Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Property and Equipment
Type of Finding: Equipment and Real Property Management, Financial
Statement. Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.320 Equipment:
Management requirements. Procedures for managing equipment (including
replacement equipment), when in whole or in part under a federal award, until
disposition takes place will, as a minimum, meet some of the following
requirements.
(2) A physical inventory of the property must be taken, and the result
reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to
prevent loss, damage, or theft of the property. Any loss, damage, or theft shall
be investigated.
(4) Adequate maintenance procedures must be developed to keep the property
in good condition.
(5) If the grantee or sub grantee is authorized or required to sell the property,
proper sales procedures must be established to ensure the highest possible
return.
(6) Disposition. When original or replacement equipment acquired under a
federal award is no longer needed for the original project or program or for
other activities currently or previously supported by HHS awarding agency,
except as otherwise provided in Federal statues, regulations, or HHS.
Condition
The Center did not maintain adequate internal control over property and
equipment. The Center did not provide a real and personnel property record of all
the property and equipment acquired this year with Federal funds and Insurance.
Questioned Cost
None determined.
Cause
Center doesn’t have accurate property records of Federal funds to trace the
personal and real property activities that should be reported to Federal funds.
Effect
The Center does not present fairly the financial position of the financial
statements.
Identification of repeated findings:
Repeating findings were found.
Recommendation
A control system must be developed to ensure adequate safeguards to prevent
loss, damage, or theft of the property; loss, damage, of theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in
good condition. The center must identify all properties acquired with Federal
funds and maintain adequate accounting records in accordance with Federal
regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight.
Management Response
The Center prepared a Manual of Fiscal and Administrative Matters Procedures
to ensure a complete process and that management can make decisions based on
it. The documents that we would be used to maintain control of the equipment
are the following according to the administrative and fiscal procedures manual:
Physical Inventory, Delivery report and property receipt, Maintenance Record,
and arrangements (vehicles), Capitalizable Inventory Registry (greater than
5,000), Equipment Transfers and Non-capitalizable Registry.
Also, this includes the “Equipment” Property procedures to comply with CFR
Part 75.320. This way, we guarantee internal control for registration, physical
inventory control, maintenance, and disposal. Through this process, we will
avoid the loss, damage, or theft of this by having control of the Center
equipment. On the other hand, Center acquired an Inventory Module that allows
us to manage your inventory with the help of MIP Module Fund Accounting™
Software. With this module, the Center can track and monitor your inventory in
real time and track inventory movement and lists, among others. This acquired
software will help us to keep an accounting of the equipment from its
registration, location, and depreciation in the Trial Balance and Inventory
Ledger.
Furthermore, Center performed an inventory count during 2021 for the transition
of Head Start Grants, where Center transferred the inventory, land, and
equipment to one of the new grantees. During this inventory count, Center
identified that during the previous transition of grants received by Center in 2016
and 2017, the former administration of Center did not have an inventory report.
Similarly, after Hurricane María 2017, the Center lost several inventories,
including documentation. These two major situations affect the Management of
Center to estimate an adequate amount of lost inventory, among others. At this
point, the Center evaluated the inventory at the market value, instead of the cost
since no evidence of the cost before Hurricane María and previous transitions
with Head Start was recorded. At the time of the transition with Head Start,
Center labeled all the inventory, put the market value to each item, and
depreciated according to the time the transition happened and Hurricane María
Happened. Accordingly, as of the day of this financial statement, a high amount
of inventory has been depreciated and already transferred to a new grantee
without any inventory loss, claims, etc.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Property and Equipment
Type of Finding: Equipment and Real Property Management, Financial
Statement. Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.320 Equipment:
Management requirements. Procedures for managing equipment (including
replacement equipment), when in whole or in part under a federal award, until
disposition takes place will, as a minimum, meet some of the following
requirements.
(2) A physical inventory of the property must be taken, and the result
reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to
prevent loss, damage, or theft of the property. Any loss, damage, or theft shall
be investigated.
(4) Adequate maintenance procedures must be developed to keep the property
in good condition.
(5) If the grantee or sub grantee is authorized or required to sell the property,
proper sales procedures must be established to ensure the highest possible
return.
(6) Disposition. When original or replacement equipment acquired under a
federal award is no longer needed for the original project or program or for
other activities currently or previously supported by HHS awarding agency,
except as otherwise provided in Federal statues, regulations, or HHS.
Condition
The Center did not maintain adequate internal control over property and
equipment. The Center did not provide a real and personnel property record of all
the property and equipment acquired this year with Federal funds and Insurance.
Questioned Cost
None determined.
Cause
Center doesn’t have accurate property records of Federal funds to trace the
personal and real property activities that should be reported to Federal funds.
Effect
The Center does not present fairly the financial position of the financial
statements.
Identification of repeated findings:
Repeating findings were found.
Recommendation
A control system must be developed to ensure adequate safeguards to prevent
loss, damage, or theft of the property; loss, damage, of theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in
good condition. The center must identify all properties acquired with Federal
funds and maintain adequate accounting records in accordance with Federal
regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight.
Management Response
The Center prepared a Manual of Fiscal and Administrative Matters Procedures
to ensure a complete process and that management can make decisions based on
it. The documents that we would be used to maintain control of the equipment
are the following according to the administrative and fiscal procedures manual:
Physical Inventory, Delivery report and property receipt, Maintenance Record,
and arrangements (vehicles), Capitalizable Inventory Registry (greater than
5,000), Equipment Transfers and Non-capitalizable Registry.
Also, this includes the “Equipment” Property procedures to comply with CFR
Part 75.320. This way, we guarantee internal control for registration, physical
inventory control, maintenance, and disposal. Through this process, we will
avoid the loss, damage, or theft of this by having control of the Center
equipment. On the other hand, Center acquired an Inventory Module that allows
us to manage your inventory with the help of MIP Module Fund Accounting™
Software. With this module, the Center can track and monitor your inventory in
real time and track inventory movement and lists, among others. This acquired
software will help us to keep an accounting of the equipment from its
registration, location, and depreciation in the Trial Balance and Inventory
Ledger.
Furthermore, Center performed an inventory count during 2021 for the transition
of Head Start Grants, where Center transferred the inventory, land, and
equipment to one of the new grantees. During this inventory count, Center
identified that during the previous transition of grants received by Center in 2016
and 2017, the former administration of Center did not have an inventory report.
