Finding 584645 (2022-007)

2022-007 Reporting – LCTS Spending Report Prior Year Finding Number: 2021-004 Repeat Finding Since: 2021 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: 2205MN5ADM; 2022 Pass-Through Agency: Minnesota Department of Human Services (DHS) 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 County federal awards received from the Minnesota Department of Human Services (DHS), internal control should be established and maintained to provide assurance that program reports submitted to DHS are accurate and completed in accordance with DHS reporting instructions. DHS instructions for the completion of the Local Collaborative Time Study (LCTS) Annual Spending Report indicate that the reported spending of LCTS funds should reflect the amount spent by recipients of the funds on the collaborative’s behalf. Condition: During the review of the 2022 LCTS Annual Spending Report, it was noted that the amounts reported as spent reflected funds paid to the recipient school districts rather than the spending of the funds by the school districts on the Hubbard County Social Services’ behalf. The classification of reported amounts into the specific spending categories was estimated based on set allocation rates rather than the actual uses of the funds. Support for the allocation rates used could not be provided. Questioned Costs: None Context: LCTS funding includes federal Medical Assistance Program funds. DHS relies on accurate submission of the LCTS Annual Spending Report to monitor and report on how LCTS funding is being used. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Governmental Auditing Standards and Single Audits. Effect: The LCTS Annual Spending Report was not completed in accordance with DHS instructions. Cause: The County’s method for reporting funds spent is based on past practice. Procedures have not been put in place to obtain necessary spending information from the LCTS funding recipients. Recommendation: We recommend the County develop a process to collect the necessary spending information from the various LCTS funding recipients to facilitate completion of the LCTS Annual Spending Report in accordance with DHS instructions. View of Responsible Official: Acknowledge