Finding 561616 (2023-006)

2023-006 Reporting – DHS Social Service Fund (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: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.658 Foster Care – Title IV-E Award Number and Year: 2301MNFOST, 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 Foster Care are submitted to the Minnesota Department of Human Services (DHS) through the DHS 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 quarter report overstated payroll expense for individuals required to participate in the social services time study by $552,225 and understated payroll expense for individuals who do not participate in the social services time study. Questioned Costs: None. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the County are allowable and provide detailed information necessary for maintaining proper oversight over federal programs. The sample size was based on 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 error was due to an incorrect formula in a supporting workbook. Recommendation: We recommend Ramsey County implement controls to ensure accurate reporting to DHS in accordance with federal program guidance and DHS instructions. We also recommend reports submitted incorrectly are corrected and resubmitted. View of Responsible Official: Concur