Similarly, after Hurricane María 2017, the Center lost several inventories,
including documentation. These two major situations affect the Management of
Center to estimate an adequate amount of lost inventory, among others. At this
point, the Center evaluated the inventory at the market value, instead of the cost
since no evidence of the cost before Hurricane María and previous transitions
with Head Start was recorded. At the time of the transition with Head Start,
Center labeled all the inventory, put the market value to each item, and
depreciated according to the time the transition happened and Hurricane María
Happened. Accordingly, as of the day of this financial statement, a high amount
of inventory has been depreciated and already transferred to a new grantee
without any inventory loss, claims, etc.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Property and Equipment
Type of Finding: Equipment and Real Property Management, Financial
Statement. Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.320 Equipment:
Management requirements. Procedures for managing equipment (including
replacement equipment), when in whole or in part under a federal award, until
disposition takes place will, as a minimum, meet some of the following
requirements.
(2) A physical inventory of the property must be taken, and the result
reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to
prevent loss, damage, or theft of the property. Any loss, damage, or theft shall
be investigated.
(4) Adequate maintenance procedures must be developed to keep the property
in good condition.
(5) If the grantee or sub grantee is authorized or required to sell the property,
proper sales procedures must be established to ensure the highest possible
return.
(6) Disposition. When original or replacement equipment acquired under a
federal award is no longer needed for the original project or program or for
other activities currently or previously supported by HHS awarding agency,
except as otherwise provided in Federal statues, regulations, or HHS.
Condition
The Center did not maintain adequate internal control over property and
equipment. The Center did not provide a real and personnel property record of all
the property and equipment acquired this year with Federal funds and Insurance.
Questioned Cost
None determined.
Cause
Center doesn’t have accurate property records of Federal funds to trace the
personal and real property activities that should be reported to Federal funds.
Effect
The Center does not present fairly the financial position of the financial
statements.
Identification of repeated findings:
Repeating findings were found.
Recommendation
A control system must be developed to ensure adequate safeguards to prevent
loss, damage, or theft of the property; loss, damage, of theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in
good condition. The center must identify all properties acquired with Federal
funds and maintain adequate accounting records in accordance with Federal
regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight.
Management Response
The Center prepared a Manual of Fiscal and Administrative Matters Procedures
to ensure a complete process and that management can make decisions based on
it. The documents that we would be used to maintain control of the equipment
are the following according to the administrative and fiscal procedures manual:
Physical Inventory, Delivery report and property receipt, Maintenance Record,
and arrangements (vehicles), Capitalizable Inventory Registry (greater than
5,000), Equipment Transfers and Non-capitalizable Registry.
Also, this includes the “Equipment” Property procedures to comply with CFR
Part 75.320. This way, we guarantee internal control for registration, physical
inventory control, maintenance, and disposal. Through this process, we will
avoid the loss, damage, or theft of this by having control of the Center
equipment. On the other hand, Center acquired an Inventory Module that allows
us to manage your inventory with the help of MIP Module Fund Accounting™
Software. With this module, the Center can track and monitor your inventory in
real time and track inventory movement and lists, among others. This acquired
software will help us to keep an accounting of the equipment from its
registration, location, and depreciation in the Trial Balance and Inventory
Ledger.
Furthermore, Center performed an inventory count during 2021 for the transition
of Head Start Grants, where Center transferred the inventory, land, and
equipment to one of the new grantees. During this inventory count, Center
identified that during the previous transition of grants received by Center in 2016
and 2017, the former administration of Center did not have an inventory report.
Similarly, after Hurricane María 2017, the Center lost several inventories,
including documentation. These two major situations affect the Management of
Center to estimate an adequate amount of lost inventory, among others. At this
point, the Center evaluated the inventory at the market value, instead of the cost
since no evidence of the cost before Hurricane María and previous transitions
with Head Start was recorded. At the time of the transition with Head Start,
Center labeled all the inventory, put the market value to each item, and
depreciated according to the time the transition happened and Hurricane María
Happened. Accordingly, as of the day of this financial statement, a high amount
of inventory has been depreciated and already transferred to a new grantee
without any inventory loss, claims, etc.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.512, the Uniform Guidance established the audit must be
completed nine months after the end of audit period and the Single Audit
Reporting package and Data Collection Form (SF-SAC) Federal Audit
Clearing House, must be submitted within the earlier 30 calendar days after
receipts of the auditor’s report, or nine months after the end audit period,
whichever comes first.
Condition
Financial report and programs financial information were not available on time
to prepare the Single Audit Reporting package.
Questioned Cost
Not determined.
Cause
Finance personnel do not establish control procedures to provide Single Audit
information on time, most checks registers of Federal programs were provided
after the audit from financial department.
Effect
The Center does not comply with the grant programs conditions. The Federal
Awards are at risk of being cancelled, not to be renewed or open competition.
Identification of repeated findings:
Repeating findings were found.
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements.
Management Response:
On the other hand, a “Administrative Accountant” was hired who will perform
the accounting at the Center, review the entries in the mechanized accounting
system and submit a financial statement to the Executive Director that will be
discussed to the Board of Directors and any Another component that requires it.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.512, the Uniform Guidance established the audit must be
completed nine months after the end of audit period and the Single Audit
Reporting package and Data Collection Form (SF-SAC) Federal Audit
Clearing House, must be submitted within the earlier 30 calendar days after
receipts of the auditor’s report, or nine months after the end audit period,
whichever comes first.
Condition
Financial report and programs financial information were not available on time
to prepare the Single Audit Reporting package.
Questioned Cost
Not determined.
Cause
Finance personnel do not establish control procedures to provide Single Audit
information on time, most checks registers of Federal programs were provided
after the audit from financial department.
Effect
The Center does not comply with the grant programs conditions. The Federal
Awards are at risk of being cancelled, not to be renewed or open competition.
Identification of repeated findings:
Repeating findings were found.
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements.
Management Response:
On the other hand, a “Administrative Accountant” was hired who will perform
the accounting at the Center, review the entries in the mechanized accounting
system and submit a financial statement to the Executive Director that will be
discussed to the Board of Directors and any Another component that requires it.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.512, the Uniform Guidance established the audit must be
completed nine months after the end of audit period and the Single Audit
Reporting package and Data Collection Form (SF-SAC) Federal Audit
Clearing House, must be submitted within the earlier 30 calendar days after
receipts of the auditor’s report, or nine months after the end audit period,
whichever comes first.
