HENNEPIN COUNTYLocal Government

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Health Center Program Cluster Assistance Listing Number: 93.224 / 93.527 Federal Award Identification Number and Year: H8000028 – 2024 Pass-Through Agency: Not Applicable Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award states that Health centers must prepare and apply a sliding fee discount schedule (SFDS) so that amounts owed for health center services by eligible patients are adjusted based on the patient’s ability to pay, including: (a) discounts applied to individuals/families with annual incomes at or below 200% of Federal Poverty Guidelines (FPG); (b) full discount or nominal charge for individuals/families at or below 100% of FPG; (c) discounts based on gradations in family size and income for those above 100% and at or below 200% of FPG; and (d) no discount applied for those above 200% of FPG. Condition: During our testing, we noted the following two instances of noncompliance in the sample of forty patient files tested: •In one patient file selected for testing, the sliding fee discount applied was incorrect due to the patient’s income not being entered correctly in Epic, resulting in an inaccurate FPL calculation and associated discount classification. •In one patient file selected for testing, based on support provided and the SFDS, an incorrect discount class was applied and the County was not able to provide documentation demonstrating how annual income/household size supported the applied discount classification. Questioned costs: None Context: The eligible individuals consist of one population, and a total of 40 patients were selected from the health care system. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Of the 40 selections, errors were noted in two of the cases (see condition section above for more detail). Cause: The root cause of this finding is the inconsistent application of the defined “annual income” standard for low‑income patients and household size across the team. For patients with unstable employment or multiple income sources, annual income calculations were not applied consistently, resulting in inaccuracies and inconsistent approach. Effect: Improper calculation of patient's income/improper input of patient's income to the EPIC system causes the improper sliding fee discount to be applied to their account. This could cause the County to not follow their sliding fee discount scale and patients paying incorrect amounts for services provided. Repeat Finding: No Recommendation: We recommend NorthPoint continue to implement their new automated process of uploading applications to EPIC to avoid human error when it comes to income amounts. We also recommend that NorthPoint creates more procedures/policy over documentation of the income calculations/conversation that takes place with the patient. Views of responsible officials: Hennepin County has reviewed and agrees with the findings and recommendations.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program (SNAP) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 212MN101S2514; 212MN101S2520; 212MN127Q7503 - 2025 Pass-Through Agency: Minnesota Department of Agriculture Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award 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. Condition: During our testing, we noted the following instance of noncompliance in the sample of sixty case files tested: •One MAXIS case file did not have a re-determination of eligibility performed within the 12-month period. •One MAXIS case file did not have documentation of income verification. Questioned costs: None Context: The State of Minnesota Department of Agriculture contracts with county social services departments to perform the “intake function” (meeting with the social services client to determine income and categorical eligibility), while the State maintains the MAXIS system, which determine eligibility. Participants receive benefit payments from the state. The eligible individuals consist of one population, and a total of 60 enrolled persons were selected. The sample sizes were based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Of the 60 selections, errors were noted in two of the cases (see condition section above for more detail). Cause: Instances of non-compliance were the result of: •Agency entry error in MAXIS system when converting an MFIP case to SNAP, resulting in an incorrect recertification period to be established for SNAP greater than 12 months from the previous certification date. •Agency failure to request mandatory verification of reported income/change to income in addition to a failure to update MAXIS system with reported income change. Effect: Although not found during our testing, benefits paid for participants in the program by the State of Minnesota may have paid for ineligible participants or paid the incorrect amount. Repeat Finding: Yes, 2024-002. Recommendation: We recommend the County strengthen internal controls over inputs used to determine eligibility to ensure they are correctly entered and the information required by the contract is retained in the County’s records. Views of responsible officials: Hennepin County has reviewed and agrees with the finding and recommendation.

