Finding Text
2022-003 Activities Allowed or Unallowed and Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: N/A Repeat Finding Since: N/A 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: 93.563 Child Support Enforcement 93.778 Medical Assistance Program Award Number and Year: 2201MNCEST and 2201MNCSES, 2022 2205MN5ADM and 2205MN5MAP, 2022 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 Health and Human Services? 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 completed in accordance with DHS reporting instructions. As part of the Health and Human Services? reporting requirements for Child Support Enforcement and Medical Assistance Program, the County submits the DHS Income Maintenance DHS-2550 report and the Social Services DHS-2556 report on a quarterly basis. The DHS instructions for the Social Services DHS-2556 report list general information which states, ?Do not include property taxes, or penalties in any expenditure line. Do not include interest on investments, refunds that occurred in a prior calendar year or cancellations in any revenue line (these should be reported as a reduction to expenditures).? DHS Bulletin 16-32-04 indicates the reports should be submitted to include data related to each calendar quarter. Condition: During testing of the sample of reports and while performing reconciliations to the general ledger, the following issues were investigated and found to be deficient: ? Southwest Health and Human Services split payroll that is reported in the quarterly reports for social services and income maintenance based on individual job duties rather than the Full Time Equivalent (FTE) as indicated by the DHS report instructions. In addition, payments made to Lyon County for the cost allocation plan funds and a payment to a local transportation company were included in the quarterly reports and should not have been. ? Eligible payroll expenditures were excluded from the Income Maintenance DHS-2550 reports for quarter 2 in the amount of $22,704 and for quarter 4 in the amount of $3,848. ? Investment income was improperly included on the Social Services DHS-2556 report for quarter 1 in the amount of $690 and for quarter 3 in the amount of $5,832 with the miscellaneous revenue. ? Allocated expenditures of $7,002 and direct charges of $255 reported in quarter 1 of the Local Collaborative Time Study (LCTS) Public Health Web-based Cost Schedule DHS-3220.3 report were reported again in the quarter 2 report. Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate submission of program costs to ensure that resulting grant funds paid to the the Health and Human Services are for applicable federal program activities/costs. For sampled items, 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 submission of costs on the quarterly reports can result in the Health and Human Services receiving either more or less federal funding than can be justified based on the actual underlying activity. Cause: The Health and Human Services? controls over preparation of the quarterly reports and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls that ensure the quarterly reports are completed accurately and in accordance with DHS guidance. View of Responsible Official: Concur