Condition
Financial report and programs financial information were not available on time
to prepare the Single Audit Reporting package.
Questioned Cost
Not determined.
Cause
Finance personnel do not establish control procedures to provide Single Audit
information on time, most checks registers of Federal programs were provided
after the audit from financial department.
Effect
The Center does not comply with the grant programs conditions. The Federal
Awards are at risk of being cancelled, not to be renewed or open competition.
Identification of repeated findings:
Repeating findings were found.
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements.
Management Response:
On the other hand, a “Administrative Accountant” was hired who will perform
the accounting at the Center, review the entries in the mechanized accounting
system and submit a financial statement to the Executive Director that will be
discussed to the Board of Directors and any Another component that requires it.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
Form 990 Return of Organization Exempt from Income Tax under section
501(c) 3 of the Internal Revenue Code.
Condition
Form 990 is an annual information return required to be filed with the IRS by
most organizations exempt from income tax under section 501(c)(3). The form
must be completed by all filing organizations and requires reporting on the
organization’s exempt and other activities, finances, governance, compliance
with certain federal tax filing and requirements, and compensation paid to
certain persons.
Questioned Cost:
Not determined
Cause
Finance personnel do not establish internal control procedures to provide
financial information on time to prepare federal form 990 on time.
Effect
The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of
$20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the
organization for the year, can be charged when a return is filed late, unless the
organization shows that the late filing was due to reasonable cause.
Identification of repeated findings:
Repeating findings
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements to file the return of
organization exempt from Income Tax on time.
Management Response:
Our new Administrative Accountant was trained to perform the accounting at the
Center, review the entries in the new mechanized accounting system and submit a
financial statement to the Executive Director that will be discussed and approved
by the Board of Directors, CPN and any Another component that requires the
form 990 return to be file during the period required.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
Form 990 Return of Organization Exempt from Income Tax under section
501(c) 3 of the Internal Revenue Code.
Condition
Form 990 is an annual information return required to be filed with the IRS by
most organizations exempt from income tax under section 501(c)(3). The form
must be completed by all filing organizations and requires reporting on the
organization’s exempt and other activities, finances, governance, compliance
with certain federal tax filing and requirements, and compensation paid to
certain persons.
Questioned Cost:
Not determined
Cause
Finance personnel do not establish internal control procedures to provide
financial information on time to prepare federal form 990 on time.
Effect
The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of
$20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the
organization for the year, can be charged when a return is filed late, unless the
organization shows that the late filing was due to reasonable cause.
Identification of repeated findings:
Repeating findings
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements to file the return of
organization exempt from Income Tax on time.
Management Response:
Our new Administrative Accountant was trained to perform the accounting at the
Center, review the entries in the new mechanized accounting system and submit a
financial statement to the Executive Director that will be discussed and approved
by the Board of Directors, CPN and any Another component that requires the
form 990 return to be file during the period required.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
Form 990 Return of Organization Exempt from Income Tax under section
501(c) 3 of the Internal Revenue Code.
Condition
Form 990 is an annual information return required to be filed with the IRS by
most organizations exempt from income tax under section 501(c)(3). The form
must be completed by all filing organizations and requires reporting on the
organization’s exempt and other activities, finances, governance, compliance
with certain federal tax filing and requirements, and compensation paid to
certain persons.
Questioned Cost:
Not determined
Cause
Finance personnel do not establish internal control procedures to provide
financial information on time to prepare federal form 990 on time.
Effect
The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of
$20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the
organization for the year, can be charged when a return is filed late, unless the
organization shows that the late filing was due to reasonable cause.
Identification of repeated findings:
Repeating findings
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements to file the return of
organization exempt from Income Tax on time.
Management Response:
Our new Administrative Accountant was trained to perform the accounting at the
Center, review the entries in the new mechanized accounting system and submit a
financial statement to the Executive Director that will be discussed and approved
by the Board of Directors, CPN and any Another component that requires the
form 990 return to be file during the period required.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start 02CH01050104, 02CH01050105, 02CH01050106
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria Section 342 reporting program performance
Federal regulations require award recipients’ to submit performance reports at
the interval required by the HHS awarding agency or pass-through entity to best
inform improvements in program outcomes and productivity and provide
accurate, current, and complete disclosure of the financial results of each
Federal award (45 CFR § 75.342). The award recipients were required to
adequately document costs and submit financial reports to the payment system
within the timeframes.
Condition
The Center did not submit timely Federal Financial Report (FFR).
Cause
The program of the Center did not submitted Federal Financial Report FFR
Semi-annual and Final after the limited date, that is 30 days for Semi-annual
and 90 days after the end of each reporting period. The program must report the
Federal Financial Report from March 1, 2022, to August 31, 2022, the last date
of the reporting period.
Effect:
The Centro de Servicios a la Juventud, Inc. did not comply with the
submission date required for the Financial Federal Reports to the US
Department of Health & Human Services Head Start program; this could
affect the continuance and new approvals of federal program funds.
Questioned cost:
Not determined
Identification of a repeated finding:
None repeating finding were found.
Recommendations:
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements accurate
and in a timely manner. In addition, the Center need to implement adequate
internal controls procedures in order to assure that the supporting
documentation is available on a timely manner. Also, proper training in the
accounting system should be obtained by the personnel in charge of preparing
the bank reconciliations and Financial Reports required by Head Start.
Management Response:
The Center will strengthen our financial management practices through a
multifaceted corrective action plan. As mentioned, to maintain adequate
accounting records, we will implement enhanced record-keeping practices,
assigning the Administrative Accountant to ensure accurate documentation of
all transactions related to federal funds. This initiative aligns with industry best
practices and compliance standards. Simultaneously, we will conduct
comprehensive internal controls review to identify and address procedural
weaknesses. Internal control protocols will be documented to uphold the
accuracy and completeness of financial data, with a particular emphasis on
supporting documentation. Recognizing the importance of expertise, personnel
responsible for bank reconciliations and financial reports will undergo
specialized training tailored to address specific needs identified during the
review. Furthermore, we commit to regular monitoring and review processes,
including periodic internal audits, to track the effectiveness of implemented
corrective actions and identify areas for continuous improvement. Additionally,
we will explore the possibility of engaging external experts or consultants with
expertise in federal fund accounting to provide valuable insights and
recommendations, augmenting our internal efforts for sustained financial
excellence.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Disbursement not allowed and Material Weakness
Responsible Official: Executive Director
Condition Section 75.441 Fines, penalties costs.