Federal Agency: U.S. Department of Agriculture; U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program (SNAP), Medical Assistance Program; Foster Care Title IV-E Program Assistance Listing Number: 10.561; 93.778; 93.658 Federal Award Identification Number and Year: 212MN101S2514;212MN101S2520; 212MN127Q7503– 2025; 2005MN5ADM; 2105MN5ADM; 2105MN5MAP– 2025 2101MNFOST; IVE2501MNFOST; MA505MN5ADM – 2025 Pass-Through Agency: Minnesota Department of Health Human Services and Minnesota Department of Agriculture Award Period: January 1, 2025 – December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i)Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii)Be incorporated into the official records of the nonfederal entity; (iii)Reasonably reflect the total activity for which the employee is compensated by the nonfederal entity, (iv)Encompass both federally assisted and all other activities compensated by the nonfederal entity on an integrated basis, but may include the use of subsidiary records as defined in the nonfederal entity's written policy; (v)Comply with the established accounting policies and practices of the nonfederal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii)Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and nonfederal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii)Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A)The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the nonfederal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The nonfederal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition: During our testing of 1,524 and 1,521 random moment study participants reported in quarters one and two, respectively, two individuals were reported on the first quarter time study report that were terminated or resigned prior to the start of the respective quarter. Questioned costs: None Context: It was noted that for one of the two random moment study submissions tested as part of our sample, two individuals were incorrectly included on the random moment study roster that was submitted to the State for the respective quarters. Cause: The implementation of a new Employee Position Directory disrupted the previous method of receiving notification of staff resignations and terminations. A new method of receiving notification was put in place in July 2025. The two individuals that were identified were in quarters prior to implementation of the new notification method. Effect: The County reported to the State of Minnesota employees previously terminated or resigned which were subject to the random moment surveys the State Department of Health and Human Services conducts. Repeat Finding: Yes; 2024-004 Recommendation: We recommend the County reviews its procedures for giving timely notice of an individual’s termination or resignation to other departments as well as ensuring departments are reviewing for accuracy the information provided to granting agencies. Views of responsible officials: Hennepin County has reviewed and agrees with the finding and recommendation.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program (SNAP) Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 212MN101S251; 212MN101S2520; 212MN127Q7503 – 2024 Pass-Through Agency: Minnesota Department of Human Services Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matter Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award 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. Condition: During our testing, we noted the following three instances of noncompliance in the sample of forty case files tested: • One MAXIS case files did not have a renewal application on file. • One MAXIS case file did not have a signed application on file. • One MAXIS case file did not have documentation matching the income on file. In addition, the County does not have a formalized supervisory case file review process in place to ensure accuracy and completeness of inputs into the eligibility determination system, MAXIS. Questioned costs: None Context: The State of Minnesota Department of Human Services (DHS) contracts with county social services departments to perform the “intake function” (meeting with the social services client to determine income and categorical eligibility), while the State maintains the MAXIS and METS systems, which determine eligibility. Participants receive benefit payments from the state. The eligible individuals consist of one population, and a total of 40 enrolled persons were selected from the MAXIS system. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Of the 40 selections, errors were noted in three of the cases (see condition section above for more detail). Cause: The County relied on DHS case file reviews as a control over accuracy and completeness of eligibility inputs into MAXIS. Effect: Although not found during our testing, benefits paid for participants in the program by the State of Minnesota may have paid for ineligible participants or paid the incorrect amount. Recommendation: We recommend the County strengthen internal controls over inputs used to determine eligibility to ensure they are correctly entered and the information required by the contract is retained in the County’s records. Views of responsible officials: Hennepin County has reviewed and agrees with the finding and recommendation.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Program Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2005MN5ADM; 2105MN5ADM; 2105MN5MAP; NH23IP922628 - 2024 Pass-Through Agency: Minnesota Department of Human Services Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matter Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award 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. Condition: During our testing, we noted the following instance of noncompliance in the sample of sixty case files tested: • One MAXIS case file did not have a renewal application on file. In addition, the County does not have a formalized supervisory case file review process in place to ensure accuracy and completeness of inputs into the two eligibility determination systems, MAXIS and METS. Questioned costs: None Context: The State of Minnesota Department of Human Services (DHS) contracts with county social services departments to perform the “intake function” (meeting with the social services client to determine income and categorical eligibility), while the State maintains the MAXIS and METS systems, which determine eligibility. Participants receive benefit payments from the state. The eligible individuals consist of two populations, and a total of 60 enrolled persons were selected, 49 from the MAXIS system and another 11 from the METS system. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Of the 60 selections, errors were noted in one of the cases (see condition section above for more detail). Cause: The County relied on reinstatement of program renewal requirements by DHS as a control over eligibility. In 2024, the County designed but did not fully implement a formalized case file review process. Effect: Although not found during our testing, benefits paid for participants in the program by the State of Minnesota may have paid for ineligible participants or paid the incorrect amount. Repeat Finding: Yes, 2023-007. Recommendation: We recommend the County strengthen internal controls over inputs used to determine eligibility to ensure they are correctly entered and the information required by the contract is retained in the County’s records. Views of responsible officials: Hennepin County has reviewed and agrees with the finding and recommendation.

Federal Agency: U.S. Department of Agriculture; U.S. Department of Health and Human Services Federal Program Name: Supplemental Nutrition Assistance Program (SNAP), Medical Assistance Program; Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 10.561; 93.778; 93.558 Federal Award Identification Number and Year: 212MN101S251; 212MN101S2520; 212MN127Q7503 – 2024; 2005MN5ADM; 2105MN5ADM; 2105MN5MAP; NH23IP922628 – 2024; 2101MNTANF – 2024 Pass-Through Agency: Minnesota Department of Human Services Award Period: January 1, 2024 – December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or specific requirement: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, (iv) Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity (See paragraph (h)(1)(ii) above for treatment of incidental work for IHEs.); and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: During our testing of 3,588 and 3,606 random moment study participants reported in quarters two and three, respectively, one individual was reported on the second quarter time study report and five individuals were reported on the third quarter report that were terminated or resigned prior to the start of the respective quarter. Questioned costs: None Context: It was noted that for both of the two random moment study submissions tested as part of a statistically valid sample, six individuals were incorrectly included on the random moment study roster that was submitted to the State for the respective quarters. Cause: At the time of the audit, the County was changing its procedures for updating the random moments listing for the State of Minnesota. Effect: The County reported employees previously terminated or resigned to the State of Minnesota which were subject to the random moment surveys the State Department of Health and Human Services conducts.

Schedule of Expenditures of Federal Awards (SEFA) Federal Agency: U.S. Department of Health and Human Services; U.S. Department of Agriculture (USDA) Program: National Bioterrorism Hospital Preparedness Program (ALN 93.889); Immunization Cooperative Agreements (ALN 93. 268); COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)(ALN 93. 323); Child Support Services (ALN 93. 563); State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (ALN 10.561) Pass-through Entity: Minnesota Department of Health; Minnesota Department of Human Services Federal Assistance Identification Number or Pass-Through Number: U90TP000529; 6NH23P0007370502; NH23P922628; NH23IP922628; NU50CK000508; 2001MNCEST; 2101MNCSES; 212MN127Q7503; 212MN101S2520; 212MN101S2514 Federal Award Year: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance; Other Matter Compliance Finding Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." 2 CFR 200.510(b) requires that “The auditee must prepare a schedule of expenditures of Federal awards awards (the “schedule”) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with ss 200.502... ...At minimum, the schedule must... ...(3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available…” Condition: While testing the SEFA, we noted that internal controls were not operating effectively over the preparation of the SEFA. In addition, we noted the following errors in the original SEFA we received for the audit: - $1,284,631 of expenditures were improperly included in ALN 93.889 when the amount should have been included in ALN 93.268. - $30,394 of expenditures was improperly included in ALN 93.889 when the amount should have been included in ALN 93.323. - $626,894 of expenditures related to ALN 93.563 was missing from the schedule. - $61,290 of expenditures related to ALN 10.561 was missing from the schedule. Cause: The errors of $1,284,631 and $30,394 related to ALN 93.889 were caused by the county hospital’s system of assigning identifying numbers within the chart of accounts not being applied to awards managed outside of the Hennepin Health Foundation. The errors of $626,894 related to ALN 93.563 and $61,290 related to ALN 10.561 related to the County’s reducing expenditures by a reversal of a prior year receivable transaction when determining the amount of expenditures. Effect: The errors in the preparation of the SEFA indicate noncompliance with the requirements for the Schedule, including ensuring that it is complete and accurate. Context: Approximately $2 million of errors were noted over the SEFA with total expenditures of approximately $360 million. Questioned Costs: None Repeat Finding?: No Recommendation: We recommend that the County strengthen its processes and controls over the preparation of the SEFA. Views of Responsible Officials: Hennepin County has reviewed and agrees with the finding and the recommendation.

