Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs (Refugee Support Services and Set Asides) Assistance Listing Number: 93.566 Federal Award Identification Number and Year: 2301MNRSS (2025) Pass-Through Agency: State of Minnesota, YMCA of the North, and CAPI USA Pass-Through Numbers: 258246, 258633, 258276 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: - Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement: Management has established controls requiring grant reimbursement requests to be reviewed and approved by the Executive Director prior to submission to the grantor. Approval should be performed by an authorized individual independent of the preparer to ensure adequate review and segregation of duties. Condition: Of the reimbursement requests selected for testing, multiple requests were approved by personnel other than the authorized Executive Director. In addition, the individual approving the reimbursement request was the same individual who prepared the request. As a result, controls requiring independent review and approval were not operating as designed, and adequate segregation of duties was not maintained over reimbursement request preparation and approval. Questioned Costs: None Context: Of the reimbursement requests selected for testing, multiple requests were approved by personnel other than the authorized Executive Director. As a result, the control requiring Executive Director review and approval was not operating as designed for those transactions. Cause: Established review and approval procedures for grant reimbursement requests were not consistently followed, and management had not implemented monitoring controls to ensure requests were reviewed by the authorized Executive Director prior to submission. Effect: The lack of independent review and approval increases the risk that errors, unsupported expenditures, inaccurate reimbursement amounts, or noncompliance with grant requirements may not be detected and corrected in a timely manner. Repeat Finding: No Recommendation: The Organization should strengthen its internal controls over grant reimbursement requests by ensuring all requests are reviewed and approved by the authorized Executive Director prior to submission to the grantor. Management should maintain documentation evidencing the review and approval and perform periodic monitoring to ensure compliance with established approval and segregation of duties requirements. Views of Responsible Officials: There is no disagreement with the audit finding. KOM acknowledges the finding. KOM has reported enhancements to month-end and year-end close processes and the engagement of a contract accounting firm beginning in August 2025 with expanded controller functions. KOM will establish a documented Schedule of Expenditures of Federal Awards (SEFA) preparation and review procedure. Federal expenditures will be reconciled to the general ledger, grant records, and supporting schedules; award and assistance listing information will be reviewed for completeness and accuracy. A qualified individual independent of preparation will review and document approval of the SEFA before it is provided to the external auditors.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs (Refugee Support Services and Set Asides) Assistance Listing Number: 93.566 Federal Award Identification Number and Year: 2301MNRSS (2025) Pass-Through Agency: State of Minnesota, YMCA of the North, and CAPI USA Pass-Through Numbers: 258246, 258633, 258276 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: - Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement: Executive Director payroll records and timesheets should be reviewed and approved by an individual with appropriate oversight authority, such as the Board Chair, Treasurer, or other designated board representative. Approval should not be performed by a subordinate employee. Condition: Payroll timesheets for the Executive Director were reviewed and approved by the Office Manager, who is subordinate to the Executive Director, rather than by an individual with appropriate oversight authority. As a result, controls requiring independent review and approval of Executive Director payroll were not operating as designed. Questioned Costs: None Context: Executive Director payroll timesheets selected for testing did not contain evidence of review and approval by an individual with appropriate governance oversight authority. Instead, approval was performed by a subordinate employee. Cause: Management had not implemented controls requiring Executive Director payroll records to be reviewed and approved by an independent individual at an appropriate level within the organizational hierarchy. Effect: Approval of Executive Director payroll by a subordinate employee weakens oversight and increases the risk of unauthorized, inaccurate, or unsupported payroll transactions not being detected in a timely manner. Repeat Finding: No Recommendation: The Organization should strengthen its controls over Executive Director payroll by requiring payroll timesheets and related payroll records to be reviewed and approved by an individual with appropriate oversight authority, such as the Board Chair, Treasurer, or another designated board representative. Management should maintain documentation of such approval and periodically monitor compliance with the control. Views of Responsible Officials: There is no disagreement with the audit finding. KOM acknowledges the finding. KOM reports that, effective January 2026, it began documenting Minnesota residency for participants receiving Resettlement Network Services. KOM will formalize enrollment procedures requiring verification and retention of Minnesota residency documentation before services are provided. The Program Director and Executive Director will oversee periodic reviews of participant files, document review and approval, identify missing records, and follow up on exceptions. Supporting evidence of eligibility verification and supervisory review will be retained.