FAC Explorer

Audit 14757

FY End
2022-06-30
Total Expended
$99.06M
Findings
18
Programs
12
Organization: Puerto Rico Department of Economic Development and Commerce (PR)
Year: 2022 Accepted: 2024-01-31
Auditor: Galindez LLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
10939 2022-004 Significant Deficiency Yes L
10940 2022-005 Significant Deficiency Yes L
10941 2022-006 Significant Deficiency - A
10942 2022-004 Significant Deficiency Yes L
10943 2022-005 Significant Deficiency Yes L
10944 2022-006 Significant Deficiency - A
10945 2022-004 Significant Deficiency Yes L
10946 2022-005 Significant Deficiency Yes L
10947 2022-006 Significant Deficiency - A
587381 2022-004 Significant Deficiency Yes L
587382 2022-005 Significant Deficiency Yes L
587383 2022-006 Significant Deficiency - A
587384 2022-004 Significant Deficiency Yes L
587385 2022-005 Significant Deficiency Yes L
587386 2022-006 Significant Deficiency - A
587387 2022-004 Significant Deficiency Yes L
587388 2022-005 Significant Deficiency Yes L
587389 2022-006 Significant Deficiency - A

Programs

ALN Program Spent Major Findings
17.278 Wia Dislocated Worker Formula Grants $49.61M Yes 3
17.258 Wia Adult Program $24.26M Yes 3
17.259 Wia Youth Activities $19.77M Yes 3
81.042 Weatherization Assistance for Low-Income Persons $1.70M - 0
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.67M - 0
59.061 State Trade and Export Promotion Pilot Grant Program $483,779 - 0
11.307 Economic Adjustment Assistance $411,501 - 0
17.285 Apprenticeship USA Grants $405,856 - 0
81.041 State Energy Program $311,822 - 0
12.002 Procurement Technical Assistance for Business Firms $282,910 - 0
17.245 Trade Adjustment Assistance $155,649 - 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $4,326 - 0

Contacts

Name Title Type
HHFQLX1DPWM7 Neysa Lopez Auditee
7877584747 Rafael Nieves Auditor
No contacts on file

Notes to SEFA

Title: Basis of presentation Accounting Policies: The Schedule is prepared from the Department’s accounting records. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be available or may be limited as to reimbursement. b. The financial transactions are recorded by the Department in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. c. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable, or when paid, whichever occurs first. De Minimis Rate Used: N Rate Explanation: In 2018, the Department signed an indirect cost rate agreement with the U.S. Department of Labor (DOL) on which the state agency would use an indirect cost of 20.37% for Workforce Innovation Opportunity Act Programs. As for the rest of the grants on which the DOL served as Grantor the indirect cost rate would be of 21.44%. This agreement was signed on March 9, 2021, and would be valid from July 1, 2018, through June 30, 2023. The accompanying supplementary Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant activity of the Puerto Rico Department of Economic Development and Commerce (“the Department”) and is presented on the accrual basis of accounting. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in the Schedule may differ from amounts presented in or used in the preparation of the Department’s financial statements. Because the Schedule presents only a selected portion of the activities of the Department, it is not intended to, and does not present the net position, changes in net position, and cash flows of the Department.
Title: Summary of significant accounting policies Accounting Policies: The Schedule is prepared from the Department’s accounting records. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be available or may be limited as to reimbursement. b. The financial transactions are recorded by the Department in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. c. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable, or when paid, whichever occurs first. De Minimis Rate Used: N Rate Explanation: In 2018, the Department signed an indirect cost rate agreement with the U.S. Department of Labor (DOL) on which the state agency would use an indirect cost of 20.37% for Workforce Innovation Opportunity Act Programs. As for the rest of the grants on which the DOL served as Grantor the indirect cost rate would be of 21.44%. This agreement was signed on March 9, 2021, and would be valid from July 1, 2018, through June 30, 2023. The Schedule is prepared from the Department’s accounting records. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be available or may be limited as to reimbursement. b. The financial transactions are recorded by the Department in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. c. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable, or when paid, whichever occurs first.