Eligibility Federal Agency: U.S. Department of Agriculture (USDA) Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (ALN 10.557) Pass-through Entity: State of Minnesota, Department of Health Federal Assistance Identification Number or Pass-Through Number: 202MN004W1003, 192MN004W5003 Federal Award Year: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." The County is responsible for the verification of an applicant’s categorical eligibility, identity, and residency as well as the performance of assessments of an applicant’s nutritional risk. In addition, the County is also responsible for the input of this information as well as income and family size into HuBERT, the State’s WIC Information System. Condition: While we were able to test manual compensating controls over eligibility determination, we were not able to review and test the automated application controls and the related information technology general controls (ITGCs) within the HuBERT system, a state system that is administered by the state and required to be used by the County for eligibility determination, to determine whether controls are adequately designed and implemented and operating effectively. Cause: The State was not able to provide information regarding the design and effectiveness of HuBERT system controls nor were we able to test those controls directly due to complexities of data privacy and resources within the State. Effect: Although not found during our testing, benefits disbursed to participants in the program and issued by the State of Minnesota may have paid for ineligible participants. Context: Applies to the automated application controls over the population of eligible participants within the program. Questioned Costs: None Repeat Finding?: Yes Recommendation: We suggest that the County encourage the State to provide an independent audit of the design and implementation of HuBERT system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

Matching Federal Agency: U.S. Department of Housing and Urban Development Program: Continuum of Care Program (ALN 14.267) Federal Assistance Identification Number or Pass-Through Numbers: MN0311L5K002007, MN0364L5K002005, MN0372L5K002105 Federal Award Years: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a), requires that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 24 CFR 578.73(a) requires that the recipient must match all grant funds, except for leasing funds, with no less than 25 percent of funds or in-kind contributions from other sources. For grantees where there is more than one grant agreement, the 25 percent match must be provided on a grant-by-grant basis. Cash match must be used for the costs of activities that are eligible as program costs under 24 CFR 578 Subpart D. 2 CFR 200.306(b)(1) requires that any shared costs or matching funds must be verifiable from the non-Federal entity’s records. Condition: While we were able to test a manual compensating control over matching, we were not able to review and test the automated application controls and related ITGCs within the State’s MAXIS system. The State was not able to provide information regarding the design and implementation of MAXIS system controls, nor were we able to test those controls directly. Cause: The State was not able to provide information regarding the design and effectiveness of MAXIS system controls nor were we able to test those controls directly due to complexities of data privacy and resources within the State. Effect: There is an increased risk of noncompliance with the matching requirement. Context: Applies to the automated application controls over matching. Questioned Costs: None Repeat Finding?: Yes Recommendation: We suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

Eligibility Federal Agency: U.S. Department of Health and Human Services Program: Medical Assistance Program (ALN 93.778) Pass-through Entity: State of Minnesota, Department of Human Services Federal Assistance Identification Number or Pass-Through Numbers: 2005MN5ADM, 2105MN5ADM, 2105MN5MAP, NH23IP922628 Federal Award Years: Year ended December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance; Other Matter Compliance Finding Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Specific criteria are established with respect to eligibility for assistance and the County’s responsibilities related to the intake function:  The Minnesota Health Care Programs Eligibility Policy Manual at 1.3.2.4 requires a County agency to evaluate and pursue resolution of information that is inconsistent with other information.  42 CFR 435.907 requires, as a condition of eligibility, each individual seeking Medicaid must submit a signed application.  42 CFR 435.407 requires, as a condition of eligibility, each individual seeking Medicaid must provide evidence of citizenship. Condition: During our testing, we noted the following 8 instances of noncompliance in the sample of 120 case files tested:  Five MAXIS (eligibility determination system) case files had different bases of eligibility in MAXIS and MMIS (payment system). For three of the five cases, MAXIS indicated the beneficiary was “EX” (age 65 or older) while MMIS indicated the beneficiary was “DX” (disabled). For one of the five cases, MAXIS indicated the beneficiary was “1619(b)” (people who no longer receive an SSI cash benefit and maintain their disability status) while MMIS indicated the beneficiary was “DX” (disabled) and the final case indicated the beneficiary was “DC” (disabled child 18-20) in MAXIS while MMIS indicated the beneficiary was “DT” (disabled child under TEFRA option).  Two MAXIS case files did not have a signed application on file.  One MAXIS case file did not have citizenship verified. In addition, the County does not have a formalized supervisory case file review process in place to ensure accuracy and completeness of inputs into the two eligibility determination systems, MAXIS and METS. Cause: The County relied on the pandemic related continuous eligibility provisions for the Medical Assistance program. Program personnel entering case data into MAXIS or METS did not ensure all required information was input correctly, supported or that all required information was obtained. Effect: Although not found during our testing, benefits paid for participants in the program by the State of Minnesota may have paid for ineligible participants or paid the incorrect amount. Context: The State of Minnesota Department of Human Services (DHS) contracts with county social services departments to perform the “intake function” (meeting with the social services client to determine income and categorical eligibility), while the State maintains the MAXIS and METS systems, which determine eligibility. Participants receive benefit payments from the state. The eligible individuals consist of two populations, and a total of 120 enrolled persons were selected, 60 from the MAXIS system and another 60 from the METS system. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Of the 120 selections, errors were noted in seven of the cases (see condition section above for more detail). Questioned Costs: None. The County only receives reimbursement for administrative costs of the program. All benefits paid to participants in the program are paid directly by the State of Minnesota. Repeat Finding?: Yes Recommendation: We recommend the County strengthen internal controls over inputs used to determine eligibility to ensure they are correctly entered and the information required by the contract is retained in the County’s records. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility Federal Agency: U.S. Department of Health and Human Services Program: Foster Care Title IV-E (ALN 93.658) Pass-through Entity: State of Minnesota, Department of Human Services Federal Assistance Identification Number or Pass-Through Number: 2101MNFOST Federal Award Year: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must “Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Expenditures are to be made for allowable foster care activities and must be in accordance with 2 CFR Part 200, Subpart E. Foster care maintenance payments are allowable if the foster child is removed from home per the requirements of Section 406(a) of the Social Security Act and is placed into foster care by means of a judicial determination. Condition: While we were able to test manual compensating controls over activities allowed or unallowed, allowable costs/cost principles and eligibility, we were not able to review and test the automated application controls and the related ITGCs within the MAXIS and SSIS systems that reside within the State of Minnesota, but are utilized by the County, to determine whether the system controls are adequately designed and implemented and operating effectively. Cause: The State was not able to provide information regarding the design and effectiveness of MAXIS and SSIS system controls nor were we able to test those controls directly due to complexities of data privacy and resources within the State. Effect: Although not found during our testing, benefits paid for participants in the program may have paid for ineligible participants. Context: Applies to the automated application controls over the population of expenditures and eligible participants within the program. Questioned Costs: None noted Repeat Finding?: Yes Recommendation: We suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS and SSIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

