Nobles CountyLocal Government

Review of Casefiles Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405MN5ADM, 2405MN5MAP; 2024 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Eligibility Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR 200.403 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 testing of eligibility requirements, it was noted there are no reviews being completed over MAXIS nor METS casefiles. Questioned Costs: None Context: No supervisor or peer review is being completed over METS and MAXIS casefiles. Cause: Due to staff turnover, the County did not have time to complete the reviews. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2024-005. Recommendation: We recommend that a supervisor or team lead perform regular internal reviews on MAXIS and METS casefiles to determine that proper policies and procedures are being followed in determining eligibility. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.

Reporting Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2405MN5ADM, 2405MN5MAP; 2024 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Reporting Award Period: Year Ended December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: 2 CFR 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. Additionally, 2 CFR 200.403 lists general criteria for allowability of costs under federal awards, and the 2556 Social Services quarterly report has further guidance on what is allowed to be reported. Condition: Reports for the 2556 Social Services Quarterly Expense Report were reviewed, but were not reported correctly and sent to the state with incorrect direct charges reported. Auditor estimates that the reimbursed amount based on these ineligible costs reported on the 2556 is less than $25,000. Questioned Costs: Amount less than $25,000. Context: The quarterly report was reviewed, however it was determined that incorrect expenses were reported and was not caught during the review process. Cause: Lack of review of the requirements of the 2556 instructions by the County. Effect: Ineligible costs could be reported. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023-009. Recommendation: We recommend that the County implement review procedures to ensure that the reports are submitted timely and accurately, and record of review is kept on file. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.

Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP; 2023 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Eligibility Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR 200.403 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 testing of eligibility requirements, it was noted there are no reviews being completed over MAXIS nor METS casefiles. Questioned Costs: None Context: No supervisor or peer review is being completed over METS and MAXIS casefiles. Cause: Due to staff turnover, the County did not have time to complete the reviews. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: No. Recommendation: We recommend that a supervisor or team lead perform regular internal reviews on MAXIS and METS casefiles to determine that proper policies and procedures are being followed in determining eligibility. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.

Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP; 2023 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Allowable Costs/Allowable Activities Award Period: Year Ended 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 Income Maintenance report should be included on the random moment study quarterly listings provided to MN DHS. Condition: For one of two Income Maintenance Random Moment Study listings tested, CLA noted one employee who was improperly excluded from the time study listing. Questioned Costs: Unable to determine. Context: One of two Income Maintenance Random Moment Study listings tested had one employee who was improperly excluded from the time study listing. Cause: Management oversight. Effect: Ineligible payroll costs could be reported on the 2550 report. Repeat Finding: No. Recommendation: We recommend procedures and controls be implemented to ensure each quarterly listing is properly reviewed and accurate employees are on the listings. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.

Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP; 2023 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Allowable Costs/Allowable Activities Award Period: Year Ended 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 2556 Social Services Fund quarterly report has further guidance on what is allowed to be reported. Condition: During testing of general disbursements, it was noted that for one of the 40 general disbursements tested, costs were not allowable. Questioned Costs: Amount less than $25,000. Context: One of 40 general disbursements tested had costs that are not allowable under program guidance. Cause: Management oversight. Effect: Ineligible costs are reported on the 2556 report. 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: There is no disagreement with the audit finding. There is a corrective action plan in place.

Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP; 2023 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Special Provisions Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: According to the contract between the Minnesota Department of Human Services and Nobles County, it is the responsibility of the Fiscal Reporting and Payment Agent (the County) to review all submitted cost reports for accuracy, as well as timeliness, and retain a paper copy of all members’ submitted reports. Six years of records should be kept on file to ensure compliance with the LCTS contract. It is also the responsibility of the County, as the fiscal liaison between the state and collaborative members, to distribute the LCTS funding to the various collaborative members no later than 30 days after receiving the quarterly payments from the state. Condition: The County does not retain printed copies of the participating collaborative members’ reports. There is no physical evidence kept on file that the County is reviewing these reports for accuracy and timeliness. For the second half of 2023, the County was not remitting the LCTS funding to the Collaborative within the required timeline of the LCTS contract. Questioned Costs: None. Context: For two of two quarters tested, the County did not have printed 3220 LCTS reports on file for collaborative members and did not review the reports. For one of two quarters tested, the funds were not remitted to the collaborative members within the 30 day required timeframe. Cause: Turnover at the collaborative and lack of review of the requirements of the contract by the County. Effect: The County is not in compliance with the LCTS contract with the state. Collaborative members could be submitting inaccurate reports or filing late, and funding is not remitted timely. Repeat Finding: No. Recommendation: We recommend that the County review the contract with MN DHS, and implement proper review and approval procedures for all LCTS reports. We recommend that paper copies are kept on file for the required timeframe. We recommend that the County implement procedures to remit the quarterly funding to the collaborative in a timely manner. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.

