect: Improper procurement procedures can result in actions taken by oversight agencies which could impact future funding. During the audit, we were able to verify that the vendor was not suspended or debarred. Questioned costs: None Context: The population subject to suspension and debarment requirements included five vendors. The sample size of two procurements was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. Repeat finding: No Recommendation: SHN should continue to improve its procedures to ensure that all procurements of goods and services are in accordance with the Uniform Guidance and its procurement policy. It is also recommended that documentation supporting the procurements be maintained. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.

Item 2024-006: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568 and 10.569 Federal award grant number: 204645, 244603, 244590 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 11 reimbursement requests. The sample size of two was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted two instances in our sample size of two where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: No Recommendation: We recommend that SHN implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.

Item 2024-003: Preparation of Schedule of Expenditures of Federal Awards Identification of federal programs: All Assistance Listing Numbers included on the schedule of expenditures of federal awards for the period from January 1, 2024 to June 30, 2024. Federal award grant number: 204645, 244603, 244590, 242754 Federal agency: U.S. Department of Agriculture, U.S. Department of Treasury Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.510) requires the auditee to prepare the schedule of expenditures of federal awards to cover the correct reporting period and contain certain information to be considered complete. Condition: We noted the initial schedule of expenditures of federal awards presented for audit was incorrectly for the year ended June 30, 2024. Once the correct period was determined and the revised schedule of expenditures of federal awards was received for the period from January 1, 2024 to June 30, 2024, additional findings were noted as follows:  Food Distribution Cluster program was not properly grouped by federal Assistance Listing Number.  Pass-through entity identifying numbers listed for two programs were incorrect.  Coronavirus State and Local Fiscal Recovery Funds had improper identification of the program and pass-through entity identifying number. This program was improperly included in the Food Distribution Cluster. Cause: The exceptions noted above were due to a breakdown in SHN’s procedures to ensure that the schedule of expenditures of federal awards is in accordance with the Uniform Guidance. Further, we noted there is no documented review and approval of the schedule of expenditures of federal awards. Effect: Improper schedule of expenditures of federal awards was presented for audit. Questioned costs: None Context: The schedule of expenditures of federal awards was not prepared consistent with the requirements of the Uniform Guidance (2 CFR 200.510). Repeat finding: No Recommendation: SHN should continue to improve its procedures around the preparation and review of the schedule of expenditures of federal awards. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.