Finding 574590 (2024-002)

2024-002 Reporting Prior Year Finding Number: N/A Year of Finding Origination: 2024 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: 2405MN5ADM; 2024 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 the Medical Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the DHS Social Services Fund (DHS 2556) report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: In the sample of two DHS-2556 reports, misclassifications of expenditures were found between the SSTS RMS Participants Payroll Expense (Line 2a) and Non SSTS RMS Participants Payroll Expense (Line 2b) report categories. In one instance, there was a net misclassification of $44,047 between reported Line 2a and Line 2b expenditures. In the other, there was a net misclassification of $10,444 between reported Line 2a and Line 2b expenditures. Questioned Costs: None. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to MNPrairie are allowable and provide detailed information necessary for maintaining proper oversight over federal programs. The identified misclassifications had no effect on the total expenses claimed for federal funding and, therefore, had no effect on federal funding received. The population consisted of four quarterly DHS 2556 reports; the sample was two quarterly DHS 2556 reports. 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 in the quarterly reports can impair DHS’ ability to provide required oversight over federal programs. Cause: MNPrairie’s controls over preparation of the quarterly reports were not sufficient to identify the reporting errors. Recommendation: We recommend MNPrairie implement controls to ensure all DHS reports are completed accurately and in accordance with DHS guidance. View of Responsible Official: Acknowledge