Cost resulting from non-Federal entity violations of alleged violations of, or
failure to comply with, Federal, state, tribal, local or foreign laws and
regulations are unallowable. Federal Tax lien provided by section 6321, 6322
and 6323 of the Internal Revenue Code, include interest and penalties for
Forms 990 and 941.
Criteria
Federal Law require to withhold certain taxes from the employees pay, must
file Form 941 quarterly to report wages, tips, on time. Organization exempt
from Income tax under section 501 (c) of the Internal Revenue Code must
File Form 990 annually on time.
Questioned costs $76,992
Cause
The Centro de Servicios a la Juventud, Inc. did not prepare on time the Form
990 for the Tax Period ended September 30, 2018 and the Form 941 of the
current Period ended June 30, 2020, Period ended September 30, 2020 and
Period ended December 31, 2020. This represent interest and penalties.
Effect
There is a risk that the funds use by the entity may have been debarred and
might not be recovered by the program.
Recommendation.
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements
accurately and in a timely manner and. In addition, its needs to implement
adequate internal controls procedures in order to assure that the supporting
documentation is available.
Management Response
In 2020, Puerto Rico faced an earthquake and COVID-19 lockdown,
impacting our team's capacity to finalize tax returns, specifically the 941.
Additionally, following the passing of our founder and former executive
director, Nidra Torres, much of our focus centered on ensuring compliance,
encompassing the tax filing and single audit for 2018.
CSJ is pleased to report that, as of today, we have successfully caught up with
all our tax compliance filings, meeting the requirements of both the IRS and
Hacienda.
On the other hand, an "Administrative Accountant" was hired who will
perform the accounting at the Center, review the entries in the mechanized
accounting system, and submit a financial statement to the Executive Director
that will be discussed with the Board of Directors and any Other component
that requires it. With these financial statements, this Accountant will work to
submit any tax filing required by the Internal Revenue Service and Department
of Treasury of Puerto Rico.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Disbursement not allowed and Material Weakness
Responsible Official: Executive Director
Condition Section 75.441 Fines, penalties costs.
Cost resulting from non-Federal entity violations of alleged violations of, or
failure to comply with, Federal, state, tribal, local or foreign laws and
regulations are unallowable. Federal Tax lien provided by section 6321, 6322
and 6323 of the Internal Revenue Code, include interest and penalties for
Forms 990 and 941.
Criteria
Federal Law require to withhold certain taxes from the employees pay, must
file Form 941 quarterly to report wages, tips, on time. Organization exempt
from Income tax under section 501 (c) of the Internal Revenue Code must
File Form 990 annually on time.
Questioned costs $76,992
Cause
The Centro de Servicios a la Juventud, Inc. did not prepare on time the Form
990 for the Tax Period ended September 30, 2018 and the Form 941 of the
current Period ended June 30, 2020, Period ended September 30, 2020 and
Period ended December 31, 2020. This represent interest and penalties.
Effect
There is a risk that the funds use by the entity may have been debarred and
might not be recovered by the program.
Recommendation.
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements
accurately and in a timely manner and. In addition, its needs to implement
adequate internal controls procedures in order to assure that the supporting
documentation is available.
Management Response
In 2020, Puerto Rico faced an earthquake and COVID-19 lockdown,
impacting our team's capacity to finalize tax returns, specifically the 941.
Additionally, following the passing of our founder and former executive
director, Nidra Torres, much of our focus centered on ensuring compliance,
encompassing the tax filing and single audit for 2018.
CSJ is pleased to report that, as of today, we have successfully caught up with
all our tax compliance filings, meeting the requirements of both the IRS and
Hacienda.
On the other hand, an "Administrative Accountant" was hired who will
perform the accounting at the Center, review the entries in the mechanized
accounting system, and submit a financial statement to the Executive Director
that will be discussed with the Board of Directors and any Other component
that requires it. With these financial statements, this Accountant will work to
submit any tax filing required by the Internal Revenue Service and Department
of Treasury of Puerto Rico.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Disbursement not allowed and Material Weakness
Responsible Official: Executive Director
Condition Section 75.441 Fines, penalties costs.
Cost resulting from non-Federal entity violations of alleged violations of, or
failure to comply with, Federal, state, tribal, local or foreign laws and
regulations are unallowable. Federal Tax lien provided by section 6321, 6322
and 6323 of the Internal Revenue Code, include interest and penalties for
Forms 990 and 941.
Criteria
Federal Law require to withhold certain taxes from the employees pay, must
file Form 941 quarterly to report wages, tips, on time. Organization exempt
from Income tax under section 501 (c) of the Internal Revenue Code must
File Form 990 annually on time.
Questioned costs $76,992
Cause
The Centro de Servicios a la Juventud, Inc. did not prepare on time the Form
990 for the Tax Period ended September 30, 2018 and the Form 941 of the
current Period ended June 30, 2020, Period ended September 30, 2020 and
Period ended December 31, 2020. This represent interest and penalties.
Effect
There is a risk that the funds use by the entity may have been debarred and
might not be recovered by the program.
Recommendation.
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements
accurately and in a timely manner and. In addition, its needs to implement
adequate internal controls procedures in order to assure that the supporting
documentation is available.
Management Response
In 2020, Puerto Rico faced an earthquake and COVID-19 lockdown,
impacting our team's capacity to finalize tax returns, specifically the 941.
Additionally, following the passing of our founder and former executive
director, Nidra Torres, much of our focus centered on ensuring compliance,
encompassing the tax filing and single audit for 2018.
CSJ is pleased to report that, as of today, we have successfully caught up with
all our tax compliance filings, meeting the requirements of both the IRS and
Hacienda.
On the other hand, an "Administrative Accountant" was hired who will
perform the accounting at the Center, review the entries in the mechanized
accounting system, and submit a financial statement to the Executive Director
that will be discussed with the Board of Directors and any Other component
that requires it. With these financial statements, this Accountant will work to
submit any tax filing required by the Internal Revenue Service and Department
of Treasury of Puerto Rico.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Property and Equipment
Type of Finding: Equipment and Real Property Management, Financial
Statement. Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.320 Equipment:
Management requirements. Procedures for managing equipment (including
replacement equipment), when in whole or in part under a federal award, until
disposition takes place will, as a minimum, meet some of the following
requirements.