Cash Management Federal Agency: U.S. Department of Health and Human Services Program: Congressional Directives (ALN 93.493) Pass-through Entity: N/A Federal Assistance Identification Number or Pass-Through Number: CE146419 Federal Award Year: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 45 CFR 75.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.". Condition: The county hospital could not provide documentation that a review and approval of grant reimbursement requests was conducted prior to the request being submitted for payment. Cause: The county hospital did not retain documentation of its review and approval process. Effect: Although not found during our testing, inaccurate reimbursement requests could be submitted for payment. Context: There were a total of seven reimbursement requests prepared for the year ended December 31, 2023. Of these, two were selected for testing and neither had documentation of the request being reviewed or approved prior to submittal. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None noted Repeat Finding?: No Recommendation: We recommend the county hospital retain documentation demonstrating the review and approval of grant reimbursement requests. View of responsible officials of the auditee: Hennepin Healthcare System Inc. has reviewed and agrees with the finding and recommendation.

Reporting Federal Agency: U.S. Department of Health and Human Services Program: Congressional Directives (ALN 93.493) Pass-through Entity: N/A Federal Assistance Identification Number or Pass-Through Number: CE146419 Federal Award Year: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 45 CFR 75.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.". Condition: The county hospital could not provide documentation that review and approval of the semiannual progress report was conducted prior to the report being submitted. Cause: The county hospital did not retain documentation of its review and approval process. Effect: Although not found during our testing, inaccurate reports could be submitted. Context: There was a total of one semi-annual progress report required to be completed for the year ended December 31, 2023. The client could not provide documentation of that report being reviewed or approved prior to submittal. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None noted Repeat Finding?: No Recommendation: We recommend the county hospital retain documentation demonstrating the review and approval of progress reports. View of responsible officials of the auditee: Hennepin Healthcare System Inc. has reviewed and agrees with the finding and recommendation.

Suspension and Debarment Federal Agency: U.S. Department of Health and Human Services Program: Congressional Directives (ALN 93.493) Pass-through Entity: N/A Federal Assistance Identification Number or Pass-Through Number: CE146419 Federal Award Year: Year ended December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance; Other Matter Compliance Finding Criteria: 45 CFR 75.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award…”. 45 CFR 75.213 requires that “Non-federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR parts 180 and 376. These regulations restrict awards, subawards and contracts with certain parties that are debarred, suspended or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.” Condition: The county hospital does not have effective internal controls over the suspension and debarment requirement for the Congressional Directives program. In addition, there was no evidence that the county hospital had verified that entities receiving more than $25,000 in federal grant funds were not suspended or debarred prior to providing them with federal funds. Cause: For most specialized medical equipment purchased under this grant, the department identifying the need for the equipment is also responsible for selecting the vendor. These personnel do not appear to receive training in the requirements related to suspension and debarment for federally funded projects. Effect: While not found during our testing, the lack of controls over this requirement increases the possibility that contracts could be awarded to vendors that are ineligible to provide goods and services under federally funded grants. Context: For all of the procurements selected for testing that were covered transactions, documentation was not maintained that could provide evidence that the county hospital had performed the required verifications. Out of 11 covered transactions, 8 were selected for testing. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None Repeat Finding?: No Recommendation: We recommend that when entering into a contract that relates to a covered transaction that the county hospital either search for the contractor in the list at SAM.gov, or obtain certification from the potential vendor that they are not excluded from participation in federally funded procurements. Additionally, on an annual basis we recommend that the county hospital compares the vendor and employee master file to the excluded parties list at SAM.gov to ensure there are not any on the list that impact the county hospital’s current contracts. The county hospital should retain documentation demonstrating each of these internal control activities was performed timely. View of responsible officials of the auditee: Hennepin Healthcare System Inc. has reviewed and agrees with the finding and recommendation.

