2025-005 Procurement and Suspension and Debarment Prior Year Finding Number: 2024-006 Year of Finding Origination: 2020 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP3474, 2021 Pass-Through Agency: N/A – Federal Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, 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. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction with the contracting party. Condition: The County did not verify that vendors were not debarred, suspended, or otherwise excluded from participation in federal assistance programs or activities before entering into the covered transactions. Questioned Costs: $217,587; known questioned costs were determined based on payments to vendors with federal funds from this program that exceeded $25,000 in 2025. Context: This issue is reported for this major program; however, it impacts federal programs county-wide. The County has revised its procurement policies to include components of federal procurement requirements related to suspension and debarment; these are pending review and approval by the Board of County Commissioners. The vendors paid with federal funds from this program were not listed as suspended or debarred on SAM.gov at the time of audit. Total federal expenditures for this program were $336,448. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County’s written procurement policy does not include requirements specific to suspension and debarment. Recommendation: We recommend the County review and approve their revised policy that includes the requirements specific to suspension and debarment and maintain documentation to demonstrate that vendors were not suspended, debarred, or otherwise excluded from conducting business with the County; the County should complete this documentation prior to entering into a covered transaction. View of Responsible Official: Concur
2025-006 Eligibility – METS Prior Year Finding Number: N/A Year of Finding Origination: 2025 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 Grants to States for Medicaid Award Number and Year: 2505MN5ADM; 2025 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, document, 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 Grants to States for Medicaid. Specific eligibility requirements are included for participants’ Social Security number verification. Minnesota Statutes, Section 256B.05, requires county agencies to administer Grants to States for Medicaid. Condition: The Minnesota Department of Human Services maintains the computer system, METS, which is used by McLeod County to support the eligibility determination process. In a sample of 40 recipient files tested for eligibility, two recipients’ coverage was not terminated in a timely manner after eligibility ended resulting in benefits being provided to ineligible recipients. Questioned Costs: Not applicable. McLeod County administers the program, but benefits to clients in this program are paid by the State of Minnesota. Context: The State of Minnesota and McLeod County split the eligibility determination process. Generally, McLeod County resolves eligibility issues when prompted by the system, while the State performs the initial review of the recipient files, including determining the information in METS is verified. Recipients receive benefits from the State. The population consisted of 6,398 active METS recipients enrolled in the Grants to States for Medicaid in 2025; the sample size was 40 recipient 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 improper input or updating of information in METS and lack of verification or follow-up of eligibility determining factors increase the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel responsible for resolving eligibility issues in METS did not ensure coverage was terminated in a timely manner after eligibility ended. Recommendation: We recommend McLeod County implement additional procedures to provide reasonable assurance that all necessary documentation needed to support eligibility determinations exists and the program personnel properly input or update the documentation in METS and follow up on issues in a timely manner. In addition, McLeod County should consider providing further training to program personnel. View of Responsible Official: Concur