(2) A physical inventory of the property must be taken, and the result
reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to
prevent loss, damage, or theft of the property. Any loss, damage, or theft shall
be investigated.
(4) Adequate maintenance procedures must be developed to keep the property
in good condition.
(5) If the grantee or sub grantee is authorized or required to sell the property,
proper sales procedures must be established to ensure the highest possible
return.
(6) Disposition. When original or replacement equipment acquired under a
federal award is no longer needed for the original project or program or for
other activities currently or previously supported by HHS awarding agency,
except as otherwise provided in Federal statues, regulations, or HHS.
Condition
The Center did not maintain adequate internal control over property and
equipment. The Center did not provide a real and personnel property record of all
the property and equipment acquired this year with Federal funds and Insurance.
Questioned Cost
None determined.
Cause
Center doesn’t have accurate property records of Federal funds to trace the
personal and real property activities that should be reported to Federal funds.
Effect
The Center does not present fairly the financial position of the financial
statements.
Identification of repeated findings:
Repeating findings were found.
Recommendation
A control system must be developed to ensure adequate safeguards to prevent
loss, damage, or theft of the property; loss, damage, of theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in
good condition. The center must identify all properties acquired with Federal
funds and maintain adequate accounting records in accordance with Federal
regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight.
Management Response
The Center prepared a Manual of Fiscal and Administrative Matters Procedures
to ensure a complete process and that management can make decisions based on
it. The documents that we would be used to maintain control of the equipment
are the following according to the administrative and fiscal procedures manual:
Physical Inventory, Delivery report and property receipt, Maintenance Record,
and arrangements (vehicles), Capitalizable Inventory Registry (greater than
5,000), Equipment Transfers and Non-capitalizable Registry.
Also, this includes the “Equipment” Property procedures to comply with CFR
Part 75.320. This way, we guarantee internal control for registration, physical
inventory control, maintenance, and disposal. Through this process, we will
avoid the loss, damage, or theft of this by having control of the Center
equipment. On the other hand, Center acquired an Inventory Module that allows
us to manage your inventory with the help of MIP Module Fund Accounting™
Software. With this module, the Center can track and monitor your inventory in
real time and track inventory movement and lists, among others. This acquired
software will help us to keep an accounting of the equipment from its
registration, location, and depreciation in the Trial Balance and Inventory
Ledger.
Furthermore, Center performed an inventory count during 2021 for the transition
of Head Start Grants, where Center transferred the inventory, land, and
equipment to one of the new grantees. During this inventory count, Center
identified that during the previous transition of grants received by Center in 2016
and 2017, the former administration of Center did not have an inventory report.
Similarly, after Hurricane María 2017, the Center lost several inventories,
including documentation. These two major situations affect the Management of
Center to estimate an adequate amount of lost inventory, among others. At this
point, the Center evaluated the inventory at the market value, instead of the cost
since no evidence of the cost before Hurricane María and previous transitions
with Head Start was recorded. At the time of the transition with Head Start,
Center labeled all the inventory, put the market value to each item, and
depreciated according to the time the transition happened and Hurricane María
Happened. Accordingly, as of the day of this financial statement, a high amount
of inventory has been depreciated and already transferred to a new grantee
without any inventory loss, claims, etc.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Property and Equipment
Type of Finding: Equipment and Real Property Management, Financial
Statement. Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.320 Equipment:
Management requirements. Procedures for managing equipment (including
replacement equipment), when in whole or in part under a federal award, until
disposition takes place will, as a minimum, meet some of the following
requirements.
(2) A physical inventory of the property must be taken, and the result
reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to
prevent loss, damage, or theft of the property. Any loss, damage, or theft shall
be investigated.
(4) Adequate maintenance procedures must be developed to keep the property
in good condition.
(5) If the grantee or sub grantee is authorized or required to sell the property,
proper sales procedures must be established to ensure the highest possible
return.
(6) Disposition. When original or replacement equipment acquired under a
federal award is no longer needed for the original project or program or for
other activities currently or previously supported by HHS awarding agency,
except as otherwise provided in Federal statues, regulations, or HHS.
Condition
The Center did not maintain adequate internal control over property and
equipment. The Center did not provide a real and personnel property record of all
the property and equipment acquired this year with Federal funds and Insurance.
Questioned Cost
None determined.
Cause
Center doesn’t have accurate property records of Federal funds to trace the
personal and real property activities that should be reported to Federal funds.
Effect
The Center does not present fairly the financial position of the financial
statements.
Identification of repeated findings:
Repeating findings were found.
Recommendation
A control system must be developed to ensure adequate safeguards to prevent
loss, damage, or theft of the property; loss, damage, of theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in
good condition. The center must identify all properties acquired with Federal
funds and maintain adequate accounting records in accordance with Federal
regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight.
Management Response
The Center prepared a Manual of Fiscal and Administrative Matters Procedures
to ensure a complete process and that management can make decisions based on
it. The documents that we would be used to maintain control of the equipment
are the following according to the administrative and fiscal procedures manual:
Physical Inventory, Delivery report and property receipt, Maintenance Record,
and arrangements (vehicles), Capitalizable Inventory Registry (greater than
5,000), Equipment Transfers and Non-capitalizable Registry.
Also, this includes the “Equipment” Property procedures to comply with CFR
Part 75.320. This way, we guarantee internal control for registration, physical
inventory control, maintenance, and disposal. Through this process, we will
avoid the loss, damage, or theft of this by having control of the Center
equipment. On the other hand, Center acquired an Inventory Module that allows
us to manage your inventory with the help of MIP Module Fund Accounting™
Software. With this module, the Center can track and monitor your inventory in
real time and track inventory movement and lists, among others. This acquired
software will help us to keep an accounting of the equipment from its
registration, location, and depreciation in the Trial Balance and Inventory
Ledger.
Furthermore, Center performed an inventory count during 2021 for the transition
of Head Start Grants, where Center transferred the inventory, land, and
equipment to one of the new grantees. During this inventory count, Center
identified that during the previous transition of grants received by Center in 2016
and 2017, the former administration of Center did not have an inventory report.
