Lake CountyLocal Government

2023-003 Special Tests and Provisions Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Agriculture Program: 10.665 Schools and Roads – Grants to States Award Number and Year: P.L. 117-58; 2023 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. Title 16 United States Code § 7142 states that a participating county can use Title III funds only after a 45-day public comment period. Condition: The County expended fiscal year 2019 Title III funds in May 2023, prior to the 45-day public comment period. Questioned Costs: None. Context: The 45-day public comment period for fiscal year 2019 Title III funds was from October 27, 2023, to December 11, 2023. Effect: Failing to follow program requirements could result in inappropriately expending funds and affect future funding. Cause: New County personnel were unaware of these requirements. Recommendation: We recommend County staff establish procedures to ensure Title III funds are not expended prior to the required public comment period. View of Responsible Official: Concur

2023-004 Eligibility Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM; 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Minnesota Department of Human Services (DHS) maintains the computer systems, METS and MAXIS, which are used by Lake County to support the eligibility determination process. In the case files reviewed for eligibility, not all documentation was available, updated, or input correctly to support participant eligibility. The following exceptions were noted in the sample of 40 MAXIS and 40 METS case files tested: • In METS, three case files did not contain documentation that social security numbers were verified. Additionally, two of those three files did not contain documentation that citizenship was verified. • In MAXIS, there was one instance where judicial determination or voluntary placement agreement for Foster Care was missing. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to participants in this program. Context: The State of Minnesota and Lake County Public Health and Human Services split the eligibility determination process. Pursuant to Minnesota statutes, Lake County Public Health and Human Services performs the “intake function” needed for this program, while the state maintains the MAXIS and METS systems, which support the eligibility determination process. Participants receive benefit payments from the state. 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 METS documenting verification of key eligibility-determining factors increases the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel entering case information into MAXIS and METS did not ensure all required information was obtained or retained. Recommendation: We recommend the County implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations is obtained, retained, and properly input or updated in MAXIS and METS. In addition, Lake County should consider providing further training to program personnel. View of Responsible Official: Concur

2023-005 Local Collaborative Time Study (LCTS) Reporting (Cost Schedules DHS-3220) Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM; 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. For County federal awards received from the Minnesota Department of Human Services (DHS), internal control should be established and maintained to provide assurance that program reports submitted to DHS are accurate and completed in accordance with DHS reporting instructions. DHS Bulletin No. 16-32-04 requires the Local Collaborative Time Study (LCTS) Fiscal Reporting and Payment Agent to review DHS-3220 quarterly reports prior to their submission. Condition: In a sample of six DHS-3220 Cost Schedules tested, none were reviewed by the County’s LCTS Fiscal Reporting and Payment Agent. Questioned Costs: None. Context: The DHS-3220 Cost Schedules are submitted quarterly by each member of a collaborative to DHS for reimbursement of LCTS money, which is reimbursed to the County, in part, with federal Medical Assistance Program funds. Lake County Public Health and Human Services acts as the LCTS Fiscal Reporting and Payment Agent for the local collaborative in Lake County. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: If reviews are not performed, there is an increased possibility that an error will occur and not be detected, resulting in the County receiving the incorrect amount of federal reimbursements. Cause: Staff from Lake County Public Health and Human Services were not aware of the review requirements for the collaborative partners’ quarterly reports. Recommendation: We recommend the County implement procedures to ensure the DHS-3220 Cost Schedules are reviewed and evidence of the review is retained. View of Responsible Official: Concur

Reporting Prior Year Finding Number: 2021-002 Repeat Finding Since: 2021 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Agriculture Program: 10.665 Schools and Roads – Grants to States Award Number and Year: P.L. 117-58; 2021 Pass-Through Agency: Minnesota Management and Budget Criteria: Per Office of Management and Budget (OMB) No. 0596-0220, not later than February 1st of the year after the year in which any Title III county funds were expended by a participating county, the participating county must submit a certification that the county funds expended in the applicable year, have been used as authorized under this title, including a description of the amounts expended and their use. The participating county certification also must include the amount of Title III funds not obligated by September 30 of the previous year. Condition: The County did not submit the required certification by February 1, 2023, for Title III funds expended in 2022. Questioned Costs: None. Context: The County submitted the required report in March 2023. Effect: The County did not meet the reporting requirements for the program which may affect future funding. Cause: Program personnel forgot to submit the yearly certification. Recommendation: We recommend County staff establish procedures to ensure the required yearly certification for Title III funds is submitted to meet reporting requirements. View of Responsible Official: Acknowledge

