Finding Text
2023-006 Local Collaborative Time Study (LCTS) Reporting (Cost Schedules DHS-3220.2)
Prior Year Finding Number: N/A
Year of Finding Origination: 2023
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: 2305MN5ADM, 2023
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 submitted to DHS are completed in accordance with reporting instructions. As part of Traverse County’s reporting requirements, the County submits the Local Collaborative Time Study (LCTS) Corrections Cost Schedules DHS-3220.2 on a quarterly basis.
Condition: The following exceptions were noted in the sample of the Corrections Cost Schedules DHS-3220.2 tested:
• The County reported rent payments in the second and fourth quarters, but the County paid the rent in the third quarter of 2023 and the first quarter of 2024, respectively.
• Reported direct labor and benefit expenditures in the second and fourth quarters were estimated based on a portion of the individuals’ annual salary rather than actual salaries and benefits in the general ledger.
• The County reported only 27 percent of expenditures incurred in the second quarter and 30 percent of expenditures incurred in the fourth quarter.
Questioned Costs: None
Context: DHS relies on accurate reporting of program costs to ensure grant funds paid to the County are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. Revised reports have since been submitted by the County to correct for the errors identified in the audit.
The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits.
Effect: Errors in the reporting of costs on the quarterly reports can impair the ability of DHS to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity.
Cause: County staff indicated errors were due to lack of oversight and detailed review of costs being included or excluded from the quarterly reports submitted to DHS.
Recommendation: We recommend Traverse County implement detailed supervisory review procedures to ensure accurate reporting to DHS in accordance with federal program guidance and DHS instructions.
View of Responsible Official: Acknowledge