Sherburne CountyLocal Government

Fededral 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: 2505MN5ADM - 2025 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Number: 2505MN5ADM Award Period: 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Special provisions for the program require that funds received from the state for the Local Collaborative Time Study (LCTS) be distributed within 30 days of being received by the County. Condition: The quarter three LCTS funding payment was not remitted within the 30 day window. This only applied to one of the four annual quarters. Questioned costs: None Context: Quarter three payment was received on November 13, 2025 and remitted on December 19, 2025, outside the 30 day window. Cause: The County processes did not properly ensure the timeliness of this process. Effect: The County was not in compliance with this requirement of special provisions of the program. Repeat Finding: No. Recommendation: CLA recommend that the County implement sufficient internal control procedures to ensure LCTS payments are made within 30 days of receipt. Views of responsible officials: There is no disagreement with the audit finding.

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: 2505MN5ADM - 2025 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Number: 2505MN5ADM Award Period: 2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: All expenditure reports must be reviewed prior to submission. Condition: The County did not provide proper documentation of review for the 2025 Participant Lists for the 2550 Income Maintenance, 2556 Social Services, and 3220 Local Collaborative time random moment time studies (RMTS). Questioned costs: None Context: Formal documentation of review was not received for these reports. Cause: The County processes did not properly document review of reports. Effect: The County was not in compliance with this requirement of the program. Repeat Finding: No. Recommendation: CLA recommend that the County implement sufficient internal control procedures to ensure properly documented review of all reports. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP1643 - 2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: Due to the amount of the noted contract being $28,424, the County should have followed the small purchases method of procurement for the related procurement. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the County. Condition: Formal documentation and quotes were not retained for a professional services contract. Questioned Costs: $28,424 Context: 1 of 8 procurements tested did not retain formal documentation of price or rate quotations from an adequate number of qualified sources. Cause: The County did not have an open competition for this service due to using Local Fiscal Recovery Fund on an annually recurring expense with the same vendor that was not known to have needed additional quotes when the department charged the contract expenditures to Local Fiscal Recovery Fund. Effect: Lack of formal procedure and controls and proper documentation of those controls related to procurement could result in the County entering into a contract with an entity at an unreasonable cost, and, therefore, incurring questioned costs. Repeat Finding: Yes – 2022-001 Recommendation: We recommend that County management ensure all departments are made aware of and trained to properly follow and document the County’s procurement procedures and controls, as they apply to federally funded contracts, to ensure the County retained documentation of price or rate quotations obtained for all procurements entered into using the small purchase procurement method. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP1643 - 2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: 2 CRF §200.430 (i) states that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: It was noted that the sheriff office accountant and officer in-charge of pulling the overtime reports and tracking this used average wages for all jail employees multiplied by specific overtime time codes to calculate the amount to be charged to the grant instead of trying to calculate the actual hours for the specific over-time codes times the actual rates for each individual employee. Also, originally, they just used this average base rate, but later realized the actual wages at time and a half for overtime were paid to the employees, so the average rate should have been 150% the average rate using their chosen method. Therefore, the County undercharged and under reported their jail overtime costs that were incurred due to COVID-19, but this was partially offset by some sheriff timekeeping software reporting issues that were doubling up the time for a few employees that used multiple overtime system codes on their timesheets. The issues with the hours and rates originally used were caught by the County after the fact in February of 2023, but, as the grant was undercharged, the County took no further action. The undercharging and under reporting from the above issue was also partially offset for differences reported because the pay of one individual was used to charge the time of another individual to the program for all of Quarter 3 of 2023. As controls did not originally catch the over statement of hours used and understatement of rates and there being a risk that the grant could have been overcharges. But there were no questioned costs, as the County actually could have charged more to the grant for these payroll costs. Questioned Costs: None Context: 3 of the 40 payroll disbursements selected for testing has the noted exceptions. Cause: The hours used were overstated due to a software issue. The pay rate used was too low due this being for overtime charged at 150% of the staff's base hourly rate, but the County accidentally just used the base hourly rate. The pay of one individual was used to charge the time of another individual to the program for all of Quarter 3, at a rate of 50%. Effect: Lack of proper procedures and controls related to payroll charged to the grant could result in inappropriate or inaccurate payroll expenditures being charged to the grant. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that County management reviews the controls around payroll journal entries that are reclassifying payroll to federal grants to ensure the payroll that is being reclassified is supported and accurate and that such review continues to be formally documented. Views of Responsible Officials: There is no disagreement with the audit finding.