Title: Assistance Listing Numbers (ALN) Accounting Policies: The Schedule is prepared from the Department’s accounting records. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be available or may be limited as to reimbursement. b. The financial transactions are recorded by the Department in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. c. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable, or when paid, whichever occurs first. De Minimis Rate Used: N Rate Explanation: In 2018, the Department signed an indirect cost rate agreement with the U.S. Department of Labor (DOL) on which the state agency would use an indirect cost of 20.37% for Workforce Innovation Opportunity Act Programs. As for the rest of the grants on which the DOL served as Grantor the indirect cost rate would be of 21.44%. This agreement was signed on March 9, 2021, and would be valid from July 1, 2018, through June 30, 2023. The Assistance Listing numbers (ALN) included in the Schedule are determined based on the program name, review of grant contract information and the public descriptions of federal assistance listings published by the U.S. Government on sam.gov. ALN are presented for those programs for which such numbers were available.

Finding Details

Finding 2022-004
Finding No. 2022-004 - Federal Funding Accountability and Transparency Act - Late Submission Federal Program Workforce Innovation Opportunity Act Cluster: ALN 17.258, 17.259, and 17.278 Name of Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency Criteria The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub_x0002_grants, FFATA 2(a),(2),(i),(ii). 2 CFR Chapter 1, Part 170, Reporting Sub-Award and Executive Compensation Information Prime Awardees awarded a federal grant are required to file a FFATA sub-award report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. Condition None of the required Federal Funding Accountability and Transparency Act (FFATA) reports were timely filed. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 97 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Context From a sample of ten (10) FFATA reports submitted during the fiscal year ended June 30, 2022, none of the reports were timely submitted. Cause Lack of oversight and awareness over the federal reporting requirements of this Act. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 98 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Effect - (continued) (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partially suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-006. Recommendation We recommend the Department to correct the technical issues encountered with the Department's subrecipients' information and work together issue with the local areas to comply with FFATA. In addition, the implications of noncompliance should be communicated to management and those charged with governance, who are the individuals responsible for ascertaining those processes and controls are in place and operating effectively in compliance with federal requirements and enforce stricter compliance policies. Views of responsible Officials (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-005
Finding No. 2022-005 - Late Filing of Single Audit Reporting Package Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal Control over Compliance Category Significant Deficiency 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 auditor's 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 Department has not submitted the Single Audit Reporting Packages for the year ended June 30, 2022. Cause The Single Audit Reporting Packages late submission results from the operational changes generated by Act No. 171 of October 2, 2014 (Act No. 171) enactment. Act No. 171 integrated the Labor Development Program and the WIOA Cluster Programs with the Department. This merge, in conjunction with other difficulties in accounting and reporting processes, has delayed the Department’s efforts to bring up to date all federal filings. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 100 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Effect If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. b) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. c) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. d) Wholly or partly suspend or terminate the Federal award. e) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). f) Withhold further Federal awards for the project or program. g) Take other remedies that may be legally available. Questioned Costs None. Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-007. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 101 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Recommendation The data collection form and single audit reporting package must be submitted within the required due dates. Also, we strongly suggest the accounting department to take whatever steps necessary to ensure that senior management receives current and accurate financial information on a timely basis. If it is determined that the department is understaffed, steps should be taken to alleviate this problem so that work can remain current without an undue hardship on any one employee. Once up to date, the accounting staff must consistently provide management with the accurate financial reports and information necessary to effectively manage the Department’s operations. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-006
Finding No. 2022-006 - Insufficient Controls Related to the Application of Indirect Cost Rates Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Activities Allowed and Unallowed - Eligible Uses - Indirect Cost Type of finding Internal Control over Compliance/non-compliance Category Significant deficiency Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Cost Principles, for States and Local Governments and Tribes Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR PART 200, the Department have to comply with the provisions of 2 CFR Part 200, Appendix VII as follows: (1) Charges to cost pools used in calculating indirect cost rates should be for allowable costs. (2) The methods for allocating the costs should be in accordance with the cost principles and produce an equitable and consistent distribution of costs. (3) Indirect cost rates should be applied in accordance with negotiated indirect cost rate agreements (ICRA). Condition The Department recorded indirect cost transaction that did not correspond as indirect costs for the audit year ended June 30, 2022. Cause The Department did not have sufficient validation controls over accounting entries related to the recognition of indirect costs and expenses reimbursable to state funds. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 103 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-006 Insufficient Controls Related to the Application of Indirect Cost Rates – (continued) Effect Lack of proper validation controls over accounting entries caused to improperly recognize a transaction in the indirect costs general ledger account. . Questioned Costs The transaction was adjusted to the correct general ledger account for the fiscal year ended on June 30, 2022, and thus there is no questioned cost. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend the Department to strengthen its administrative and management controls and processes for recording transactions related to indirect cost. Also establish a periodic account review process to ensure that indirect costs are properly presented within the performance period. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-004
