Kandiyohi CountyLocal Government

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2405MN5MAP, 2405MN5ADM, 2401MNFOST Federal Award Identification Number and Year: 2405MN5MAP, 2405MN5ADM, 2401MNFOST, 2024 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2024 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2023-005 Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2401MNFOST Federal Award Identification Number and Year: 2401MNFOST, 2024 Compliance Requirement Affected: Reporting Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: No formal evidence of review of the foster care report was kept on file. Questioned Costs: None. Context: State system does not have the ability to indicate who reviewed the report, and formal evidence of review was not retained. Cause: The County does not have policies or procedures in place to ensure review was taking place. Effect: The County could be reporting inaccurate information. Repeat Finding: Yes, Finding 2023-008. Recommendation: It is recommended that the County implement procedures to review the foster care report and retain evidence of the review. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to review the foster care report and retain evidence of the review on file.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2401MNFOST Federal Award Identification Number and Year: 2401MNFOST, 2024 Compliance Requirement Affected: Activities Allowed/Allowable Costs Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: The County's internal controls do not include a process to retain documentation of review when the main reviewer is out of the office. Questioned Costs: None. Context: The State system does not have the ability to document electronic review of the disbursements when the Fiscal Supervisor is out of the office, and alternative physical evidence of review was not retained. In our testing, we noted that 1 of 12 SSIS disbursements tested did not have documentation of review. Cause: The County does not have policies or procedures in place to document review when reviewer is out of the office. Effect: Errors in the disbursements could occur. Repeat Finding: Yes, Finding 2023-009. Recommendation: It is recommended that the County implement procedures to document review of disbursements when not able to show an electronic approval in the SSIS system. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to document review of disbursements when not able to show an electronic approval in the SSIS system.

Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0727, 2024 Compliance Requirement Affected: Suspension and Debarment Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: Physical evidence that the County ensured vendor was not suspended or debarred was not retained. Questioned Costs: None. Context: For two of two transactions tested for suspension and debarment, the County did not have documentation that the verification was done. Cause: The County does not have policies or procedures in place to ensure proper evidence with compliance requirements are retained. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction. Repeat Finding: Yes, Finding 2023-0011. Recommendation: It is recommended that the County ensure properly language related to suspension and debarment is included in the contract, or other records are kept on file to support a verification was done. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Numbers: 034-070-010 Federal Award Identification Number and Year: 034-070-010, 2023 Compliance Requirement Affected: Reporting Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: In September 2023, the county requested reimbursement for project costs totaling $221,902 for expenditures incurred during 2020. Questioned Costs: None. Context: During our testing of reports submitted in 2023, it was noted the County has not submitted reimbursement requests timely. Cause: The County does not have policies or procedures in place to ensure reimbursement requests are submitted timely after costs are incurred. Effect: By submitting untimely reimbursement requests, the County is not receiving funds it is owed in a timely manner, which has the potential to cause cash flow shortages. It also increases the likelihood that federal expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are not accurate, causing the potential of the SEFA to be materially misstated. Repeat Finding: Yes, Finding 2022-004. Recommendation: We recommend the County review internal controls currently in place and design and implement procedures to request reimbursements timelier and to submit requests for reimbursements on at least a quarterly basis. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to ensure timely submission of reimbursement requests.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2305MN5MAP, 2305MN5ADM, 2301MNFOST Federal Award Identification Number and Year: 2305MN5MAP, 2305MN5ADM, 2301MNFOST, 2023 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2023 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2022-005 over Medicaid Cluster only Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2305MN5MAP, 2305MN5ADM, 2301MNFOST Federal Award Identification Number and Year: 2305MN5MAP, 2305MN5ADM, 2301MNFOST, 2023 Compliance Requirement Affected: Activities Allowed/Allowable Costs Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: All staff coded to Section A on the 2550 and section 1 of the 2556 report should be included on the RMS listing provided to MN DHS. Condition: Inconsistencies noted between the time study listing and the payroll report codes related to those listings. Questioned Costs: None. Context: For 1 of 2 IMRMS quarters tested, auditor noted one employee who was improperly excluded from the time study listing. For 1 of 2 quarters of the SSTS tested, auditor noted one employee who had resigned before the cutoff but was not removed from the quarterly time study listing. Through time study testing, auditor noted many instances where employees who were included on the time study were being recorded to the wrong payroll code, and thus the wrong line of the 2550 and 2556 reports. Cause: Fiscal Supervisor who review the time study listing does not have access to make changes in payroll and changes that are requested are not always entered. Effect: Ineligible payroll costs could be reported. Repeat Finding: No. Recommendation: It is recommended that the county streamline the payroll change process between the payroll department and human services department. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will revise procedures around the review of the payroll reports for the human services department.

Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0727, 2023 Compliance Requirement Affected: Reporting Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: No formal evidence of review of the report was kept on file. Questioned Costs: None. Context: County Administrator was not formally signing off indicating review of report submissions. Cause: The County does not have policies or procedures in place to ensure review was taking place. Effect: The County could be reporting inaccurate information. Repeat Finding: No. Recommendation: It is recommended that the County sign off to indicate review of SLFRF Report. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County Administrator will start reviewing SLFRF reports before submitting.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2301MNFOST Federal Award Identification Number and Year: 2301MNFOST, 2023 Compliance Requirement Affected: Reporting Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: No formal evidence of review of the foster care report was kept on file. Questioned Costs: None. Context: State system does not have the ability to indicate who reviewed the report, and formal evidence of review was not kept on file. Cause: The County does not have policies or procedures in place to ensure review was taking place. Effect: The County could be reporting inaccurate information. Repeat Finding: No. Recommendation: It is recommended that the County implement procedures to review the foster care report and retain evidence of the review on file. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to review the foster care report and retain evidence of the review on file.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2301MNFOST Federal Award Identification Number and Year: 2301MNFOST, 2023 Compliance Requirement Affected: Activities Allowed/Allowable Costs Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: The County's internal controls do not include a process to retain documentation of review when the main reviewer is out of the office. Questioned Costs: None. Context: The State system does not have the ability to document electronic review of the disbursements when the Fiscal Supervisor is out of the office, and alternative physical evidence of review was not kept on file. In our testing, we noted that 7 of 19 SSIS disbursements tested did not documentation of review. Cause: The County does not have policies or procedures in place to document review when reviewer is out of the office. Effect: Errors in the disbursements could occur. Repeat Finding: No. Recommendation: It is recommended that the County implement procedures to document review of disbursements when not able to show an electronic approval in the SSIS system. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to document review of disbursements when not able to show an electronic approval in the SSIS system.

Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2301MNFOST Federal Award Identification Number and Year: 2301MNFOST, 2023 Compliance Requirement Affected: Activities Allowed/Allowable Costs Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: 2 CFR 200.403 lists general criteria for allowability of costs under federal awards, and the Social Services Fund Quarterly Expense Report (2256) also has further guidance on what can be reported. Condition: For 1 of 40 disbursements tested, it was noted the costs were not allowable. Questioned Costs: $620. Context: Auditor tested one warrant coded to the DHS Social Services Fund Quarterly Expense Report (2256) that fell in a category explicitly excluded from allowability according to the report instructions. Cause: Level of invoice detail and client's understanding of the instructions for what can be coded. Effect: Ineligible costs could be reported. Repeat Finding: No. Recommendation: We recommend that the County continue to be diligent in their review of what is allowable when coding to certain account codes that flow into the DHS reports. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will continue to be diligent in their review of what is allowable when coding to certain account codes that flow into the DHS reports.

Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0727, 2023 Compliance Requirement Affected: Suspension and Debarment Award Period: Year Ending December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: Physical evidence that the County ensured vendor was not suspended or debarred was not retained. Questioned Costs: None. Context: For two of five transactions tested for suspension and debarment, the County did not have documentation that the verification was done. Cause: The County does not have policies or procedures in place to ensure proper evidence with compliance requirements are retained. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction. Repeat Finding: No. Recommendation: It is recommended that the County ensure properly language related to suspension and debarment is included in the contract, or other records are kept on file to support a verification was done. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.

