Finding 505381 (2023-007)

2023-007 Social Service Fund Reporting (DHS-2556) Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Heath 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. Administrative program costs for Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the Social Service Fund (DHS-2556) report on a quarterly basis. DHS provides reporting instructions including information regarding eligible and ineligible costs. Condition: The DHS-2556 second and fourth quarter reports overstated “Other Expenses” by $104,180 for expenses not related to the Social Service program and, therefore, not eligible to be included in the reported balances. Questioned Costs: $104,180. Context: DHS relies on accurate identification and 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. DHS determines the rate of reimbursement for costs reported; the amount of questioned costs represents actual costs and does not reflect the amount reimbursed to the County for this grant. The sample sizes were 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: The County’s controls over preparation of the quarterly reports were not sufficient to identify the reporting errors. Recommendation: We recommend the County implement controls to ensure accurate reporting to DHS in accordance with federal program guidance and DHS instructions. We also recommend the County correct and resubmit incorrect reports. View of Responsible Official: Acknowledge