Finding No. 2022-004 - Federal Funding Accountability and Transparency Act - Late Submission Federal Program Workforce Innovation Opportunity Act Cluster: ALN 17.258, 17.259, and 17.278 Name of Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency Criteria The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub_x0002_grants, FFATA 2(a),(2),(i),(ii). 2 CFR Chapter 1, Part 170, Reporting Sub-Award and Executive Compensation Information Prime Awardees awarded a federal grant are required to file a FFATA sub-award report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. Condition None of the required Federal Funding Accountability and Transparency Act (FFATA) reports were timely filed. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 97 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Context From a sample of ten (10) FFATA reports submitted during the fiscal year ended June 30, 2022, none of the reports were timely submitted. Cause Lack of oversight and awareness over the federal reporting requirements of this Act. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 98 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Effect - (continued) (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partially suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-006. Recommendation We recommend the Department to correct the technical issues encountered with the Department's subrecipients' information and work together issue with the local areas to comply with FFATA. In addition, the implications of noncompliance should be communicated to management and those charged with governance, who are the individuals responsible for ascertaining those processes and controls are in place and operating effectively in compliance with federal requirements and enforce stricter compliance policies. Views of responsible Officials (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-005
Finding No. 2022-005 - Late Filing of Single Audit Reporting Package Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal Control over Compliance Category Significant Deficiency 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 auditor's 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 Department has not submitted the Single Audit Reporting Packages for the year ended June 30, 2022. Cause The Single Audit Reporting Packages late submission results from the operational changes generated by Act No. 171 of October 2, 2014 (Act No. 171) enactment. Act No. 171 integrated the Labor Development Program and the WIOA Cluster Programs with the Department. This merge, in conjunction with other difficulties in accounting and reporting processes, has delayed the Department’s efforts to bring up to date all federal filings. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 100 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Effect If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. b) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. c) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. d) Wholly or partly suspend or terminate the Federal award. e) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). f) Withhold further Federal awards for the project or program. g) Take other remedies that may be legally available. Questioned Costs None. Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-007. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 101 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Recommendation The data collection form and single audit reporting package must be submitted within the required due dates. Also, we strongly suggest the accounting department to take whatever steps necessary to ensure that senior management receives current and accurate financial information on a timely basis. If it is determined that the department is understaffed, steps should be taken to alleviate this problem so that work can remain current without an undue hardship on any one employee. Once up to date, the accounting staff must consistently provide management with the accurate financial reports and information necessary to effectively manage the Department’s operations. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-006
Finding No. 2022-006 - Insufficient Controls Related to the Application of Indirect Cost Rates Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Activities Allowed and Unallowed - Eligible Uses - Indirect Cost Type of finding Internal Control over Compliance/non-compliance Category Significant deficiency Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Cost Principles, for States and Local Governments and Tribes Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR PART 200, the Department have to comply with the provisions of 2 CFR Part 200, Appendix VII as follows: (1) Charges to cost pools used in calculating indirect cost rates should be for allowable costs. (2) The methods for allocating the costs should be in accordance with the cost principles and produce an equitable and consistent distribution of costs. (3) Indirect cost rates should be applied in accordance with negotiated indirect cost rate agreements (ICRA). Condition The Department recorded indirect cost transaction that did not correspond as indirect costs for the audit year ended June 30, 2022. Cause The Department did not have sufficient validation controls over accounting entries related to the recognition of indirect costs and expenses reimbursable to state funds. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 103 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-006 Insufficient Controls Related to the Application of Indirect Cost Rates – (continued) Effect Lack of proper validation controls over accounting entries caused to improperly recognize a transaction in the indirect costs general ledger account. . Questioned Costs The transaction was adjusted to the correct general ledger account for the fiscal year ended on June 30, 2022, and thus there is no questioned cost. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend the Department to strengthen its administrative and management controls and processes for recording transactions related to indirect cost. Also establish a periodic account review process to ensure that indirect costs are properly presented within the performance period. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-004