2022-001 ? PROCUREMENT Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP1643 - 2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or Specific Requirement: Due to the amount of the noted contract being $25,000, the County should have followed the small purchases method of procurement for the related procurement. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the County. Condition: Formal documentation and quotes were not retained for a professional services contract. While the County did not obtain multiple quotes, the County did contact other local government entities that utilize the service. The costs were based on the population of the municipality and each of the entities stated the value received from the program was well worth the costs. It was corroborated with employees of the County that two other local government entities that obtained services from the noted contractor were contacted to ensure the reasonableness of the cost of the contract, but no formal documentation of those conversations was retained. Questioned Costs: $25,000 Context: 1 of 8 procurements tested did not retain formal documentation of price or rate quotations from an adequate number of qualified sources. Cause: As the conversations to ensure the reasonableness of the contract pricing were either over the phone or in person, no formal documentation of those procedures were retained. Effect: Lack of formal procedure and controls and proper documentation of those controls related to procurement could result in the County entering into a contract with an entity at an unreasonable cost, and, therefore, incurring questioned costs. Repeat Finding: No Recommendation: We recommend that County management ensure all departments are made aware of and trained to properly follow and document the County?s procurement procedures and controls, as they apply to federally funded contracts, to ensure the County retained documentation of price or rate quotations obtained for all procurements entered into using the small purchase procurement method. Views of Responsible Officials: There is no disagreement with the audit finding.

2022-002 ? SUSPENSION AND DEBARMENT Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP1643 - 2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: ? Material Weakness in Internal Control over Compliance ? Other Matters Criteria or Specific Requirement: Prior to entering in subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR ? 19.300. Condition: Although the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) was checked before the County Board approved the expenditures being charged to the grant, the expenditures had already been incurred. Therefore, the verification process was after the related contracts were already entered into for 2 of the 5 vendors that had been selected for testing. Questioned Costs: $209,192 Context: The verification process was completed after the contract was already entered into for 2 of the 5 vendors that had been selected for testing. Cause: When the purchase was made it was not known it would be federally funded. The County's process included summarizing proposed projects or expenditures for Board approval to be charged to the grant, prior to the actual reporting of the expenditures. As part of that process, the assistant county administrator was checking SAM.gov for the noted vendors at that time, but the expenditures can sometimes already be incurred at that point. The County noted that if a vendor happened to be suspended or debarred, the County then would not report the expenditures against the grant award, and the County would have to come up with a different funding source. Effect: The County should be verifying vendors before entering into the covered transaction, as there could be a risk that an expenditure is coded to the grant for a vendor that is suspended and debarred and the check to SAM.gov is then subsequently missed before reporting the expenditures against the grant proceeds. Lack proper, formal procedures and controls related to suspension and debarment could result in the County entering into a contract with an entity that is suspended or debarred or otherwise excluded from participating in the transaction, and, therefore, incurring questioned costs. Repeat Finding: Yes ? See prior year 2021-002 Recommendation: We recommend that County management ensure all departments are made aware of and trained to properly follow and document the County?s suspension and debarment procedures and controls to ensure the County verifies that contractors involved in an applicable covered transaction funded by Federal grant awards is not suspended or debarred or otherwise excluded from participating in the transaction before entering into the covered transaction. This verification may be accomplished by checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Views of Responsible Officials: There is no disagreement with the audit finding.

2022-003 ? CONTROLS OVER ACTVITIES ALLOWED OR UNALLOWED Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP1643 - 2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: ? Material Weakness in Internal Control over Compliance Criteria or Specific Requirement: 2 CRF ?200.430 (i) states that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Condition: It was noted that the sheriff office accountant and officer in-charge of pulling the overtime reports and tracking this used average wages for all jail employees multiplied by specific overtime time codes to calculate the amount to be charged to the grant instead of trying to calculate the actual hours for the specific over-time codes times the actual rates for each individual employee. Also, originally, they just used this average base rate, but later realized the actual wages at time and a half for overtime were paid to the employees, so the average rate should have been 150% the average rate using their chosen method. Condition (continued): Therefore, the County undercharged and under reported their jail overtime costs that were incurred due to COVID-19, but this was partially offset by some sheriff timekeeping software reporting issues that were doubling up the time for a few employees that used multiple overtime system codes on their timesheets. The issues with the hours and rates originally used were caught by the County after the fact in February of 2023, but, as the grant was undercharged, the County took no further action. As controls did not originally catch the over statement of hours used and understatement of rates, there is then a risk that the grant could have been overcharged, but there were no questioned costs, as the County could have charged more to the grant for these payroll costs. Questioned Costs: None Context: 4 of the 26 payroll disbursements selected for testing has the noted exception. Cause: The hours used were overstated due to a software issue. The pay rate used was too low due this being for overtime charged at 150% of the staff's base hourly rate, but the County accidentally just used the base hourly rate. Effect: Lack of proper procedures and controls related to payroll charged to the grant could result in inappropriate or inaccurate payroll expenditures being charged to the grant. Repeat Finding: No Recommendation: We recommend that County management reviews the controls around payroll journal entries that are reclassifying payroll to federal grants to ensure the payroll that is being reclassified is supported and accurate and that such review continues to be formally documented. Views of Responsible Officials: There is no disagreement with the audit finding.