Similarly, after Hurricane María 2017, the Center lost several inventories,
including documentation. These two major situations affect the Management of
Center to estimate an adequate amount of lost inventory, among others. At this
point, the Center evaluated the inventory at the market value, instead of the cost
since no evidence of the cost before Hurricane María and previous transitions
with Head Start was recorded. At the time of the transition with Head Start,
Center labeled all the inventory, put the market value to each item, and
depreciated according to the time the transition happened and Hurricane María
Happened. Accordingly, as of the day of this financial statement, a high amount
of inventory has been depreciated and already transferred to a new grantee
without any inventory loss, claims, etc.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Property and Equipment
Type of Finding: Equipment and Real Property Management, Financial
Statement. Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.320 Equipment:
Management requirements. Procedures for managing equipment (including
replacement equipment), when in whole or in part under a federal award, until
disposition takes place will, as a minimum, meet some of the following
requirements.
(2) A physical inventory of the property must be taken, and the result
reconciled with the property records at least once every two years.
(3) A control system must be developed to ensure adequate safeguards to
prevent loss, damage, or theft of the property. Any loss, damage, or theft shall
be investigated.
(4) Adequate maintenance procedures must be developed to keep the property
in good condition.
(5) If the grantee or sub grantee is authorized or required to sell the property,
proper sales procedures must be established to ensure the highest possible
return.
(6) Disposition. When original or replacement equipment acquired under a
federal award is no longer needed for the original project or program or for
other activities currently or previously supported by HHS awarding agency,
except as otherwise provided in Federal statues, regulations, or HHS.
Condition
The Center did not maintain adequate internal control over property and
equipment. The Center did not provide a real and personnel property record of all
the property and equipment acquired this year with Federal funds and Insurance.
Questioned Cost
None determined.
Cause
Center doesn’t have accurate property records of Federal funds to trace the
personal and real property activities that should be reported to Federal funds.
Effect
The Center does not present fairly the financial position of the financial
statements.
Identification of repeated findings:
Repeating findings were found.
Recommendation
A control system must be developed to ensure adequate safeguards to prevent
loss, damage, or theft of the property; loss, damage, of theft must be investigated.
Adequate maintenance procedures must be developed to keep the property in
good condition. The center must identify all properties acquired with Federal
funds and maintain adequate accounting records in accordance with Federal
regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight.
Management Response
The Center prepared a Manual of Fiscal and Administrative Matters Procedures
to ensure a complete process and that management can make decisions based on
it. The documents that we would be used to maintain control of the equipment
are the following according to the administrative and fiscal procedures manual:
Physical Inventory, Delivery report and property receipt, Maintenance Record,
and arrangements (vehicles), Capitalizable Inventory Registry (greater than
5,000), Equipment Transfers and Non-capitalizable Registry.
Also, this includes the “Equipment” Property procedures to comply with CFR
Part 75.320. This way, we guarantee internal control for registration, physical
inventory control, maintenance, and disposal. Through this process, we will
avoid the loss, damage, or theft of this by having control of the Center
equipment. On the other hand, Center acquired an Inventory Module that allows
us to manage your inventory with the help of MIP Module Fund Accounting™
Software. With this module, the Center can track and monitor your inventory in
real time and track inventory movement and lists, among others. This acquired
software will help us to keep an accounting of the equipment from its
registration, location, and depreciation in the Trial Balance and Inventory
Ledger.
Furthermore, Center performed an inventory count during 2021 for the transition
of Head Start Grants, where Center transferred the inventory, land, and
equipment to one of the new grantees. During this inventory count, Center
identified that during the previous transition of grants received by Center in 2016
and 2017, the former administration of Center did not have an inventory report.
Similarly, after Hurricane María 2017, the Center lost several inventories,
including documentation. These two major situations affect the Management of
Center to estimate an adequate amount of lost inventory, among others. At this
point, the Center evaluated the inventory at the market value, instead of the cost
since no evidence of the cost before Hurricane María and previous transitions
with Head Start was recorded. At the time of the transition with Head Start,
Center labeled all the inventory, put the market value to each item, and
depreciated according to the time the transition happened and Hurricane María
Happened. Accordingly, as of the day of this financial statement, a high amount
of inventory has been depreciated and already transferred to a new grantee
without any inventory loss, claims, etc.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.512, the Uniform Guidance established the audit must be
completed nine months after the end of audit period and the Single Audit
Reporting package and Data Collection Form (SF-SAC) Federal Audit
Clearing House, must be submitted within the earlier 30 calendar days after
receipts of the auditor’s report, or nine months after the end audit period,
whichever comes first.
Condition
Financial report and programs financial information were not available on time
to prepare the Single Audit Reporting package.
Questioned Cost
Not determined.
Cause
Finance personnel do not establish control procedures to provide Single Audit
information on time, most checks registers of Federal programs were provided
after the audit from financial department.
Effect
The Center does not comply with the grant programs conditions. The Federal
Awards are at risk of being cancelled, not to be renewed or open competition.
Identification of repeated findings:
Repeating findings were found.
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements.
Management Response:
On the other hand, a “Administrative Accountant” was hired who will perform
the accounting at the Center, review the entries in the mechanized accounting
system and submit a financial statement to the Executive Director that will be
discussed to the Board of Directors and any Another component that requires it.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.512, the Uniform Guidance established the audit must be
completed nine months after the end of audit period and the Single Audit
Reporting package and Data Collection Form (SF-SAC) Federal Audit
Clearing House, must be submitted within the earlier 30 calendar days after
receipts of the auditor’s report, or nine months after the end audit period,
whichever comes first.
Condition
Financial report and programs financial information were not available on time
to prepare the Single Audit Reporting package.
Questioned Cost
Not determined.
Cause
Finance personnel do not establish control procedures to provide Single Audit
information on time, most checks registers of Federal programs were provided
after the audit from financial department.
Effect
The Center does not comply with the grant programs conditions. The Federal
Awards are at risk of being cancelled, not to be renewed or open competition.
Identification of repeated findings:
Repeating findings were found.
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements.
Management Response:
On the other hand, a “Administrative Accountant” was hired who will perform
the accounting at the Center, review the entries in the mechanized accounting
system and submit a financial statement to the Executive Director that will be
discussed to the Board of Directors and any Another component that requires it.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
CFR part 75.512, the Uniform Guidance established the audit must be
completed nine months after the end of audit period and the Single Audit
Reporting package and Data Collection Form (SF-SAC) Federal Audit
Clearing House, must be submitted within the earlier 30 calendar days after
receipts of the auditor’s report, or nine months after the end audit period,
whichever comes first.
Condition
Financial report and programs financial information were not available on time
to prepare the Single Audit Reporting package.