Finding No. 2022-004 - Federal Funding Accountability and Transparency Act - Late Submission Federal Program Workforce Innovation Opportunity Act Cluster: ALN 17.258, 17.259, and 17.278 Name of Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency Criteria The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub_x0002_grants, FFATA 2(a),(2),(i),(ii). 2 CFR Chapter 1, Part 170, Reporting Sub-Award and Executive Compensation Information Prime Awardees awarded a federal grant are required to file a FFATA sub-award report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. Condition None of the required Federal Funding Accountability and Transparency Act (FFATA) reports were timely filed. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 97 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Context From a sample of ten (10) FFATA reports submitted during the fiscal year ended June 30, 2022, none of the reports were timely submitted. Cause Lack of oversight and awareness over the federal reporting requirements of this Act. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 98 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Effect - (continued) (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partially suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-006. Recommendation We recommend the Department to correct the technical issues encountered with the Department's subrecipients' information and work together issue with the local areas to comply with FFATA. In addition, the implications of noncompliance should be communicated to management and those charged with governance, who are the individuals responsible for ascertaining those processes and controls are in place and operating effectively in compliance with federal requirements and enforce stricter compliance policies. Views of responsible Officials (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-005
Finding No. 2022-005 - Late Filing of Single Audit Reporting Package Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal Control over Compliance Category Significant Deficiency 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 auditor's 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 Department has not submitted the Single Audit Reporting Packages for the year ended June 30, 2022. Cause The Single Audit Reporting Packages late submission results from the operational changes generated by Act No. 171 of October 2, 2014 (Act No. 171) enactment. Act No. 171 integrated the Labor Development Program and the WIOA Cluster Programs with the Department. This merge, in conjunction with other difficulties in accounting and reporting processes, has delayed the Department’s efforts to bring up to date all federal filings. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 100 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Effect If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. b) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. c) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. d) Wholly or partly suspend or terminate the Federal award. e) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). f) Withhold further Federal awards for the project or program. g) Take other remedies that may be legally available. Questioned Costs None. Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-007. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 101 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Recommendation The data collection form and single audit reporting package must be submitted within the required due dates. Also, we strongly suggest the accounting department to take whatever steps necessary to ensure that senior management receives current and accurate financial information on a timely basis. If it is determined that the department is understaffed, steps should be taken to alleviate this problem so that work can remain current without an undue hardship on any one employee. Once up to date, the accounting staff must consistently provide management with the accurate financial reports and information necessary to effectively manage the Department’s operations. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-006
Finding No. 2022-006 - Insufficient Controls Related to the Application of Indirect Cost Rates Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Activities Allowed and Unallowed - Eligible Uses - Indirect Cost Type of finding Internal Control over Compliance/non-compliance Category Significant deficiency Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Cost Principles, for States and Local Governments and Tribes Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR PART 200, the Department have to comply with the provisions of 2 CFR Part 200, Appendix VII as follows: (1) Charges to cost pools used in calculating indirect cost rates should be for allowable costs. (2) The methods for allocating the costs should be in accordance with the cost principles and produce an equitable and consistent distribution of costs. (3) Indirect cost rates should be applied in accordance with negotiated indirect cost rate agreements (ICRA). Condition The Department recorded indirect cost transaction that did not correspond as indirect costs for the audit year ended June 30, 2022. Cause The Department did not have sufficient validation controls over accounting entries related to the recognition of indirect costs and expenses reimbursable to state funds. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 103 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-006 Insufficient Controls Related to the Application of Indirect Cost Rates – (continued) Effect Lack of proper validation controls over accounting entries caused to improperly recognize a transaction in the indirect costs general ledger account. . Questioned Costs The transaction was adjusted to the correct general ledger account for the fiscal year ended on June 30, 2022, and thus there is no questioned cost. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend the Department to strengthen its administrative and management controls and processes for recording transactions related to indirect cost. Also establish a periodic account review process to ensure that indirect costs are properly presented within the performance period. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-004
