Finding Text
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.