Procurement Federal Agency: U.S. Department of Health and Human Services Program: Congressional Directives (ALN 93.493) Pass-through Entity: N/A Federal Assistance Identification Number or Pass-Through Number: CE146419 Federal Award Year: Year ended December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance; Material Noncompliance Finding Criteria: 45 CFR 75.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award…”. 45 CFR 75.327(a) requires that "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 45 CFR 75.327(i) requires that "The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." 45 CFR 75.328(a) requires that "All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals must be excluded from competing for such procurements." 45 CFR 75.328(d) requires that "The non-Federal entity must ensure that all prequalified lists of persons, firms, or products which are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. Also, the non-Federal entity must not preclude potential bidders from qualifying during the solicitation period." 45 CFR 75.329(b) requires that "...Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources." All procurements for this grant occurred at the county hospital which is specifically exempted from state statutes related to procurement for political subdivisions. For federally funded procurements, decisions greater than the Simplified Acquisition Threshold of $250,000 defined in 48 CFR 2.101 require the use of formal procurement methods, as described below. 45 CFR 75.329(c) requires that "Bids are publicly solicited and a firm fixed price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bid method is the preferred method for procuring construction, if the conditions in paragraph (c)(1) of this section apply. (1) In order for sealed bidding to be feasible, the following conditions should be present: (i) A complete, adequate, and realistic specification or purchase description is available; (ii) Two or more responsible bidders are willing and able to compete effectively for the business; and (iii) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (2) If sealed bids are used, the following requirements apply: (i) Bids must be solicited from an adequate number of known suppliers, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (ii) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (iii) All bids will be opened at the time and place prescribed in the invitation for bids, for local, and tribal governments, the bids must be opened publicly; (iv) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (v) Any or all bids may be rejected if there is a sound documented reason." 45 CFR 75.329 (d) requires that “Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply: (1) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical; (2) Proposals must be solicited from an adequate number of qualified sources; (3) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and for selecting recipients; (4) Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and (5) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.” 45 CFR 75.329(f) requires that "...Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: (1) The item is available only from a single source; (2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (3) The HHS awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or (4) After solicitation of a number of sources, competition is determined inadequate." The county hospital procurement policy requires that all county hospital purchases must have a purchase order and be processed through Supply Chain Management using Peoplesoft FSCM in order to ensure purchases are compliant with all clinical and safety mandates and done in a cost effective manner. The policy also requires that Supply Chain Management is the only department authorized to contact suppliers for the purpose of placing orders and negotiating pricing. Condition: The county hospital does not have effective internal controls over the procurement requirement of the Congressional Directives program, which resulted in two instances of noncompliance. During our testing we noted: Small Purchases: In our sample of six small purchases we found the following exceptions for five of the selections: ‐ The county hospital purchased lab equipment with a total cost of $118,000 but did not seek more than a single quote when two distributors were available, which resulted in noncompliance with the procurement requirements. The price of the equipment is set by the manufacturer. The county hospital cited sole source as the procurement method but the circumstances cited by the county hospital , an established relationship with the vendor, did not meet one of the allowable criteria under the regulations. The county hospital was unable to provide support that it maintained records documenting the history of the procurement. ‐ The county hospital obtained architectural services with a total cost of $31,259 using noncompetitive negotiation but none of the criteria allowing for noncompetitive procurements were met, which resulted in noncompliance with the procurement requirements. The county hospital was unable to provide support that it maintained records documenting the history of the procurement, including the selection of the architect for this procurement or the initial selection. ‐ The county hospital obtained fluid management equipment with a total cost of $39,756 but did not maintain documentation of the history of the procurement decision, including the decision to use the pricing available through a Group Purchasing Organization. ‐ The county hospital purchased infant care equipment with a total cost of $83,676 but did not maintain documentation of the history of the procurement decision, including the decision to use the pricing available through a Group Purchasing Organization. ‐ The county hospital purchased imaging equipment with a total cost of $170,370 but did not maintain documentation of the history of the procurement decision, including the decision to use the pricing available through a Group Purchasing Organization. Formal Methods: In our sample of two procurements requiring formal methods we found the following exceptions: ‐ The county hospital purchased infant care equipment with a total cost of $345,923 by seeking quotes from two different vendors, but based on the size of the procurement the county hospital should have utilized one of the formal procurement methods such as sealed bids or competitive proposals. The county hospital later decided to use the pricing available through a Group Purchasing Organization but was unable to provide support that it maintained records documenting the history of the procurement. ‐ The county hospital selected ultrasound equipment with a total cost of $600,000 by seeking product demonstrations from three different vendors. The county hospital did not maintain records to demonstrate that the responses were the result of public solicitation. The county hospital was unable to provide documentation to support that it maintained records documenting the history of the procurement, including a cost/price analysis and decision to use a contract through a Group Purchasing Organization. During 2023 the county hospital did not have written procurement policies that conformed to the requirements of the Uniform Guidance, including the requirement to maintain records of the history of the procurement. State law specifically exempts the county hospital from the State's own laws related to local government procurement, but this has not been replaced by local laws or policies and procedures specific to procurement. Cause: For most specialized medical equipment purchased by the grantee, the department identifying the need for the equipment is also responsible for selecting the vendor. Personnel making procurement decisions do not appear to receive training in the requirements related to procurement for federally funded projects, including the limited circumstances where noncompetitive procurements are allowed or the maintenance of required records of the history of procurement. Effect: The county hospital is not complying with the procurement requirements applicable to the program, including properly maintaining records of procurement decisions and processes that ensure fair and open competition between an adequate number of potential vendors. Context: For 2023 we identified four procurements greater than the simplified acquisition threshold and ten procurements less than the simplified acquisition threshold. We selected two procurements and six procurements, respectively, from this population of expenditures that occurred during 2023. We found control deficiencies with both of the selections greater than the simplified acquisition threshold and five control deficiencies and/or exceptions in the selections less than the simplified acquisition threshold. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: $149,259 known Repeat Finding?: No Recommendation: We recommend that the county hospital develop a procurement policy that conforms to federal requirements, including the most stringent between the Uniform Guidance at 2 CFR 200 and the United States Department of Health and Human Services Uniform Administrative Requirements at 45 CFR 75. We recommend that the county hospital develop a document retention policy related to procurement. We further recommend that a standardized procurement process is developed for micropurchases, small purchases less than the simplified acquisition threshold, and formal procedures for all other procurement decisions. Noncompetitive, or “sole source” procurements should also be standardized and when applicable, include documentation to justify the limitation of competition. View of responsible officials of the auditee: Hennepin Healthcare System Inc. has reviewed and acknoledges the finding and recommendation.

