Finding 1154812 (2024-004)

2024-004 Reporting 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. For federal awards received from the Minnesota Department of Human Services (DHS), the County should establish and maintain internal control to provide assurance that program reports are completed in accordance with DHS reporting instructions. As part of Watonwan County’s federal award reporting requirements, the County submits the quarterly Local Collaborative Time Study (LCTS) Public Health Cost Schedule (DHS-3220.3) and the Annual Collaborative Report to DHS. Condition: The following exceptions were noted in the tested program reports: • Sampled DHS-3220.3 reports understated the federal funds cost pool by including state grant funds in the reported federal revenue offsets. In total, the two sampled reports understated the federal funds cost pool by $17,494. • The 2024 Annual Collaborative Report was submitted on July 2, 2025, which is after the due date of April 30, 2025. Questioned Costs: None. Context: DHS relies on accurate and timely reporting of program costs and activities to ensure that resulting grant funds paid to the County are for applicable federal program costs and activities as well as to provide detailed information necessary for maintaining proper oversight over federal programs. The population of program reports tested included four quarterly DHS-3220.3 reports; the sample was two quarterly DHS-3220.3 reports. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Inaccurate reports and late submission of reports can impair the DHS’s ability to provide required oversight over federal programs and can result in the County receiving either more or less federal funds than allowed based on the actual underlying activity. Cause: The County’s controls over preparation of the reports were not sufficient to identify the reporting errors and ensure timely reporting. Recommendation: We recommend Watonwan County implement controls that ensure that all DHS reports are completed accurately and in accordance with DHS instructions. We also recommend the County revise and resubmit any DHS-3220.3 reports permitted with federal revenue offset activity reported incorrectly. View of Responsible Official: Acknowledge