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Refugee and Entrant Assistance State/Replacement Designee Administered Programs (Refugee Support Services and Set Asides) Assistance Listing Number: 93.566 Federal Award Identification Number and Year: 2301MNRSS (2025) Pass-Through Agency: State of Minnesota, YMCA of the North, and CAPI USA Pass-Through Numbers: 258246, 258633, 258276 Award Period: January 1, 2025 – December 31, 2025 Type of Finding: - Material Weakness in Internal Control Over Compliance - Other Matters Criteria or Specific Requirement: Participants receiving ORR-funded services must be eligible for services and receive those services within the allowable eligibility period. In general, ORR-funded services may not be provided more than 60 months (five years) after the participant's ORR eligibility date, unless specifically permitted under program requirements. In addition, participants receiving Resettlement Network Services under Minnesota RPO contracts must be residents of Minnesota, and organizations are required to verify participant eligibility and retain supporting documentation in participant files. Condition: During testing of participant eligibility, we noted one participant who continued to receive services beyond the allowable five-year eligibility period. Management indicated that the Minnesota Refugee Information System (MRIS) does not generate automated alerts when participants approach or exceed the five-year eligibility threshold. Additionally, the Organization did not verify or retain documentation supporting Minnesota residency for participants receiving services. Management indicated residency verification is not currently performed as part of the enrollment process, nor is supporting documentation retained in participant files. Questioned Costs: Not determinable. The entity failed to maintain documentation supporting compliance with eligibility requirements under the grant. Because it was not possible to reconstruct the eligibility requirements to determine whether individuals were eligible to receive services, the auditor could not quantify the amount of questioned costs resulting from the noncompliance. Context: One of sixty participant files tested contained evidence of services provided after the expiration of the allowable eligibility period. Additionally, residency verification procedures were not performed or documented for participants enrolled in the program. Cause: The Organization did not have sufficient procedures in place to monitor participant eligibility periods or verify and document Minnesota residency. Management relied on the MRIS system for eligibility monitoring without implementing independent review procedures and had not established enrollment procedures requiring collection and retention of residency documentation. Effect: Participants who do not meet program eligibility requirements may receive services, resulting in noncompliance with ORR program requirements and Minnesota RPO contract provisions. In addition, the lack of documented residency verification impairs the Organization's ability to demonstrate compliance with participant eligibility requirements. Recommendation: We recommend that the Organization strengthen controls over participant eligibility by implementing procedures to regularly monitor participant eligibility periods, track ORR eligibility dates, and timely close cases that exceed the maximum allowable service period. In addition, the Organization should verify and document Minnesota residency prior to providing services, retain supporting eligibility documentation in participant files, and perform periodic monitoring to ensure compliance with program eligibility requirements. Management should not rely solely on systemgenerated notifications to identify participants approaching eligibility expiration. Views of Responsible Officials: There is no disagreement with the audit finding. KOM acknowledges both control deficiencies identified in the audit finding. Grant reimbursement requests: KOM will require each reimbursement request to be reviewed and approved before submission by the Executive Director or another individual formally authorized under the applicable grant and organizational approval requirements. The preparer will not approve the same request. Supporting documentation and evidence of independent approval will be retained, and management will periodically review compliance. Executive Director payroll: Beginning in October 2026, KOM will implement independent review and approval of the Executive Director's timesheets and related payroll records by a designated Board member or other person with appropriate oversight authority. KOM will arrange suitable Paylocity approval access, retain evidence of each approval, and periodically monitor compliance. Repeat Finding: Yes