Federal Agency: U.S. Department of Human Services Federal Program Name: Medical Assistance (Medicaid Cluster) Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5ADM, 2305MN5MAP; 2023 Pass-Through Agency: Minnesota Department of Human Services Compliance Requirement Affected: Reporting Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: 2 CFR 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. Additionally, 2 CFR 200.403 lists general criteria for allowability of costs under federal awards, and the 2556 Social Services quarterly report has further guidance on what is allowed to be reported. Condition: There is no formal review being completed on reports that are required to be submitted to MN DHS. The quarterly 3220 LCTS and annual LCTS Collaborative reports were not reviewed. The annual LCTS Spending Report was submitted after the due date. The County reported $121,563 in disbursements on the 2556 Social Services quarterly report that were funded with other state or federal grants and included no revenue offset in the required line of the report. Questioned Costs: Amount less than $25,000. Context: No formal review is being completed on two of the four quarterly 3220 LCTS reports tested and one of one annual LCTS Collaborative report tested. For one of one annual LCTS Spending report, the report was submitted after the due date and a review was not in place to ensure compliance. Within two of the two 2556 Social Services quarterly reports that were tested, it was found that disbursements funded by other sources were included on the report. Cause: Turnover and lack of review of the requirements of the 2556 instructions by the County. Effect: Ineligible costs are being reported and the reports are not being submitted timely. Repeat Finding: No. Recommendation: We recommend that the County implement review procedures to ensure that the reports are submitted timely and accurately, and record of review is kept on file. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.

2022-005 Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP2301, 2022 Compliance Requirement Affected: Reporting Award Period: Year Ended December 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition: The project and expense report due April 30 ,2023 was not submitted until May 1, 2023. Additionally, the key line item "current period obligation and current period expenditures" reported in the April 30, 2022 report included the total allocation, instead of the expenditures obligated and incurred in the current period. Criteria or Specific Requirement: Under the compliance and reporting guidance issued by the Department of the Treasury, the County is required to submit a project and expense report by April 30th annually. The reports should contain complete and accurate expenditure information at the time of submission. 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. Questioned Costs: None. Context: One out of two annual project and expense reports tested were not submitted by the reporting deadline. One out of two annual project and expense reports inaccurately reported the full total allocation expended, instead of the expenditures obligated and incurred in the current period. Cause: April 30, 2023 fell on a Sunday and the reporting requirements issued by the Treasury were new to the county. Effect: Reports could be deemed out of compliance by the granting agency. Repeat Finding: No. Recommendation: We recommend procedures and controls be implemented to ensure each report is properly reviewed against the reporting guidance and that a reminder is set for timely submission. Views of responsible officials: There is no disagreement with the audit finding. There is a corrective action plan in place.

2021-005 Special Provisions Federal Agency: U.S. Department of Health and Human Services Federal Program: Medical Assistance Program (Part of Medicaid Cluster) CFDA Number: 93.778 Pass Through Agency: Minnesota Department of Human Services Pass Through Numbers: 2105MN5ADM, 2105MN5MAP Award Periods: Year ended December 31, 2021 Type of Finding: Significant Deficiency in Internal Control Over Compliance and Compliance Criteria or Specific Requirement: The contract between the Minnesota Department of Human Services and Nobles County states that the County is required to review all reports submitted for accuracy and timeliness and retain a paper copy of all submitted reports. Condition: The quarterly 3220 reports filed by collaborative members, 2 of 2 tested were missing documentation of review by the County and paper copies of all submitted reports were not kept on file. Questioned Costs: None. Cause: The County does not have adequate controls in place to ensure review of reports, and retention of applicable supporting documentation. Effect: A reimbursement might be made for an activity that is not allowable. Repeat Finding: Yes, previously reported at 2020-007. Recommendation: We recommend management review the contract with MN DHS and implement proper review and approval of all LCTS reports as well as keep a paper copy of all submitted reports on file. View of Responsible Officials: There is no disagreement with the audit finding.

2021-006 Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program: Medical Assistance Program (Part of Medicaid Cluster) CFDA Number: 93.778 Pass Through Agency: Minnesota Department of Human Services Pass Through Numbers: 2105MN5ADM, 2105MN5MAP Award Periods: Year ended December 31, 2021 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: 2 of 2 quarterly 3220 LCTS reports tested were missing signatures indicating review and approval. One of one annual CTC report was missing evidence of review. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None. Cause: The County does not have adequate controls in place to ensure review of report. Effect: Errors in the reports would not be detected prior to submission. Repeat Finding: No. Recommendation: We recommend the County implement procedures to ensure the report is formally reviewed and approved by someone other than the person who prepared the reports. View of Responsible Officials: There is no disagreement with the audit finding.

2020-006 Eligibility Federal Agency: U.S. Department of Health and Human Services Federal Program: Medical Assistance Program (Part of Medicaid Cluster) CFDA Number: 93.778 Pass Through Agency: Minnesota Department of Human Services Pass Through Numbers: 2005MN5ADM, 2005MN5MAP Award Periods: Year ended December 31, 2020 Type of Finding: Significant Deficiency in Internal Control over Compliance 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. OMB Compliance Supplement ? Eligibility. Condition and Context: The County's internal controls do not include a process to review and ensure accuracy of METS case files. Questioned Costs: None. Cause: Changing guidance regarding program. Effect: The lack of proper eligibility documentation review increases the risk that benefits could be provided to ineligible clients. Repeat Finding: Yes, previously reported as finding 2019-008 Recommendation: We recommend County personnel establish procedures and controls over client eligibility determinations. Case files should be reviewed to ensure proper documentation exists to support the eligibility determination. View of Responsible Officials: There is no disagreement with the audit finding.