Suspension and Debarment Prior Year Finding Number: N/A Repeat Finding Since: N/A Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Criteria: Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. The suspension and debarment requirements apply to covered transaction amounts over $25,000. Condition: For two covered transactions tested, the verification for suspension or debarred vendors was not performed before entering into the covered transactions. Questioned Costs: None. Context: The County informed us that it had a prior working relationship with these vendors. In addition, neither of the vendors tested were listed as suspended or debarred on SAM.gov at the time of the audit. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Failure to verify vendors are not suspended or debarred may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County was not aware that it had to assign specific expenditures when classifying them as "Revenue Replacement". As a result, the County did not complete its established procedures for these expenditures as identified in its Procurement Policy because it was not aware they would be assigned as funded through the SLFRF grant at the time funds were disbursed. Recommendation: We recommend the County maintain documentation to demonstrate that vendors were not debarred, suspended, or otherwise excluded from conducting business with the County; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur Section IV – Other Findings and Recommendations

2021-002 Reporting Prior Year Finding Number: N/A Repeat Finding Since: N/A Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Agriculture Program: 10.665 Schools and Roads ? Grants to States Award Number and Year: P.L. 117-58, 2021 Pass-Through Agency: Minnesota Management and Budget Criteria: Per Office of Management and Budget (OMB) No. 0596-0220, not later than February 1 of the year after the year in which any Title III county funds were expended by a participating county, the participating county must submit a certification that the county funds expended in the applicable year have been used for the uses authorized under this title, including a description of the amounts expended and their uses. The participating county certification also must include the amount of Title III funds not obligated by September 30 of the previous year. Condition: The County did not submit the required certification by February 1, 2022, for Title III funds expended in 2021. Questioned Costs: None. Context: The County submitted the required report in August 2022. Effect: The County did not meet the reporting requirements for the program which could affect future funding. Cause: Program personnel forgot to submit the yearly certification. Recommendation: We recommend County staff establish procedures to ensure the required yearly certification for Title III funds is submitted to meet reporting requirements. View of Responsible Official: Acknowledge

Finding Number: 2020-004 Prior Year Finding Number: N/A Repeat Finding Since: N/A Reporting Program: Coronavirus Relief Fund, CFDA No. 21.019, U. S. Department of the Treasury, SLT0016, 2020 Pass-Through Agency: The State of Minnesota Office of Management and Budget (MMB) 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. Per MMB guidance, local governments accepting Coronavirus Relief Funds were required to submit monthly, interim, and final reports. The County was required to report monthly to MMB; this reporting includes the total spent to date and the total received by the County. On the final report, the County reports the status of Coronavirus Relief Funds spent that were awarded by MMB. The final report requires reporting of both summary and detailed information. The summary information is the same as that for monthly reporting on the total spent to date. Detail reporting requires the selection of the eligible Coronavirus Relief Fund category and the amount spent and the date. The County should have procedures in place to verify the accuracy of the reports and that the reports agree to the underlying support. MMB also requires reports to be submitted to the MMB within seven business days of the end of the monthly reporting period. Condition: One of three reports tested contained duplicate expenditures totaling $17,873. One of three reports tested was not submitted timely to MMB. Questioned Costs: Not applicable. Context: The County included duplicate expenditures on the final report totaling $17,873. The August 2020 report was not submitted to MMB within the seven business days after the end of the monthly reporting period. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The County over reported expenditures by $17,873 on the final report. In addition, the final report was not submitted timely to MMB. Cause: The duplicate expenditures and late report were due to human error. Recommendation: We recommend that the County implement policies and procedures to ensure that the reports are reviewed for accuracy and completeness by an individual independent of the preparer and submitted timely to MMB. View of Responsible Official: Acknowledged

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