Audit 11856

Finding No. 2022-004 - Monthly Reporting Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Reporting Criteria As stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), § 200.303 Internal controls, “the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.” In addition, the grant agreement establishes in its Exhibit A of the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF, its Spanish acronym) guidelines, Grant Plan, Reporting, the following: Coronavirus Relief Fund – COVID – 19: “By the 15th day of each month, the Grantee will submit a Use of Funds Grant Report for the prior month’s expenses. The financial report will provide a detailed explanation of how the Grant funds were spent.” Coronavirus State and Local Fiscal Recovery Fund - ARP Act: To ensure timely reporting, the Government of Puerto Rico requires the entity to adhere to the following reporting frequency: • All Grantees receiving Premium Pay for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Premium Pay Award detailing use of funds and evidencing that all premium payments were made. • All Grantees receiving Recruitment Incentive for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Recruitment incentive Award detailing use of funds. Thereafter, Applicant / Grantee will be required to submit a monthly report on the 15th day of each month, detailing new incentives awarded until all Recruitment Incentives are completed. • If the Essential Worker was recruited from a Third-Party Contractor or if the Essential Worker is an Independent Contractor, Grantee will include in the report the Name of the Contractor and its EIN Number, where applicable. • On a quarterly basis, the Puerto Rico Department of Treasury may provide a summary of all program disbursements to date. Condition During our audit procedures regarding the compliance requirement related to reporting, we noted that, during the fiscal year ended June 30, 2022: • The Corporation was not able to provide audit evidence for the submission of fifteen (15) monthly reports, three (3) for Coronavirus Relief Fund and twelve (12) for Coronavirus State and Local Fiscal Recovery Fund. • Five (5) monthly reports were submitted later than their dues date as follows: Fund Required date Reported date Past due days Cause Lack of internal controls properly established and monitored to assure the documenting and timely submission of compliance reports. Effect As a result of this condition, the grantor may issue warnings and/or impose penalties to the Corporation. Also, the grantor was deprived of timely taking any action that it understood to be pertinent in the program. The analysis, evaluations, and decision-making of the grantee could be affected. Questioned Cost None. Context • Of a total of twenty-eight (28) monthly reports required for ALN 21.019 and ALN 21.027, the Corporation was not able to provide evidence of submission for fifteen (15) monthly reports. • Five (5) of thirteen (13) monthly reports that were submitted were sent after their due date. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2021-003 Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. It is critically important that timely and accurate reports be produced to ensure that the goals and purposes of the grant have been achieved and accounted for properly. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022-008 – Provider Relief Fund Reporting Time Period Name of Federal Agency U.S. Department of Health and Human Services (HHS) Pass-through Entity N/A Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirements Reporting Criteria According to the guidelines governing the Provider Relief Fund (PRF), recipients who received one or more PRF and or ARP payments exceeding $10,000, in the aggregate, during a Payment Received Period are required to report in each applicable Reporting Period as outlined in a provided timetable by the Health Resources & Services Administration. The table below is the applicable to the funds received by the Corporation: Condition The Corporation did not report the entire amount of Provider Relief Funds expensed during Period 1 by the Reporting Time Period. By unintentional error, the Corporation reported those transactions that were already paid as of June 30, 2021, instead of reporting all transactions that were already incurred and supported with a purchase order by the end of the Period of Availability for Expenses. Effects As a result of this condition, the Health Resources & Services Administration may request the return of funds, issue warnings and/or impose penalties to the Corporation. Questioned Cost None. Context The Corporation reported on the schedule of expenditures of federal awards expenses amounting to $1,465,048 in connection with the Provider Relief Fund. However, the Corporation reported on the Health Resources and Service Administration portal expenses amounting to $1,092,303 by the Reporting Time Period. Funds amounting to $372,745 are still pending to be reported as of the date that the financial statement were available to be issued. Identification of a repeat finding This is not a repeat finding from the immediate previous audit. Recommendations The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Health Resources & Services Administration in order to obtain instructions for the correction of the non-compliance event. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022-004 - Monthly Reporting Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Reporting Criteria As stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), § 200.303 Internal controls, “the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.” In addition, the grant agreement establishes in its Exhibit A of the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF, its Spanish acronym) guidelines, Grant Plan, Reporting, the following: Coronavirus Relief Fund – COVID – 19: “By the 15th day of each month, the Grantee will submit a Use of Funds Grant Report for the prior month’s expenses. The financial report will provide a detailed explanation of how the Grant funds were spent.” Coronavirus State and Local Fiscal Recovery Fund - ARP Act: To ensure timely reporting, the Government of Puerto Rico requires the entity to adhere to the following reporting frequency: • All Grantees receiving Premium Pay for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Premium Pay Award detailing use of funds and evidencing that all premium payments were made. • All Grantees receiving Recruitment Incentive for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Recruitment incentive Award detailing use of funds. Thereafter, Applicant / Grantee will be required to submit a monthly report on the 15th day of each month, detailing new incentives awarded until all Recruitment Incentives are completed. • If the Essential Worker was recruited from a Third-Party Contractor or if the Essential Worker is an Independent Contractor, Grantee will include in the report the Name of the Contractor and its EIN Number, where applicable. • On a quarterly basis, the Puerto Rico Department of Treasury may provide a summary of all program disbursements to date. Condition During our audit procedures regarding the compliance requirement related to reporting, we noted that, during the fiscal year ended June 30, 2022: • The Corporation was not able to provide audit evidence for the submission of fifteen (15) monthly reports, three (3) for Coronavirus Relief Fund and twelve (12) for Coronavirus State and Local Fiscal Recovery Fund. • Five (5) monthly reports were submitted later than their dues date as follows: Fund Required date Reported date Past due days Cause Lack of internal controls properly established and monitored to assure the documenting and timely submission of compliance reports. Effect As a result of this condition, the grantor may issue warnings and/or impose penalties to the Corporation. Also, the grantor was deprived of timely taking any action that it understood to be pertinent in the program. The analysis, evaluations, and decision-making of the grantee could be affected. Questioned Cost None. Context • Of a total of twenty-eight (28) monthly reports required for ALN 21.019 and ALN 21.027, the Corporation was not able to provide evidence of submission for fifteen (15) monthly reports. • Five (5) of thirteen (13) monthly reports that were submitted were sent after their due date. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2021-003 Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. It is critically important that timely and accurate reports be produced to ensure that the goals and purposes of the grant have been achieved and accounted for properly. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–005 – Activities Allowed or Unallowed, Eligible Uses – Premium Pay Federal Program Name ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirements Activities Allowed or Unallowed, Eligible Uses Criteria According to the 31 CFR Subtitle A Part 35 Subpart 35.6 (c)(1) A recipient may use funds to provide premium pay to eligible workers of the recipient who perform essential work or to provide grants to eligible employers that have eligible workers who perform essential work, eligible workers performing essential work during the COVID-19 public health emergency. A recipient uses premium pay or grants provided to eligible workers performing essential work during the COVID-19 public health emergency if: (1) The eligible worker's total wages and remuneration, including the premium pay, is less than or equal to 150 percent of the greater of such eligible worker's residing State's or county's average annual wage for all occupations as defined by the Bureau of Labor Statistics' Occupational Employment and Wage Statistics. Condition During our examination, we noted three (3) instances, which based on the regulation previously indicated, the premium pay was paid to employees whom wages are higher than the 150 percent of the Puerto Rico median annual wage of $30,750. Cause As part of the eligibility criteria to provide Premium Pay, the Corporation did not consider the eligible worker’s wages criteria as eligibility requirement in the Premium Pay distribution to employees. The Corporation indicates they did not consider these criteria because the Puerto Rico Health Department was exempt of this requirement and as part of this agency, they believe to be exempt too. Effect As a result of this condition, the U.S. Department of Treasury may request the return of funds, issue warnings and/or impose penalties to the Corporation. Questioned Cost The known questioned cost was calculated by the amount disbursed ($2,000) to the total ineligible employees (77), including the three (3) exceptions noted, is equal to $154,000. Context Of the 1,271 premium pay payments made, we selected 40 payments for testing and noted three (3) instances of noncompliance. When we assessed the entire population the total number of cases amounted to seventy-seven (77) employees that exceed the allowed salary to receive the Premium Pay. Identification of a Repeat Finding This is not a repeat finding from the immediate previous audit. Recommendation The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Health Department of Puerto Rico in order to obtain instructions for the correction of the non-compliance event and the related questioned cost. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–007 – Activities Allowed or Unallowed, Eligible Uses – FEMA Federal Program ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Program Name of Federal Agency U.S. Department of Homeland Security Pass-through Entity Central Office of Recovery, Reconstruction and Resiliency (COR3) Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Activities Allowed or Unallowed, Eligible Uses Criteria As per 2 CFR section 200.403(g), except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: • Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. • Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. • Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. • Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. • Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. • Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). • Be adequately documented. See also §§ 200.300 through 200.309 of this part. • Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition During the closeout procedures, the Central Office of Recovery, Reconstruction and Resiliency (COR3) office performed a 100% validation on Rental Equipment, supporting documents including contract summary record, invoices, and proofs of payment. As a result of the validation, the total validated amount is $979,259 from an original amount of $1,260,775 submitted by the Corporation for reimbursement. Cause The Corporation claimed ineligible days in rent of equipment, certain invoices were claimed at a greater monthly rate, various expenses were claimed using retroactive memorandum of necessity as well as other transactions were found to not be eligible due to non-compliance with Puerto Rican Contract law, failing to comply with the proper documentation as required by the regulation. Effect The Corporation has to return a total amount of $281,516 due to the unallowed activities that were claimed to the fund. Questioned Cost The known questioned cost was calculated by the amount deemed to be unallowable activity of $281,516. Context • An amount of $26,127 was deducted from invoice #16307820 due to the dates 9/3/18 to 9/15/18 that falls in the 100% cost share." This amount was claimed under a different PW. • For chillers, invoice 16307877 was partially covered (15 days eligible), invoice 16308069 was partially covered (12 days eligible), and invoice 16308131 was partially covered (14 days eligible) due to the service order execution date. • For generators, invoices 16307884, 16307953, 16308033, 16308092, 16308146, 16308207, 16308270, 16308318, 16308357, 16308402, 16308449 and 16308476 were partially covered due to the maximum contract amount. • For generators, invoices 16307820, 16308622, 16308665, and 16308706 were found to not be eligible for reimbursement due to both retroactive execution as well as non-compliance with Puerto Rican Contract law. Identification of a repeat finding This is not a repeat finding from the immediate previous audit. Recommendation The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Central Office of Recovery, Reconstruction and Resiliency in order to obtain instructions for the correction of the non-compliance event and the related questioned cost. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022-004 - Monthly Reporting Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Reporting Criteria As stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), § 200.303 Internal controls, “the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.” In addition, the grant agreement establishes in its Exhibit A of the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF, its Spanish acronym) guidelines, Grant Plan, Reporting, the following: Coronavirus Relief Fund – COVID – 19: “By the 15th day of each month, the Grantee will submit a Use of Funds Grant Report for the prior month’s expenses. The financial report will provide a detailed explanation of how the Grant funds were spent.” Coronavirus State and Local Fiscal Recovery Fund - ARP Act: To ensure timely reporting, the Government of Puerto Rico requires the entity to adhere to the following reporting frequency: • All Grantees receiving Premium Pay for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Premium Pay Award detailing use of funds and evidencing that all premium payments were made. • All Grantees receiving Recruitment Incentive for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Recruitment incentive Award detailing use of funds. Thereafter, Applicant / Grantee will be required to submit a monthly report on the 15th day of each month, detailing new incentives awarded until all Recruitment Incentives are completed. • If the Essential Worker was recruited from a Third-Party Contractor or if the Essential Worker is an Independent Contractor, Grantee will include in the report the Name of the Contractor and its EIN Number, where applicable. • On a quarterly basis, the Puerto Rico Department of Treasury may provide a summary of all program disbursements to date. Condition During our audit procedures regarding the compliance requirement related to reporting, we noted that, during the fiscal year ended June 30, 2022: • The Corporation was not able to provide audit evidence for the submission of fifteen (15) monthly reports, three (3) for Coronavirus Relief Fund and twelve (12) for Coronavirus State and Local Fiscal Recovery Fund. • Five (5) monthly reports were submitted later than their dues date as follows: Fund Required date Reported date Past due days Cause Lack of internal controls properly established and monitored to assure the documenting and timely submission of compliance reports. Effect As a result of this condition, the grantor may issue warnings and/or impose penalties to the Corporation. Also, the grantor was deprived of timely taking any action that it understood to be pertinent in the program. The analysis, evaluations, and decision-making of the grantee could be affected. Questioned Cost None. Context • Of a total of twenty-eight (28) monthly reports required for ALN 21.019 and ALN 21.027, the Corporation was not able to provide evidence of submission for fifteen (15) monthly reports. • Five (5) of thirteen (13) monthly reports that were submitted were sent after their due date. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2021-003 Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. It is critically important that timely and accurate reports be produced to ensure that the goals and purposes of the grant have been achieved and accounted for properly. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022-008 – Provider Relief Fund Reporting Time Period Name of Federal Agency U.S. Department of Health and Human Services (HHS) Pass-through Entity N/A Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirements Reporting Criteria According to the guidelines governing the Provider Relief Fund (PRF), recipients who received one or more PRF and or ARP payments exceeding $10,000, in the aggregate, during a Payment Received Period are required to report in each applicable Reporting Period as outlined in a provided timetable by the Health Resources & Services Administration. The table below is the applicable to the funds received by the Corporation: Condition The Corporation did not report the entire amount of Provider Relief Funds expensed during Period 1 by the Reporting Time Period. By unintentional error, the Corporation reported those transactions that were already paid as of June 30, 2021, instead of reporting all transactions that were already incurred and supported with a purchase order by the end of the Period of Availability for Expenses. Effects As a result of this condition, the Health Resources & Services Administration may request the return of funds, issue warnings and/or impose penalties to the Corporation. Questioned Cost None. Context The Corporation reported on the schedule of expenditures of federal awards expenses amounting to $1,465,048 in connection with the Provider Relief Fund. However, the Corporation reported on the Health Resources and Service Administration portal expenses amounting to $1,092,303 by the Reporting Time Period. Funds amounting to $372,745 are still pending to be reported as of the date that the financial statement were available to be issued. Identification of a repeat finding This is not a repeat finding from the immediate previous audit. Recommendations The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Health Resources & Services Administration in order to obtain instructions for the correction of the non-compliance event. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022-004 - Monthly Reporting Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Reporting Criteria As stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), § 200.303 Internal controls, “the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.” In addition, the grant agreement establishes in its Exhibit A of the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF, its Spanish acronym) guidelines, Grant Plan, Reporting, the following: Coronavirus Relief Fund – COVID – 19: “By the 15th day of each month, the Grantee will submit a Use of Funds Grant Report for the prior month’s expenses. The financial report will provide a detailed explanation of how the Grant funds were spent.” Coronavirus State and Local Fiscal Recovery Fund - ARP Act: To ensure timely reporting, the Government of Puerto Rico requires the entity to adhere to the following reporting frequency: • All Grantees receiving Premium Pay for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Premium Pay Award detailing use of funds and evidencing that all premium payments were made. • All Grantees receiving Recruitment Incentive for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Recruitment incentive Award detailing use of funds. Thereafter, Applicant / Grantee will be required to submit a monthly report on the 15th day of each month, detailing new incentives awarded until all Recruitment Incentives are completed. • If the Essential Worker was recruited from a Third-Party Contractor or if the Essential Worker is an Independent Contractor, Grantee will include in the report the Name of the Contractor and its EIN Number, where applicable. • On a quarterly basis, the Puerto Rico Department of Treasury may provide a summary of all program disbursements to date. Condition During our audit procedures regarding the compliance requirement related to reporting, we noted that, during the fiscal year ended June 30, 2022: • The Corporation was not able to provide audit evidence for the submission of fifteen (15) monthly reports, three (3) for Coronavirus Relief Fund and twelve (12) for Coronavirus State and Local Fiscal Recovery Fund. • Five (5) monthly reports were submitted later than their dues date as follows: Fund Required date Reported date Past due days Cause Lack of internal controls properly established and monitored to assure the documenting and timely submission of compliance reports. Effect As a result of this condition, the grantor may issue warnings and/or impose penalties to the Corporation. Also, the grantor was deprived of timely taking any action that it understood to be pertinent in the program. The analysis, evaluations, and decision-making of the grantee could be affected. Questioned Cost None. Context • Of a total of twenty-eight (28) monthly reports required for ALN 21.019 and ALN 21.027, the Corporation was not able to provide evidence of submission for fifteen (15) monthly reports. • Five (5) of thirteen (13) monthly reports that were submitted were sent after their due date. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2021-003 Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. It is critically important that timely and accurate reports be produced to ensure that the goals and purposes of the grant have been achieved and accounted for properly. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–005 – Activities Allowed or Unallowed, Eligible Uses – Premium Pay Federal Program Name ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirements Activities Allowed or Unallowed, Eligible Uses Criteria According to the 31 CFR Subtitle A Part 35 Subpart 35.6 (c)(1) A recipient may use funds to provide premium pay to eligible workers of the recipient who perform essential work or to provide grants to eligible employers that have eligible workers who perform essential work, eligible workers performing essential work during the COVID-19 public health emergency. A recipient uses premium pay or grants provided to eligible workers performing essential work during the COVID-19 public health emergency if: (1) The eligible worker's total wages and remuneration, including the premium pay, is less than or equal to 150 percent of the greater of such eligible worker's residing State's or county's average annual wage for all occupations as defined by the Bureau of Labor Statistics' Occupational Employment and Wage Statistics. Condition During our examination, we noted three (3) instances, which based on the regulation previously indicated, the premium pay was paid to employees whom wages are higher than the 150 percent of the Puerto Rico median annual wage of $30,750. Cause As part of the eligibility criteria to provide Premium Pay, the Corporation did not consider the eligible worker’s wages criteria as eligibility requirement in the Premium Pay distribution to employees. The Corporation indicates they did not consider these criteria because the Puerto Rico Health Department was exempt of this requirement and as part of this agency, they believe to be exempt too. Effect As a result of this condition, the U.S. Department of Treasury may request the return of funds, issue warnings and/or impose penalties to the Corporation. Questioned Cost The known questioned cost was calculated by the amount disbursed ($2,000) to the total ineligible employees (77), including the three (3) exceptions noted, is equal to $154,000. Context Of the 1,271 premium pay payments made, we selected 40 payments for testing and noted three (3) instances of noncompliance. When we assessed the entire population the total number of cases amounted to seventy-seven (77) employees that exceed the allowed salary to receive the Premium Pay. Identification of a Repeat Finding This is not a repeat finding from the immediate previous audit. Recommendation The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Health Department of Puerto Rico in order to obtain instructions for the correction of the non-compliance event and the related questioned cost. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–006 – Audit Requirements for Auditees – Report Submission Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 93.498 Provider Relief Fund – CARES Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S. Department of Health and Human Services U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2022 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2022. Identification of a repeat finding This is not a repeat finding from immediate previous audit. Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.

Finding No. 2022–007 – Activities Allowed or Unallowed, Eligible Uses – FEMA Federal Program ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Program Name of Federal Agency U.S. Department of Homeland Security Pass-through Entity Central Office of Recovery, Reconstruction and Resiliency (COR3) Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Activities Allowed or Unallowed, Eligible Uses Criteria As per 2 CFR section 200.403(g), except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: • Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. • Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. • Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. • Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. • Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. • Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). • Be adequately documented. See also §§ 200.300 through 200.309 of this part. • Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Condition During the closeout procedures, the Central Office of Recovery, Reconstruction and Resiliency (COR3) office performed a 100% validation on Rental Equipment, supporting documents including contract summary record, invoices, and proofs of payment. As a result of the validation, the total validated amount is $979,259 from an original amount of $1,260,775 submitted by the Corporation for reimbursement. Cause The Corporation claimed ineligible days in rent of equipment, certain invoices were claimed at a greater monthly rate, various expenses were claimed using retroactive memorandum of necessity as well as other transactions were found to not be eligible due to non-compliance with Puerto Rican Contract law, failing to comply with the proper documentation as required by the regulation. Effect The Corporation has to return a total amount of $281,516 due to the unallowed activities that were claimed to the fund. Questioned Cost The known questioned cost was calculated by the amount deemed to be unallowable activity of $281,516. Context • An amount of $26,127 was deducted from invoice #16307820 due to the dates 9/3/18 to 9/15/18 that falls in the 100% cost share." This amount was claimed under a different PW. • For chillers, invoice 16307877 was partially covered (15 days eligible), invoice 16308069 was partially covered (12 days eligible), and invoice 16308131 was partially covered (14 days eligible) due to the service order execution date. • For generators, invoices 16307884, 16307953, 16308033, 16308092, 16308146, 16308207, 16308270, 16308318, 16308357, 16308402, 16308449 and 16308476 were partially covered due to the maximum contract amount. • For generators, invoices 16307820, 16308622, 16308665, and 16308706 were found to not be eligible for reimbursement due to both retroactive execution as well as non-compliance with Puerto Rican Contract law. Identification of a repeat finding This is not a repeat finding from the immediate previous audit. Recommendation The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Central Office of Recovery, Reconstruction and Resiliency in order to obtain instructions for the correction of the non-compliance event and the related questioned cost. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.