Questioned Cost
Not determined.
Cause
Finance personnel do not establish control procedures to provide Single Audit
information on time, most checks registers of Federal programs were provided
after the audit from financial department.
Effect
The Center does not comply with the grant programs conditions. The Federal
Awards are at risk of being cancelled, not to be renewed or open competition.
Identification of repeated findings:
Repeating findings were found.
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements.
Management Response:
On the other hand, a “Administrative Accountant” was hired who will perform
the accounting at the Center, review the entries in the mechanized accounting
system and submit a financial statement to the Executive Director that will be
discussed to the Board of Directors and any Another component that requires it.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
Form 990 Return of Organization Exempt from Income Tax under section
501(c) 3 of the Internal Revenue Code.
Condition
Form 990 is an annual information return required to be filed with the IRS by
most organizations exempt from income tax under section 501(c)(3). The form
must be completed by all filing organizations and requires reporting on the
organization’s exempt and other activities, finances, governance, compliance
with certain federal tax filing and requirements, and compensation paid to
certain persons.
Questioned Cost:
Not determined
Cause
Finance personnel do not establish internal control procedures to provide
financial information on time to prepare federal form 990 on time.
Effect
The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of
$20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the
organization for the year, can be charged when a return is filed late, unless the
organization shows that the late filing was due to reasonable cause.
Identification of repeated findings:
Repeating findings
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements to file the return of
organization exempt from Income Tax on time.
Management Response:
Our new Administrative Accountant was trained to perform the accounting at the
Center, review the entries in the new mechanized accounting system and submit a
financial statement to the Executive Director that will be discussed and approved
by the Board of Directors, CPN and any Another component that requires the
form 990 return to be file during the period required.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
Form 990 Return of Organization Exempt from Income Tax under section
501(c) 3 of the Internal Revenue Code.
Condition
Form 990 is an annual information return required to be filed with the IRS by
most organizations exempt from income tax under section 501(c)(3). The form
must be completed by all filing organizations and requires reporting on the
organization’s exempt and other activities, finances, governance, compliance
with certain federal tax filing and requirements, and compensation paid to
certain persons.
Questioned Cost:
Not determined
Cause
Finance personnel do not establish internal control procedures to provide
financial information on time to prepare federal form 990 on time.
Effect
The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of
$20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the
organization for the year, can be charged when a return is filed late, unless the
organization shows that the late filing was due to reasonable cause.
Identification of repeated findings:
Repeating findings
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements to file the return of
organization exempt from Income Tax on time.
Management Response:
Our new Administrative Accountant was trained to perform the accounting at the
Center, review the entries in the new mechanized accounting system and submit a
financial statement to the Executive Director that will be discussed and approved
by the Board of Directors, CPN and any Another component that requires the
form 990 return to be file during the period required.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria
Form 990 Return of Organization Exempt from Income Tax under section
501(c) 3 of the Internal Revenue Code.
Condition
Form 990 is an annual information return required to be filed with the IRS by
most organizations exempt from income tax under section 501(c)(3). The form
must be completed by all filing organizations and requires reporting on the
organization’s exempt and other activities, finances, governance, compliance
with certain federal tax filing and requirements, and compensation paid to
certain persons.
Questioned Cost:
Not determined
Cause
Finance personnel do not establish internal control procedures to provide
financial information on time to prepare federal form 990 on time.
Effect
The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of
$20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the
organization for the year, can be charged when a return is filed late, unless the
organization shows that the late filing was due to reasonable cause.
Identification of repeated findings:
Repeating findings
Recommendation:
To prepare a calendar responsibilities of Federal funds due dates financial
statements to be prepared on time. Adequate training must be provided to
finance personnel. The governing body must create an Audit and Finance
Committee to revise monthly financial statements to file the return of
organization exempt from Income Tax on time.
Management Response:
Our new Administrative Accountant was trained to perform the accounting at the
Center, review the entries in the new mechanized accounting system and submit a
financial statement to the Executive Director that will be discussed and approved
by the Board of Directors, CPN and any Another component that requires the
form 990 return to be file during the period required.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start 02CH01050104, 02CH01050105, 02CH01050106
CFDA Number: 93.600
Compliance Requirement: Reporting
Type of Finding: Material Noncompliance and Material Weakness
Responsible Official: Executive Director
Criteria Section 342 reporting program performance
Federal regulations require award recipients’ to submit performance reports at
the interval required by the HHS awarding agency or pass-through entity to best
inform improvements in program outcomes and productivity and provide
accurate, current, and complete disclosure of the financial results of each
Federal award (45 CFR § 75.342). The award recipients were required to
adequately document costs and submit financial reports to the payment system
within the timeframes.
Condition
The Center did not submit timely Federal Financial Report (FFR).
Cause
The program of the Center did not submitted Federal Financial Report FFR
Semi-annual and Final after the limited date, that is 30 days for Semi-annual
and 90 days after the end of each reporting period. The program must report the
Federal Financial Report from March 1, 2022, to August 31, 2022, the last date
of the reporting period.
Effect:
The Centro de Servicios a la Juventud, Inc. did not comply with the
submission date required for the Financial Federal Reports to the US
Department of Health & Human Services Head Start program; this could
affect the continuance and new approvals of federal program funds.
Questioned cost:
Not determined
Identification of a repeated finding:
None repeating finding were found.
Recommendations:
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements accurate
and in a timely manner. In addition, the Center need to implement adequate
internal controls procedures in order to assure that the supporting
documentation is available on a timely manner. Also, proper training in the
accounting system should be obtained by the personnel in charge of preparing
the bank reconciliations and Financial Reports required by Head Start.
Management Response:
The Center will strengthen our financial management practices through a
multifaceted corrective action plan. As mentioned, to maintain adequate
accounting records, we will implement enhanced record-keeping practices,
assigning the Administrative Accountant to ensure accurate documentation of
all transactions related to federal funds. This initiative aligns with industry best
practices and compliance standards. Simultaneously, we will conduct
comprehensive internal controls review to identify and address procedural
weaknesses. Internal control protocols will be documented to uphold the
accuracy and completeness of financial data, with a particular emphasis on
supporting documentation. Recognizing the importance of expertise, personnel
responsible for bank reconciliations and financial reports will undergo
specialized training tailored to address specific needs identified during the
review. Furthermore, we commit to regular monitoring and review processes,
including periodic internal audits, to track the effectiveness of implemented
corrective actions and identify areas for continuous improvement. Additionally,
we will explore the possibility of engaging external experts or consultants with
expertise in federal fund accounting to provide valuable insights and
recommendations, augmenting our internal efforts for sustained financial
excellence.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Disbursement not allowed and Material Weakness
Responsible Official: Executive Director
Condition Section 75.441 Fines, penalties costs.
