Burke County, North Carolina Schedule of Findings and Questioned Costs For the Year Ended June 30, 2025 State Awards Internal control over major State programs: • Material Weakness(es) identified? yes X no • Significant Deficiency(s) identified X yes none reported Unmodified Identification of major State programs: Program Name Medical Assistance Program NC Public School Building Capital-Lottery Proceeds Courthouse repairs and renovations Dollar threshold used to determine a State major program $ 500,000 Auditee qualified as State low-risk auditee? X yes no None reported U.S. Department of Health and Human Services Passed through the NC Department of Health and Human Services Program Name: Medical Assistance Program (Medicaid) AL #: 93.778Burke County, North Carolina Schedule of Findings and Questioned Costs For the Year Ended June 30, 2025 Condition: Questioned Costs: Context: Effect: Identification of a repeat finding: Cause: Due to the nature of the populations provided from which the samples were chosen, we are unable to calculate questioned costs for the above mentioned potential eligibility and noncompliance errors. We examined 60 cases from of a total of 555,247 Medicaid claims from the Medicaid beneficiary report provided by NC Department of Health and Human Services to redetermine eligibility. These findings are being reported with the financial statement audit as it relates to Medicaid administrative cost compliance audit. These control deficiencies and noncompliance increase the risk of improper Medicaid payments, potentially resulting in overpayments to ineligible beneficiaries or underpayments to those who qualify. Section III. Federal Award Findings and Questioned Costs (continued) This is a repeat finding from the immediate previous audit, 2024-001, 2024-002, and 2024-003. Note in FY 2025 Medicaid findings were combined into a single finding. The deficiencies and noncompliance reported above are caused from ineffective record keeping and case review processes due to insufficient training of staff, lack of oversight from management, and/or inadequate communication between departments resulting in inconsistencies in data sharing and delayed information exchanges. There were a total of 20 errors found during our testing procedures: - There were 2 errors where income or household size was incorrectly calculated or inaccurate information was entered into the case file. In 1 instance, a failure resulted in a recipient being deemed eligible for Medicaid benefits when they were not, due to income exceeding the eligibility threshold. - There was 8 error where resources were incorrectly calculated or were not properly documented in the case file. - There were 9 errors where required information needed for eligibility determinations were not requested or not requested timely at applications or redeterminations. In 1 instance, a failure resulted in a recipient being deemed eligible for Medicaid benefits when they were not, due to income exceeding the eligibility threshold. - There were 1 errors where a redetermination of eligibility was not performed in accordance with program requirements. 137Burke County, North Carolina Schedule of Findings and Questioned Costs For the Year Ended June 30, 2025 Recommendation: Views of responsible officials and planned corrective actions: Program Name: Medical Assistance Program (Medicaid) AL #: 93.778 Section III. Federal Award Findings and Questioned Costs (continued) SIGNIFICANT DEFICENCY/NONCOMPLIANCE (NOT MATERIAL): Findings 2025-001 also apply to State requirements and State Awards. Section IV. State Award Findings and Questioned Costs The County agrees with the finding and is implementing actions to correct these issues, which are further discussed in the corrective action plan. We recommend that management enhance internal controls by: (1) Providing comprehensive training to staff on the program's eligibility requirements and procedures outlined in the State's Medicaid manuals; (2) Ensuring that there is a formal internal review process and that it is adequately completed to identify and correct errors and monitor compliance; and (3) Communicating all program or policy changes clearly and timely across all departments who oversee eligibility determinations for federal funded programs. 138 Finding: 2025-001 SIGNIFICANT DEFICENCY; NONCOMPLIANCE Eligibility Criteria: Section I. Summary of Auditors' Results (continued) Section II. Financial Statement Findings Type of auditors' report issued on compliance for major State programs: Federal regulations under 42 CFR § 435.956 require states to verify eligibility factors using electronic data sources where available, and to obtain documentation for unverifiable information. Additionally, the state's Medicaid manual (Aged, Blind and Disabled manual, Family and Children Medicaid manual and the Integrated Policy manual) mandates that all eligibility determinations include cross-verification of applicant-provided data against reliable external sources to ensure accuracy and prevent improper payments. Section III. Federal Award Findings and Questioned Costs 136