TIMELY REIMBURSEMENT REQUESTS (2022-004) Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction (Highway Planning and Construction Cluster) Assistance Listing Number: 20.205 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Numbers: 34-604-032, T8C309 Federal Award Identification Number and Year: 1030034, T8C309, 2022 Compliance Requirement Affected: Reporting Award Period: Year Ending December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 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. Condition: In September 2022, the county requested reimbursement for project costs totaling 933,846 for expenditures incurred during August 2021 through July of 2022. Questioned Costs: None. Context: During our testing of reports submitted in 2022, it was noted the County has not submitted reimbursement requests timely. Cause: The County does not have policies or procedures in place to ensure reimbursement requests are submitted timely after costs are incurred. Effect: By submitting untimely reimbursement requests, the County is not receiving funds it is owed in a timely manner, which has the potential to cause cash flow shortages. It also increases the likelihood that federal expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are not accurate, causing the potential of the SEFA to be materially misstated. Repeat Finding: Yes, Finding 2021-003. Recommendation: We recommend the County review internal controls currently in place and design and implement procedures to request reimbursements timelier and to submit requests for reimbursements on at least a quarterly basis. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to ensure timely submission of reimbursement requests.

CASE FILE REVIEW (2022-005) Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2205MN5MAP, 2205MN5ADM Federal Award Identification Number and Year: 2205MN5MAP, 2205MN5ADM, 2022 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of new medical assistance applications. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2022 for Medical Assistance (Medicaid Cluster), it was noted that there were no documented case file reviews performed. Cause: Since COVID-19 pandemic started there are not very many new applications, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: No. Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.

2021-003 Timely Reimbursement Requests Prior Year Finding Number: 2020-003 Repeat Finding Since: 2020 Type of Finding: Internal Control Over Compliance Severity of Deficiency: Significant Deficiency Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 1030034, 2021 Pass-Through Agency: Minnesota Department Transportation 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. Condition: In July of 2022, the County requested reimbursement for project costs totaling $63,909 for expenditures incurred during July through October of 2021. Questioned Costs: None. Context: The County?s timing of reimbursement requests varies based on the project. Effect: By submitting untimely reimbursement requests, the County is not receiving funds it is owed in a timely manner, which has the potential to cause cash flow shortages. It also increases the likelihood that federal expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are not accurate, causing the potential of the SEFA to be materially misstated. Cause: The County does not have policies or procedures in place to ensure reimbursement requests are submitted timely after costs are incurred. Recommendation: We recommend the County review internal controls currently in place and design and implement procedures to request reimbursements timelier and to submit requests for reimbursements on at least a quarterly basis. View of Responsible Official: Concur

Finding Number: 2020-003 Prior Year Finding Number: N/A Repeat Finding Since: N/A Timely Reimbursement Requests Program: U.S. Department of Transportation Highway Planning and Construction (CFDA 20.205), Award No. 1030034, 2020 Pass-Through Agency: Minnesota Department of Transportation 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. Condition: The County did not request reimbursement for project costs totaling $1,529,262 for expenditures that were incurred in November and December of 2019 until June 2020. Questioned Costs: Not applicable. Context: The County?s timing of reimbursement requests varies based on the project. Effect: By submitting untimely reimbursement requests, the County is not receiving funds that are owed to it timely, which has the potential to cause cash flow shortages. It also increases the likelihood that federal expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are not accurate, causing the potential of the SEFA to be materially misstated. Cause: The County does not have policies or procedures in place to ensure reimbursement requests are submitted timely after costs are incurred. Recommendation: We recommend the County review internal controls currently in place and design and implement procedures to request reimbursements timelier and to submit requests for reimbursements on at least a quarterly basis. View of Responsible Official: Concur