2022-004 ? CONTROLS OVER SPECIAL PROVISIONS Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program Assistance Listing Number: 10.561 Federal Award Identification Number and Year: 222MN127Q7503 & 222MN101S2514 ? 2022 Award Period: October 1, 2021 through September 30, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: The County should have in place sufficient controls to ensure compliance with federal statutes and regulations for casefiles and eligibility. Condition: It was noted that there was one instance in the casefiles selected for testing where the determining worker also performed the casefile review. Questioned Costs: None Context: 1 of the 40 casefiles selected for testing was reviewed by the same individual who made the original determination. Cause: The sensitive nature of the case caused the preparation to be elevated to the regular reviewer of casefiles, and that reviewer?s supervisor did not review their work. Effect: Lack of proper procedures and controls related to casefiles charged to the program could result in inappropriate or inaccurate cases being charged to the grant. Repeat Finding: No Recommendation: We recommend that the County ensure for casefile review that the cases are reviewed by a separate person that the determining worker. In cases of heightened sensitivity when the lead makes the determination, the case should be reviewed by their supervisor. Views of Responsible Officials: There is no disagreement with the audit finding.

2021-002 ? SUSPENSION AND DEBARMENT Federal agency: U.S. Department of Treasury Federal program title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: ? Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: Prior to entering in subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR ? 19.300. Condition: 1 of the 5 procurements tested did not include documentation of the County?s checking of the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collection of a certification from the entity, or a clause or condition in the related contract. Questioned Costs: None Context: 1 of 5 procurements tested did not retain documentation of the County?s verification procedures related to suspension and debarment. Cause: When the purchase was made it was not known it would be federally funded, so the related County department did not retain the needed suspension and debarment documentation. Effect: Lack of formal procedure and controls and proper documentation of those controls related to suspension and debarment could result in the County entering into a contract with an entity that is suspended or debarred or otherwise excluded from participating in the transaction, and, therefore, incurring questioned costs. Repeat Finding: No Recommendation: We recommend that County management ensure all departments are made aware of and trained to properly follow and document the County?s suspension and debarment procedures and controls to ensure the County verifies that contractors involved in an applicable covered transaction funded by Federal grant awards is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Views of Responsible Officials: There is no disagreement with the audit finding.

2019-002 Overstatement of Costs in CAP Plan U.S. Department of Health and Human Services Medical Assistance CFDA Number: 93.778 Passed Through Minnesota Department of Human Services Pass Through Number: 1505MN5ADM Award Period: 2019 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Entities receiving federal awards are required to establish and maintain internal controls designed to ensure compliance with federal laws, regulations, and program compliance. When entities complete their cost allocation plan with a third parties, there should be processes and procedures in place to ensure it has been properly prepare. Condition/Context: The County?s cost allocation plan, prepared by a third party included an additional $153,851 expenditures across departments and therefore the County?s cost allocation plan was overstated when compared to the County?s 2017 audited financial statements. The 2017 cost allocation plan was used for 2019?s reporting. Questioned Costs: None. Effect: The County?s cost allocation plan was overstated. Cause: The third-party service provider excluded receipts of rebates and refunds that should have been netted against the expenditures in the CAP. This was not caught by the service provider or the county during review. Recommendation: We recommend County Management assess the processes and procedures surrounding the cost allocation plan completion and review to ensure they are accurate and reconcile to the County?s audited financial statements. Views of responsible officials: Management agrees with the finding.

GSA_MIGRATION