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: 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.