Finding Number: 2020-004 Prior Year Finding Number: N/A Repeat Finding Since: N/A Subrecipient Monitoring Program: U.S. Department of the Treasury?s COVID-19 ? Coronavirus Relief Fund (CFDA No. 21.019), Award No. SLT0016, 2020 Pass-Through Agency: Minnesota Management and Budget 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. Also, the County must comply with the requirements for pass-through entities as identified in Title 2 U.S. Code of Federal Regulations ? 200.332, such as clearly identifying the award to the subrecipient and evaluating the subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the award. Condition: The County did not document risk assessment procedures performed over its subrecipients. Award information, including the CFDA number, was not provided to subrecipients, and there were no signed subrecipient agreements in place. Questioned Costs: None. Context: The County passed funds to local governments who have been operating for many years and with whom the County is familiar with. The County also passed funds to non-profit organizations in order to provide assistance for their continuing operations. For all subrecipients, the County reviewed detailed listings of expenditures, along with supporting documentation, prior to the funds being reported to Minnesota Management and Budget. Effect: The County is not meeting all federal regulations pertaining to subrecipient monitoring. Cause: The County was not aware of the full extent of requirements for subrecipient monitoring. Recommendation: We recommend the County document its rationale of who is a subrecipient, including guidance followed at the time of determination, and to document risk assessments completed for those identified as subrecipients in order to determine further monitoring procedures that should be performed. We further recommend that signed subrecipient agreements be put in place that provides subrecipients with all information required under the Uniform Guidance. View of Responsible Official: Acknowledged

Finding Number: 2019-003 Prior Year Finding Number: 2018-001 Repeat Finding Since: 2018 Eligibility Program: U.S. Department of Health and Human Services? Medical Assistance Program (CFDA No. 93.778), Award No. 1905MN5ADM, 2019 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. Condition: The Minnesota Department of Human Services (DHS) maintains the computer system, MAXIS, which is used by the County to support the eligibility determination process. In the case files tested for compliance with Medical Assistance Program eligibility requirements, not all documentation was available, updated, or input correctly to support participant eligibility. The following exceptions were noted in the sample of 40 cases tested: ? One case file did not have documentation of citizenship verification on file. ? Assets were not verified in six case files. ? Asset information was not input or updated in MAXIS in five case files. Questioned Costs: Not applicable. The County administers the program, but benefits to participants in this program are paid by the State of Minnesota. Context: The State of Minnesota and the County split the eligibility determination process. The County Family Services Department performs the ?intake function? needed (meeting with the social services client to determine income and categorical eligibility), while the state maintains the MAXIS system, which supports the eligibility determination and actually pays the benefits to the participants. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The lack of updated information in MAXIS and documented verification of key eligibility-determining factors increases the risk that a program participant will receive benefits when they are not eligible. Cause: Program personnel entering case information into MAXIS did not ensure all required information was input or updated in MAXIS correctly or that all required information was obtained and/or retained. Recommendation: We recommend the County implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations exists and is properly input or updated in MAXIS and maintained in case files and that issues are followed up on in a timely manner. View of Responsible Official: Concur

Finding Number: 2019-004 Prior Year Finding Number: 2018-004 Repeat Finding Since: 2018 Identification of Federal Awards Programs: U.S. Department of Health and Human Services? Medical Assistance Program (CFDA No. 93.778), Award Nos. 1905MN5ADM and 1905MN5MAP, 2019 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations ? 200.510(b) states that the auditee must prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee?s financial statements which must include the total federal awards expended as determined in accordance with ? 200.502, Basis for determining federal awards expended. Condition: The County reviewed and approved audit adjustments and reclassifications totaling $139,919 for the Medical Assistance Program. Questioned Costs: Not applicable. Context: After audit adjustments and reclassifications, expenditures for the Medical Assistance Program were $2,422,211. Effect: The inability to properly identify and track federal expenditures or to detect misstatements in the SEFA increases the likelihood that federal expenditures would not be fairly reported and that noncompliance with direct and material compliance requirements may occur. Cause: The County did not properly identify federal expenditures of $139,919 related to the Medical Assistance Program. Recommendation: We recommend the County review internal controls currently in place and design and implement procedures to improve controls over identifying the program expenditures of federal awards for SEFA reporting. View of Responsible Official: Concur

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