Finding No. 2022-004 - Federal Funding Accountability and Transparency Act - Late Submission Federal Program Workforce Innovation Opportunity Act Cluster: ALN 17.258, 17.259, and 17.278 Name of Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency Criteria The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub_x0002_grants, FFATA 2(a),(2),(i),(ii). 2 CFR Chapter 1, Part 170, Reporting Sub-Award and Executive Compensation Information Prime Awardees awarded a federal grant are required to file a FFATA sub-award report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. Condition None of the required Federal Funding Accountability and Transparency Act (FFATA) reports were timely filed. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 97 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Context From a sample of ten (10) FFATA reports submitted during the fiscal year ended June 30, 2022, none of the reports were timely submitted. Cause Lack of oversight and awareness over the federal reporting requirements of this Act. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 98 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Effect - (continued) (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partially suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-006. Recommendation We recommend the Department to correct the technical issues encountered with the Department's subrecipients' information and work together issue with the local areas to comply with FFATA. In addition, the implications of noncompliance should be communicated to management and those charged with governance, who are the individuals responsible for ascertaining those processes and controls are in place and operating effectively in compliance with federal requirements and enforce stricter compliance policies. Views of responsible Officials (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-005
Finding No. 2022-005 - Late Filing of Single Audit Reporting Package Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal Control over Compliance Category Significant Deficiency 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 auditor's 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 Department has not submitted the Single Audit Reporting Packages for the year ended June 30, 2022. Cause The Single Audit Reporting Packages late submission results from the operational changes generated by Act No. 171 of October 2, 2014 (Act No. 171) enactment. Act No. 171 integrated the Labor Development Program and the WIOA Cluster Programs with the Department. This merge, in conjunction with other difficulties in accounting and reporting processes, has delayed the Department’s efforts to bring up to date all federal filings. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 100 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Effect If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. b) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. c) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. d) Wholly or partly suspend or terminate the Federal award. e) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). f) Withhold further Federal awards for the project or program. g) Take other remedies that may be legally available. Questioned Costs None. Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-007. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 101 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Recommendation The data collection form and single audit reporting package must be submitted within the required due dates. Also, we strongly suggest the accounting department to take whatever steps necessary to ensure that senior management receives current and accurate financial information on a timely basis. If it is determined that the department is understaffed, steps should be taken to alleviate this problem so that work can remain current without an undue hardship on any one employee. Once up to date, the accounting staff must consistently provide management with the accurate financial reports and information necessary to effectively manage the Department’s operations. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-006
Finding No. 2022-006 - Insufficient Controls Related to the Application of Indirect Cost Rates Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Activities Allowed and Unallowed - Eligible Uses - Indirect Cost Type of finding Internal Control over Compliance/non-compliance Category Significant deficiency Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Cost Principles, for States and Local Governments and Tribes Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR PART 200, the Department have to comply with the provisions of 2 CFR Part 200, Appendix VII as follows: (1) Charges to cost pools used in calculating indirect cost rates should be for allowable costs. (2) The methods for allocating the costs should be in accordance with the cost principles and produce an equitable and consistent distribution of costs. (3) Indirect cost rates should be applied in accordance with negotiated indirect cost rate agreements (ICRA). Condition The Department recorded indirect cost transaction that did not correspond as indirect costs for the audit year ended June 30, 2022. Cause The Department did not have sufficient validation controls over accounting entries related to the recognition of indirect costs and expenses reimbursable to state funds. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 103 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-006 Insufficient Controls Related to the Application of Indirect Cost Rates – (continued) Effect Lack of proper validation controls over accounting entries caused to improperly recognize a transaction in the indirect costs general ledger account. . Questioned Costs The transaction was adjusted to the correct general ledger account for the fiscal year ended on June 30, 2022, and thus there is no questioned cost. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend the Department to strengthen its administrative and management controls and processes for recording transactions related to indirect cost. Also establish a periodic account review process to ensure that indirect costs are properly presented within the performance period. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-004