Equipment and Real Property Management Federal Agency: U.S. Department of Health and Human Services Program: Congressional Directives (ALN 93.493) Pass-through Entity: N/A Federal Assistance Identification Number or Pass-Through Number: CE146419 Federal Award Year: Year ended December 31, 2023 Type of Finding: Material Weakness in Internal Control over Compliance; Other Matter Compliance Finding Criteria: 45 CFR 75.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award…”. Per 45 CFR 75.320(d)(1), property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property, who holds title, location, and use and condition of the property, and any ultimate disposition data including the date of disposal and sale price off the property. Condition: The county hospital does not have effective internal controls over the equipment and real property management requirement of the Congressional Directives program. In addition, during our testing we noted that while most items were listed with serial number and location, the other required information was not being consistently included. Cause: County hospital management was not aware of the specific requirements. Effect: Without proper equipment records it is possible that dispositions of federally funded equipment may not be properly identified and managed in conformance with program requirements. Context: None of the 25 items tested contained all of the required information. Questioned Costs: None noted Repeat Finding?: No Recommendation: We recommend county hospital management update records for property acquired with federal funds to include all required information. In addition, we suggest management ensure there are policies and procedures in place to track all equipment acquired with federal funds and that any removal of this equipment is properly coordinated and discussed with the granting agency. View of responsible officials of the auditee: Hennepin Healthcare System Inc. has reviewed and agrees with the finding and recommendation.

