Finding 1224323 (2025-003)

Federal Agency: U.S. Department of Agriculture; U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program (SNAP), Medical Assistance Program; Foster Care Title IV-E Program Assistance Listing Number: 10.561; 93.778; 93.658 Federal Award Identification Number and Year: 212MN101S2514;212MN101S2520; 212MN127Q7503– 2025; 2005MN5ADM; 2105MN5ADM; 2105MN5MAP– 2025 2101MNFOST; IVE2501MNFOST; MA505MN5ADM – 2025 Pass-Through Agency: Minnesota Department of Health Human Services and Minnesota Department of Agriculture Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i)Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii)Be incorporated into the official records of the nonfederal entity; (iii)Reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, (iv)Encompass both federally assisted and all other activities compensated by the nonfederal entity on an integrated basis, but may include the use of subsidiary records as defined in the nonfederal entity's written policy; (v)Comply with the established accounting policies and practices of the nonfederal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii)Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and nonfederal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii)Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A)The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The nonfederal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition: During our testing of 1,524 and 1,521 random moment study participants reported in quarters one and two, respectively, two individuals were reported on the first quarter time study report that were terminated or resigned prior to the start of the respective quarter. Questioned costs: None Context: It was noted that for one of the two random moment study submissions tested as part of our sample, two individuals were incorrectly included on the random moment study roster that was submitted to the State for the respective quarters. Cause: The implementation of a new Employee Position Directory disrupted the previous method of receiving notification of staff resignations and terminations. A new method of receiving notification was put in place in July 2025. The two individuals that were identified were in quarters prior to implementation of the new notification method. Effect: The County reported to the State of Minnesota employees previously terminated or resigned which were subject to the random moment surveys the State Department of Health and Human Services conducts. Repeat Finding: Yes; 2024-004 Recommendation: We recommend the County reviews its procedures for giving timely notice of an individual’s termination or resignation to other departments as well as ensuring departments are reviewing for accuracy the information provided to granting agencies. Views of responsible officials: Hennepin County has reviewed and agrees with the finding and recommendation.