2020-007 Special Provisions Federal Agency: U.S. Department of Health and Human Services Federal Program: Medical Assistance Program (Part of Medicaid Cluster) CFDA Number: 93.778 Pass Through Agency: Minnesota Department of Human Services Pass Through Numbers: 2005MN5ADM, 2005MN5MAP Award Periods: Year ended December 31, 2020 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria: The contract between the Minnesota Department of Human Services and Nobles County states that the County is required to review all reports submitted for accuracy and timeliness and retain a paper copy of all submitted reports. Condition and Context: 2 of 2 3220 LCTS reports tested were missing signatures of approval by the fiscal reporting and payment agent and paper copies of all submitted reports were not kept on file. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None. Cause: The County does not have adequate controls in place to ensure review of reports, and retention of applicable supporting documentation. Effect: A reimbursement might be made for an activity that is not allowable. Repeat Finding: No. Recommendation: We recommend management review the contract with MN DHS and implement proper review and approval of all LCTS reports as well as keep a paper copy of all submitted reports on file. View of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program: Child Support Enforcement CFDA Number: 93.563 Pass Through Agency: Minnesota Department of Human Services Pass Through Numbers: 1904MNSCES, 1904MNCEST Award Periods: Year ended December 31, 2019 Type of Finding: Material Weakness in Internal Control over Compliance and Compliance 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. OMB Compliance Supplement ? Allowable Costs. Title 2 U.S. Code of Federal Regulations ? 200.430 governs charging of compensation ? personal services to federal programs. Payroll expenditures that are not entirely attributable to the federal program should be supported by daily activity reports or documented salary certifications. Condition and Context: Two of twenty-five program expenditures tested did not have adequate documentation to support the direct charge to the program. The two transactions without adequate support related to the payroll charges for the county?s shared fiscal and child support supervisor position. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: Likely questioned costs totaling $36,000 which represents fifty percent of the fiscal and child support supervisor wages which were charged directly to the child support enforcement program instead of income maintenance administrative overhead. Cause: Management was unaware of the requirement to maintain daily activity reports or salary certifications for salaries charged directly to child support administration. Effect: Child support enforcement program expenditures were overstated. Repeat Finding: No. Recommendation: We recommend County personnel establish procedures and controls over payroll charged to federal programs. Payroll expenditures that are not entirely attributable to the federal program should be supported by daily activity reports or documented salary certifications. If daily reports or salary certifications are not maintained, the payroll expenditures should be reported as income maintenance administrative overhead expenditures. View of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program: Medical Assistance Program (Part of Medicaid Cluster) CFDA Number: 93.778 Pass Through Agency: Minnesota Department of Human Services Pass Through Numbers: 1905MN5ADM, 1905MN5MAP Award Periods: Year ended December 31, 2019 Type of Finding: Material Weakness in Internal Control over Compliance and Compliance 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. OMB Compliance Supplement ? Eligibility. Condition and Context: The County is responsible for maintaining documentation to support client eligibility. In one of sixty case files tested, documentation was not maintained to support asset verification. We also noted the County did not have internal controls over eligibility in place for the entire calendar year. The eligibility benefits were continued without proper paperwork on file. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None. Cause: Documentation to support eligibility was requested; however, never obtained. Effect: The lack of proper eligibility documentation increases the risk that benefits could be provided to ineligible clients. Repeat Finding: Yes, previously reported as finding 2018-007. Recommendation: We recommend County personnel establish procedures and controls over client eligibility determinations. Case files should be reviewed to ensure proper documentation exists to support the eligibility determination including client asset verifications. View of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Health and Human Services Federal Program: Medical Assistance Program (Part of Medicaid Cluster) CFDA Number: 93.778 Pass Through Agency: Minnesota Department of Human Services Pass Through Numbers: 1905MN5ADM, 1905MN5MAP Award Periods: Year ended December 31, 2019 Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria: Income maintenance reports are required to be submitted at the end of every quarter for payroll and administrative costs. Condition and Context: In 1 of 2 social service reports tested, the balances reported in the report submitted to DHS by a County general ledger report. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None. Cause: The County does not have adequate controls in place to ensure quarterly expenditure reports agree to underlying accounting records. Effect: Unsupported expenditures reported within the quarterly reports could lead to incorrect cost reimbursements. Repeat Finding: Yes, previously reported as finding 2018-009. Recommendation: We recommend procedures be implemented to ensure the quarterly expenditure reports are reviewed before submission. County general ledger reports should be retained to support balances reported. View of Responsible Officials: There is no disagreement with the audit finding.

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