Finding No. 2022-004 - Federal Funding Accountability and Transparency Act - Late Submission Federal Program Workforce Innovation Opportunity Act Cluster: ALN 17.258, 17.259, and 17.278 Name of Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency Criteria The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub_x0002_grants, FFATA 2(a),(2),(i),(ii). 2 CFR Chapter 1, Part 170, Reporting Sub-Award and Executive Compensation Information Prime Awardees awarded a federal grant are required to file a FFATA sub-award report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. Condition None of the required Federal Funding Accountability and Transparency Act (FFATA) reports were timely filed. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 97 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Context From a sample of ten (10) FFATA reports submitted during the fiscal year ended June 30, 2022, none of the reports were timely submitted. Cause Lack of oversight and awareness over the federal reporting requirements of this Act. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 98 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Effect - (continued) (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partially suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-006. Recommendation We recommend the Department to correct the technical issues encountered with the Department's subrecipients' information and work together issue with the local areas to comply with FFATA. In addition, the implications of noncompliance should be communicated to management and those charged with governance, who are the individuals responsible for ascertaining those processes and controls are in place and operating effectively in compliance with federal requirements and enforce stricter compliance policies. Views of responsible Officials (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-005
Finding No. 2022-005 - Late Filing of Single Audit Reporting Package Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal Control over Compliance Category Significant Deficiency 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 auditor's 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 Department has not submitted the Single Audit Reporting Packages for the year ended June 30, 2022. Cause The Single Audit Reporting Packages late submission results from the operational changes generated by Act No. 171 of October 2, 2014 (Act No. 171) enactment. Act No. 171 integrated the Labor Development Program and the WIOA Cluster Programs with the Department. This merge, in conjunction with other difficulties in accounting and reporting processes, has delayed the Department’s efforts to bring up to date all federal filings. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 100 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Effect If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. b) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. c) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. d) Wholly or partly suspend or terminate the Federal award. e) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). f) Withhold further Federal awards for the project or program. g) Take other remedies that may be legally available. Questioned Costs None. Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-007. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 101 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Recommendation The data collection form and single audit reporting package must be submitted within the required due dates. Also, we strongly suggest the accounting department to take whatever steps necessary to ensure that senior management receives current and accurate financial information on a timely basis. If it is determined that the department is understaffed, steps should be taken to alleviate this problem so that work can remain current without an undue hardship on any one employee. Once up to date, the accounting staff must consistently provide management with the accurate financial reports and information necessary to effectively manage the Department’s operations. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-006
Finding No. 2022-006 - Insufficient Controls Related to the Application of Indirect Cost Rates Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Activities Allowed and Unallowed - Eligible Uses - Indirect Cost Type of finding Internal Control over Compliance/non-compliance Category Significant deficiency Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Cost Principles, for States and Local Governments and Tribes Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR PART 200, the Department have to comply with the provisions of 2 CFR Part 200, Appendix VII as follows: (1) Charges to cost pools used in calculating indirect cost rates should be for allowable costs. (2) The methods for allocating the costs should be in accordance with the cost principles and produce an equitable and consistent distribution of costs. (3) Indirect cost rates should be applied in accordance with negotiated indirect cost rate agreements (ICRA). Condition The Department recorded indirect cost transaction that did not correspond as indirect costs for the audit year ended June 30, 2022. Cause The Department did not have sufficient validation controls over accounting entries related to the recognition of indirect costs and expenses reimbursable to state funds. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 103 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-006 Insufficient Controls Related to the Application of Indirect Cost Rates – (continued) Effect Lack of proper validation controls over accounting entries caused to improperly recognize a transaction in the indirect costs general ledger account. . Questioned Costs The transaction was adjusted to the correct general ledger account for the fiscal year ended on June 30, 2022, and thus there is no questioned cost. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend the Department to strengthen its administrative and management controls and processes for recording transactions related to indirect cost. Also establish a periodic account review process to ensure that indirect costs are properly presented within the performance period. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-004
Finding No. 2022-004 - Federal Funding Accountability and Transparency Act - Late Submission Federal Program Workforce Innovation Opportunity Act Cluster: ALN 17.258, 17.259, and 17.278 Name of Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency Criteria The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub_x0002_grants, FFATA 2(a),(2),(i),(ii). 2 CFR Chapter 1, Part 170, Reporting Sub-Award and Executive Compensation Information Prime Awardees awarded a federal grant are required to file a FFATA sub-award report by the end of the month following the month in which the prime awardee awards any sub-grant equal to or greater than $30,000. Condition None of the required Federal Funding Accountability and Transparency Act (FFATA) reports were timely filed. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 97 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Context From a sample of ten (10) FFATA reports submitted during the fiscal year ended June 30, 2022, none of the reports were timely submitted. Cause Lack of oversight and awareness over the federal reporting requirements of this Act. Effect If the Federal awarding agency or passthrough entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: (a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 98 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-004 Federal Funding Accountability and Transparency Act – Late Submission (continued) Effect - (continued) (b) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. (c) Wholly or partially suspend or terminate the Federal award. (d) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). (e) Withhold further Federal awards for the project or program. (f) Take other remedies that may be legally available. Questioned Costs None Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-006. Recommendation We recommend the Department to correct the technical issues encountered with the Department's subrecipients' information and work together issue with the local areas to comply with FFATA. In addition, the implications of noncompliance should be communicated to management and those charged with governance, who are the individuals responsible for ascertaining those processes and controls are in place and operating effectively in compliance with federal requirements and enforce stricter compliance policies. Views of responsible Officials (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-005
Finding No. 2022-005 - Late Filing of Single Audit Reporting Package Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Reporting Type of Finding Internal Control over Compliance Category Significant Deficiency 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 auditor's 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 Department has not submitted the Single Audit Reporting Packages for the year ended June 30, 2022. Cause The Single Audit Reporting Packages late submission results from the operational changes generated by Act No. 171 of October 2, 2014 (Act No. 171) enactment. Act No. 171 integrated the Labor Development Program and the WIOA Cluster Programs with the Department. This merge, in conjunction with other difficulties in accounting and reporting processes, has delayed the Department’s efforts to bring up to date all federal filings. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 100 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Effect If the Federal awarding agency or pass-through entity determines that noncompliance cannot be remedied by imposing additional conditions, the Federal awarding agency or passthrough entity may take one or more of the following actions, as appropriate in the circumstances: a) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. b) Temporarily withhold cash payments pending correction of the deficiency by the non-Federal entity or more severe enforcement action by the Federal awarding agency or passthrough entity. c) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance. d) Wholly or partly suspend or terminate the Federal award. e) Initiate suspension or debarment proceedings as authorized under 2 CFR part 180 and Federal awarding agency regulations (or in the case of a passthrough entity, recommend such a proceeding be initiated by a Federal awarding agency). f) Withhold further Federal awards for the project or program. g) Take other remedies that may be legally available. Questioned Costs None. Identification as a Repeated Finding This is a repeat finding from the immediate previous audit, Finding No. 2021-007. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 101 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-005 - Late Filing of Single Audit Reporting Package – (continued) Recommendation The data collection form and single audit reporting package must be submitted within the required due dates. Also, we strongly suggest the accounting department to take whatever steps necessary to ensure that senior management receives current and accurate financial information on a timely basis. If it is determined that the department is understaffed, steps should be taken to alleviate this problem so that work can remain current without an undue hardship on any one employee. Once up to date, the accounting staff must consistently provide management with the accurate financial reports and information necessary to effectively manage the Department’s operations. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114
Finding 2022-006
Finding No. 2022-006 - Insufficient Controls Related to the Application of Indirect Cost Rates Federal Programs Workforce Innovation and Opportunity Act Cluster ALN 17.258, 17.259, and 17.278 Federal Agency U.S. Department of Labor (DOL) Compliance Requirement Activities Allowed and Unallowed - Eligible Uses - Indirect Cost Type of finding Internal Control over Compliance/non-compliance Category Significant deficiency Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Cost Principles, for States and Local Governments and Tribes Audit Requirements for Federal Awards (Uniform Guidance) 2 CFR PART 200, the Department have to comply with the provisions of 2 CFR Part 200, Appendix VII as follows: (1) Charges to cost pools used in calculating indirect cost rates should be for allowable costs. (2) The methods for allocating the costs should be in accordance with the cost principles and produce an equitable and consistent distribution of costs. (3) Indirect cost rates should be applied in accordance with negotiated indirect cost rate agreements (ICRA). Condition The Department recorded indirect cost transaction that did not correspond as indirect costs for the audit year ended June 30, 2022. Cause The Department did not have sufficient validation controls over accounting entries related to the recognition of indirect costs and expenses reimbursable to state funds. Puerto Rico Department of Economic Development and Commerce (An Agency of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs For the Year Ended June 30, 2022 - 103 - Part III - Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2022-006 Insufficient Controls Related to the Application of Indirect Cost Rates – (continued) Effect Lack of proper validation controls over accounting entries caused to improperly recognize a transaction in the indirect costs general ledger account. . Questioned Costs The transaction was adjusted to the correct general ledger account for the fiscal year ended on June 30, 2022, and thus there is no questioned cost. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend the Department to strengthen its administrative and management controls and processes for recording transactions related to indirect cost. Also establish a periodic account review process to ensure that indirect costs are properly presented within the performance period. Views of Responsible Official (Unaudited) Refer to the corrective action plan on pages 110-114