Cost resulting from non-Federal entity violations of alleged violations of, or
failure to comply with, Federal, state, tribal, local or foreign laws and
regulations are unallowable. Federal Tax lien provided by section 6321, 6322
and 6323 of the Internal Revenue Code, include interest and penalties for
Forms 990 and 941.
Criteria
Federal Law require to withhold certain taxes from the employees pay, must
file Form 941 quarterly to report wages, tips, on time. Organization exempt
from Income tax under section 501 (c) of the Internal Revenue Code must
File Form 990 annually on time.
Questioned costs $76,992
Cause
The Centro de Servicios a la Juventud, Inc. did not prepare on time the Form
990 for the Tax Period ended September 30, 2018 and the Form 941 of the
current Period ended June 30, 2020, Period ended September 30, 2020 and
Period ended December 31, 2020. This represent interest and penalties.
Effect
There is a risk that the funds use by the entity may have been debarred and
might not be recovered by the program.
Recommendation.
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements
accurately and in a timely manner and. In addition, its needs to implement
adequate internal controls procedures in order to assure that the supporting
documentation is available.
Management Response
In 2020, Puerto Rico faced an earthquake and COVID-19 lockdown,
impacting our team's capacity to finalize tax returns, specifically the 941.
Additionally, following the passing of our founder and former executive
director, Nidra Torres, much of our focus centered on ensuring compliance,
encompassing the tax filing and single audit for 2018.
CSJ is pleased to report that, as of today, we have successfully caught up with
all our tax compliance filings, meeting the requirements of both the IRS and
Hacienda.
On the other hand, an "Administrative Accountant" was hired who will
perform the accounting at the Center, review the entries in the mechanized
accounting system, and submit a financial statement to the Executive Director
that will be discussed with the Board of Directors and any Other component
that requires it. With these financial statements, this Accountant will work to
submit any tax filing required by the Internal Revenue Service and Department
of Treasury of Puerto Rico.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Disbursement not allowed and Material Weakness
Responsible Official: Executive Director
Condition Section 75.441 Fines, penalties costs.
Cost resulting from non-Federal entity violations of alleged violations of, or
failure to comply with, Federal, state, tribal, local or foreign laws and
regulations are unallowable. Federal Tax lien provided by section 6321, 6322
and 6323 of the Internal Revenue Code, include interest and penalties for
Forms 990 and 941.
Criteria
Federal Law require to withhold certain taxes from the employees pay, must
file Form 941 quarterly to report wages, tips, on time. Organization exempt
from Income tax under section 501 (c) of the Internal Revenue Code must
File Form 990 annually on time.
Questioned costs $76,992
Cause
The Centro de Servicios a la Juventud, Inc. did not prepare on time the Form
990 for the Tax Period ended September 30, 2018 and the Form 941 of the
current Period ended June 30, 2020, Period ended September 30, 2020 and
Period ended December 31, 2020. This represent interest and penalties.
Effect
There is a risk that the funds use by the entity may have been debarred and
might not be recovered by the program.
Recommendation.
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements
accurately and in a timely manner and. In addition, its needs to implement
adequate internal controls procedures in order to assure that the supporting
documentation is available.
Management Response
In 2020, Puerto Rico faced an earthquake and COVID-19 lockdown,
impacting our team's capacity to finalize tax returns, specifically the 941.
Additionally, following the passing of our founder and former executive
director, Nidra Torres, much of our focus centered on ensuring compliance,
encompassing the tax filing and single audit for 2018.
CSJ is pleased to report that, as of today, we have successfully caught up with
all our tax compliance filings, meeting the requirements of both the IRS and
Hacienda.
On the other hand, an "Administrative Accountant" was hired who will
perform the accounting at the Center, review the entries in the mechanized
accounting system, and submit a financial statement to the Executive Director
that will be discussed with the Board of Directors and any Other component
that requires it. With these financial statements, this Accountant will work to
submit any tax filing required by the Internal Revenue Service and Department
of Treasury of Puerto Rico.
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Disbursement not allowed and Material Weakness
Responsible Official: Executive Director
Condition Section 75.441 Fines, penalties costs.
Cost resulting from non-Federal entity violations of alleged violations of, or
failure to comply with, Federal, state, tribal, local or foreign laws and
regulations are unallowable. Federal Tax lien provided by section 6321, 6322
and 6323 of the Internal Revenue Code, include interest and penalties for
Forms 990 and 941.
Criteria
Federal Law require to withhold certain taxes from the employees pay, must
file Form 941 quarterly to report wages, tips, on time. Organization exempt
from Income tax under section 501 (c) of the Internal Revenue Code must
File Form 990 annually on time.
Questioned costs $76,992
Cause
The Centro de Servicios a la Juventud, Inc. did not prepare on time the Form
990 for the Tax Period ended September 30, 2018 and the Form 941 of the
current Period ended June 30, 2020, Period ended September 30, 2020 and
Period ended December 31, 2020. This represent interest and penalties.
Effect
There is a risk that the funds use by the entity may have been debarred and
might not be recovered by the program.
Recommendation.
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements
accurately and in a timely manner and. In addition, its needs to implement
adequate internal controls procedures in order to assure that the supporting
documentation is available.
Management Response
In 2020, Puerto Rico faced an earthquake and COVID-19 lockdown,
impacting our team's capacity to finalize tax returns, specifically the 941.
Additionally, following the passing of our founder and former executive
director, Nidra Torres, much of our focus centered on ensuring compliance,
encompassing the tax filing and single audit for 2018.
CSJ is pleased to report that, as of today, we have successfully caught up with
all our tax compliance filings, meeting the requirements of both the IRS and
Hacienda.
On the other hand, an "Administrative Accountant" was hired who will
perform the accounting at the Center, review the entries in the mechanized
accounting system, and submit a financial statement to the Executive Director
that will be discussed with the Board of Directors and any Other component
that requires it. With these financial statements, this Accountant will work to
submit any tax filing required by the Internal Revenue Service and Department
of Treasury of Puerto Rico.