2022-002 Eligibility Federal Agency: U.S. Department of Agriculture (USDA) Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (ALN 10.557) Pass-through Entity: State of Minnesota, Department of Health Federal Assistance Identification Number or Pass-Through Number: 202MN004W1003, 192MN004W5003 Federal Award Year: Year ended December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." The County is responsible for the verification of an applicant?s categorical eligibility, identity, and residency as well as the performance of assessments of an applicant?s nutritional risk. In addition, the County is also responsible for the input of this information as well as income and family size into HuBERT, the State?s WIC Information System. Condition: While testing the eligibility requirement, we noted procedures and controls were not operating as designed to ensure that only those eligible were approved for WIC. In our sample of 40 cases, two cases had no evidence that an independent review of the eligibility determination occurred. In addition, while we were able to test manual compensating controls over eligibility determination, we were not able to review and test the automated application controls and the related information technology general controls (ITGCs) within the HuBERT system, a state system that is administered by the state and required to be used by the County for eligibility determination, to determine whether controls are adequately designed and implemented and operating effectively. Cause: The County lacks a workflow for the eligibility determination of the WIC program, including the completion of an independent review. The County currently utilizes Microsoft Teams for the caseworker to make a request for a Competent Professional Authority (CPA) to review a case after an eligibility determination is made. The caseworker is responsible for ensuring the review has occurred, but the only method of monitoring is reopening each case file for verification. In addition, the State was not able to provide information regarding the design and effectiveness of HuBERT system controls nor were we able to test those controls directly due to complexities of data privacy and resources within the State. Effect: Although not found during our testing, benefits disbursed to participants in the program and issued by the State of Minnesota may have paid for ineligible participants. Context: Out of the universe of cases eligible for assistance we noted that two out of our sample of 40 met eligibility requirements but had no evidence of an independent review of the eligibility determination. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None Repeat Finding?: No Recommendation: We recommend that the process for documenting the review of eligibility determinations be strengthened. In addition, we suggest that the County encourage the State to provide an independent audit of the design and implementation of HuBERT system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2022-003 Matching Federal Agency: U.S. Department of Housing and Urban Development Program: Continuum of Care Program (ALN 14.267) Federal Assistance Identification Number or Pass-Through Numbers: MN0311L5K002007, MN0364L5K002005, MN0372L5K002105 Federal Award Years: Year ended December 31, 2022; Year ended December 31, 2022; Year ended October 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a), requires that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 24 CFR 578.73(a) requires that the recipient must match all grant funds, except for leasing funds, with no less than 25 percent of funds or in-kind contributions from other sources. For grantees where there is more than one grant agreement, the 25 percent match must be provided on a grant-by-grant basis. Cash match must be used for the costs of activities that are eligible as program costs under 24 CFR 578 Subpart D. 2 CFR 200.306(b)(1) requires that any shared costs or matching funds must be verifiable from the non-Federal entity's records. Condition: While testing the matching requirement, we noted that internal controls are not properly designed. While the County was able to provide documentation that the matching requirement was met, we noted the following: ? The documentation to demonstrate that the required match was met was on a calendar-year basis for all grants in total instead of on the required grant-by-grant basis. ? The data utilized in determining the match requirement was met was obtained from the State?s information system, MAXIS, and the County did not retain this data. ? Reporting of the match on the HUD Annual Performance Report is completed by multiplying the total direct costs by the required match percentage instead of the actual match. ? There was a lack of evidence that a supervisory review was periodically performed over matching. In addition, while we were able to test a manual compensating control over matching, we were not able to review and test the automated application controls and related ITGCs within the MAXIS system. The State was not able to provide information regarding the design and implementation of MAXIS system controls, nor were we able to test those controls directly. Cause: Historically the County has believed that the ability to demonstrate the match requirement was met was sufficient. There are no written policies and procedures over the review of the matching requirement. In addition, the State was not able to provide information regarding the design and implementation of MAXIS system controls nor were we able to review and test the MAXIS system due to complexities of data privacy and resources within the State. Effect: Without written policies and procedures over the review of the matching requirement and without documentation of the review, there is an increased risk of noncompliance with the matching requirement. Context: We reviewed the matching requirements for all awards for this ALN that required a match during the year. Questioned Costs: None Repeat Finding?: No Recommendation: We recommend that controls be established to include determination of the match on a on a grant-by-grant basis more often than annually, that documentation of this determination is retained in the County?s records, and that a review is performed and documented. In addition, we suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2022-004 Eligibility Federal Agency: U.S. Department of Health and Human Services Program: Medical Assistance Program (ALN 93.778) Pass-through Entity: State of Minnesota, Department of Human Services Federal Assistance Identification Number or Pass-Through Numbers: 2005MN5ADM, 2105MN5ADM, 2105MN5MAP, NH23IP922628 Federal Award Years: Year ended December 31, 2022 Type of Finding: Material Weakness in Internal Control over Compliance; Other Matter Compliance Finding Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Specific criteria are established with respect to eligibility for assistance and the County?s responsibilities related to the intake function: ? Minnesota Stat 256B.056 requires that for certain eligibility groups to be eligible for Medical Assistance, a person must not individually own more than certain asset limits based on household size, disability status, and employment status. ? The Minnesota Health Care Programs Eligibility Policy Manual at 1.3.2.4 requires a County agency to evaluate and pursue resolution of information that is inconsistent with other information. ? Minnesota Stat 256B.056 requires to be eligible for Medical Assistance, a person must not have income in excess of certain limits based on household size. The Minnesota Health Care Programs Eligibility Policy Manual at 1.3.2.4 requires a County agency to evaluate and pursue resolution of information that is consistent with documentation or information on file. ? 42 CFR 435.910 requires, as a condition of eligibility, each individual seeking Medicaid must furnish his or her Social Security number (SSN). Condition: During our testing, we noted the following instances of noncompliance in the sample of 120 case files tested: ? One MAXIS case file had assets greater than their applicable household size asset limit. While beneficiaries may reduce their assets to continue to qualify, there was no documentation in the case notes showing the applicant reduced their assets subsequent to renewal in order to continue to qualify for benefits. ? One MAXIS case file had different bases of eligibility in MAXIS and MMIS where MAXIS indicated the beneficiary was ?EX? (age 65 or older) while MMIS indicated the beneficiary was ?DX? (disabled). ? One METS case file included documentation of verification of income that did not match the information entered into METS. ? One METS case file did not have a SSN entered at either the initial application date nor any of the subsequent renewal dates. No exemptions to the requirement to submit a SSN was noted in the case within METS. In addition, the County does not have effective internal controls over eligibility of the Medicaid program: ? The County does not have a formalized supervisory case file review process in place to ensure accuracy and completeness of inputs into the MAXIS and METS systems. ? We were not able to review and test the automated application controls and the related ITGCs within the MAXIS, METS and MMIS systems, all of which are state systems that are administered by the state and required to be used by the County, to determine whether the system controls are adequately designed and implemented and operating effectively for the determination of eligibility. Cause: The County relied on the pandemic related continuous eligibility provisions for the Medical Assistance program. Program personnel entering case data into MAXIS or METS did not ensure all required information was input correctly, supported or that all required information was obtained. In addition, the State was not able to provide information regarding the design and implementation of MAXIS, METS and MMIS system controls nor were we able to review and test the MAXIS, METS and MMIS systems due to complexities of data privacy and resources within the State. Effect: Although not found during our testing, benefits paid for participants in the program by the State of Minnesota may have paid for ineligible participants. Context: The State of Minnesota Department of Human Services (DHS) contracts with county social services departments to perform the ?intake function? (meeting with the social services client to determine income and categorical eligibility), while the State maintains the MAXIS and METS systems, which determine eligibility. Participants receive benefit payments from the state. The eligible individuals consist of two populations, and a total of 120 enrolled persons were selected, 60 from the MAXIS system and another 60 from the METS system. The sample sizes were based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Of the 120 selections, errors were noted in four of the cases (see condition section above for more detail). Questioned Costs: None. The County only receives reimbursement for administrative costs of the program. All benefits paid to participants in the program are paid directly by the State of Minnesota. Repeat Finding?: No Recommendation: We recommend that the County designs internal controls to determine that inputs used to determine eligibility are correctly entered and the information required by the contract is retained in the County?s records. In addition, we suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS, METS and MMIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2022-005 Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility Federal Agency: U.S. Department of Health and Human Services Program: Foster Care Title IV-E (ALN 93.658) Pass-through Entity: State of Minnesota, Department of Human Services Federal Assistance Identification Number or Pass-Through Number: 2101MNFOST Federal Award Year: Year ended December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) requires that each non-Federal entity must ?Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Expenditures are to be made for allowable foster care activities and must be in accordance with 2 CFR Part 200, Subpart E. Foster care maintenance payments are allowable if the foster child is removed from home per the requirements of Section 406(a) of the Social Security Act and is placed into foster care by means of a judicial determination. Condition: While we were able to test manual compensating controls over activities allowed or unallowed, allowable costs/cost principles and eligibility, we were not able to review and test the automated application controls and the related ITGCs within the MAXIS and SSIS systems that reside within the State of Minnesota, but are utilized by the County, to determine whether the system controls are adequately designed and implemented and operating effectively. Cause: We were unable to review and test the controls within the MAXIS and SSIS systems due to complexities of data privacy and resources within the State. These systems are administered by the state and are required to be used by the County. In addition, the State was not able to provide information regarding the design and implementation of MAXIS and SSIS system controls. Effect: Although not found during our testing, benefits paid for participants in the program may have paid for ineligible participants. Context: Applies to the automated application controls over the population of expenditures and eligible participants within the program. Questioned Costs: None noted Repeat Finding?: No Recommendation: We suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS and SSIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2021-002 Special Tests and Provisions Federal Agency: U.S. Department of Housing and Urban Development Program: COVID-19 - Emergency Solutions Grant; Emergency Solutions Grant (ALN 14.231) Pass-through Entity: City of Minneapolis Federal Award Year: 2021 Criteria: Per 24 CFR 576.203, ?The recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient?s complete payment request. This requirement also applies to each subrecipient that is a unit of general-purpose local government.? Condition: While testing the special test compliance requirement, we noted procedures and controls were not operating as designed to ensure subrecipients were paid within 30 days. Cause: Individuals involved in the review of expenditures were overwhelmed with the new program and the procedures and controls were not operating as designed. Effect: Subrecipients were paid outside of the 30 day requirement. Context: 17 of 40 subrecipient payments tested Questioned Costs: None Repeat Finding?: No Recommendation: We recommend that a process be established to make payments timely within the 30-day requirement. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2021-003 Reporting Federal Agency: U.S. Department of Treasury Program: COVID-19 - Emergency Rental Assistance (ALN 21.023) Pass-through Entity: City of Minneapolis Federal Award Year: 2021 Criteria: Per 2 CFR 200.303, ?the non-Federal entity must: a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Monthly ERA1 & ERA2 reporting is required each month beginning in April 2021 through June 30, 2022. These monthly reports require ERA recipients to certify and submit brief two-question updates with very high-level counts of the numbers of households receiving assistance and the amount of ERA funds distributed. Quarterly reports are required beginning in the calendar quarter that funds were awarded and at the end of every calendar quarter thereafter. Condition: While testing the reporting compliance requirement, the County asserted that a supervisor reviewed monthly reports prior to submission. No evidence could be provided to demonstrate that these reviews occurred independent of the preparer. Cause: Individuals involved in the review of reporting were unaware that documentation needs to be maintained to provide evidence of their review. Effect: Without evidence that reviews were conducted, we could not determine whether the control over reporting was properly performed prior to submission of the reports. Effective internal control was not established and maintained. Context: We noted there was a lack of evidence of review for all of the quarterly (four) and monthly (eight) reports selected for testing. Repeat Finding?: No Recommendation: We recommend that evidence be retained of the review conducted prior to all reports being submitted under the grant program. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2021-003 Reporting Federal Agency: U.S. Department of Treasury Program: COVID-19 - Emergency Rental Assistance (ALN 21.023) Pass-through Entity: City of Minneapolis Federal Award Year: 2021 Criteria: Per 2 CFR 200.303, ?the non-Federal entity must: a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Monthly ERA1 & ERA2 reporting is required each month beginning in April 2021 through June 30, 2022. These monthly reports require ERA recipients to certify and submit brief two-question updates with very high-level counts of the numbers of households receiving assistance and the amount of ERA funds distributed. Quarterly reports are required beginning in the calendar quarter that funds were awarded and at the end of every calendar quarter thereafter. Condition: While testing the reporting compliance requirement, the County asserted that a supervisor reviewed monthly reports prior to submission. No evidence could be provided to demonstrate that these reviews occurred independent of the preparer. Cause: Individuals involved in the review of reporting were unaware that documentation needs to be maintained to provide evidence of their review. Effect: Without evidence that reviews were conducted, we could not determine whether the control over reporting was properly performed prior to submission of the reports. Effective internal control was not established and maintained. Context: We noted there was a lack of evidence of review for all of the quarterly (four) and monthly (eight) reports selected for testing. Repeat Finding?: No Recommendation: We recommend that evidence be retained of the review conducted prior to all reports being submitted under the grant program. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2021-005 Eligibility and Special Tests Federal Agency: U.S. Department of Health and Human Services Program: Temporary Assistance for Needy Families (ALN 93.558) Pass-through Entity: Minnesota Department of Health; Minnesota Department of Human Services; City of Minneapolis Federal Award Year: 2021 Criteria: 2 CFR Part 200.303(a), states that the auditee shall maintain internal control over federal programs that provides reasonable assurance that the auditee is managing federal awards in compliance with laws, regulations, and the provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Minnesota Statute 256J.09, states that ?To apply for assistance a person must submit a signed application to the county agency in the county where that person lives.? Per MN DHS Bulletin #20-68-12C, the state "Waives the requirement to submit a signed application for MFIP, DWP, RCA, GA, MSA and Housing Support per 256J.09, 256D.07, 256D.395, 256I.04, and 256I.06. County, tribe, and community partner eligibility workers may complete an application over the phone when a potential applicant calls and expresses a need for help with cash or food. Eligibility staff should ask the caller if they wish to apply for assistance. If yes, complete the Combined Application Form (CAF) on the phone with the applicant, and case note that the applicant confirmed the accuracy of the information. Indicate on the CAF, in the agency signature area, that the CAF was completed by the agency with the applicant via phone and that a verbal signature is being accepted. The date of the application is the date the application is completed on the phone with the applicant. Send the completed application to the applicant by mail, email, or fax.? Condition: While testing eligibility and special tests, we noted that procedures and controls were not operating as designed to ensure that appropriate signature documentation was obtained on the CAF. During the signature requirement waiver period in place until the end of August 2021, eligibility staff completing the CAF via phone with the applicant did not document as required that the CAF was completed by the agency with the applicant via phone and that a verbal signature is being accepted. The verbal signature was also not included in case notes of MAXIS, which was an alternative option under the waiver.. In addition, there was a case without an applicant signature on the CAF after the waiver period ended. Cause: The missing documentation was a result of the workload of the program personnel as well as numerous requirements within the program. Effect: Benefits disbursed to participants in the program and issued by the State of Minnesota may have paid for ineligible participants. Context: Nine of the 65 cases tested Questioned Costs: None Repeat Finding?: No Recommendation: We recommend that internal memos or other communications ensure the communication of any relevant state bulletins on a regular and timely basis. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.

2020-001 Lack of Evidence of Review over Reporting U.S. Department of Housing and Urban Development Community Development Block Grants/Entitlement Grants (ALN 14.218)(CDBG) Federal Award Year 2020 Criteria: Per 2 CFR 200.303, ?the non-Federal entity must: a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Condition: While testing the reporting compliance requirement, we noted there was a lack of evidence that a supervisory review was conducted over the reports before they were submitted. Cause: Individuals involved in the review of reporting were unaware that documentation needs to be maintained to provide evidence of their review. Effect: Without evidence that reviews were conducted, we could not determine whether the control over reporting was properly performed prior to submission of the reports. Effective internal control was not established and maintained. Context: We noted there was a lack of evidence of review for the two quarterly Federal Financial Reports selected for testing and the three Federal Funding Accountability and Transparency Act (FFATA) reports received from subrecipients that were selected for testing. Questioned Costs: None Repeat Finding?: No Recommendation: We recommend that a process be established to retain evidence of the review of all reports required to be submitted under the grant program. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation. While supervisory reviews were conducted over the reports before they were submitted, physical documentation of those steps was not retained. Subsequent to year end, program staff has established a process to retain evidence of the review of all reports required to be submitted.

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