2022?001?PROCUREMENT AND SUSPENSION AND DEBARMENT Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.048 Federal Award Identification Number and Year: Multiple Award Period: Project period 06/01/2018-05/31/2023; Budget period: Multiple Questioned Costs: Unknown Type of Findings ? Significant Deficiency in Internal Control Over Compliance of Federal Awards (E) ? Instance of Non-compliance Related to Federal Awards (F)Statement of Condition The Institute did not follow federal procurement and suspension and debarment regulations. Context We sampled 60 disbursements including payroll. Out of 17 vendors, 3 vendors were paid over $25,000 over the life of the grant. These vendors were not checked for suspension and debarment prior to the purchase goods and services. Out of 17 vendors, 4 had payments/contracts over the micro-purchase threshold of $10,000. Although some procurement selection processes were explained during the audit, sufficient documentation was not kept in the file explaining why sole source procurement was used or what type of unique qualifications the selected vendors had. One vendor was selected in 2018 and the documentation was not readily available. Criteria or Specific Requirement The Institute is required to verify that entities it plans to do business with are not excluded or disqualified under the federal procurement regulations and non-procurement common rule, or otherwise declared ineligible under statutory or regulatory authority. According to ?75.303 Internal controls of 45 CFR Part 75, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to ?75.327 General procurement standards of 45 CFR Part 75, the non-federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. According to ?180.300 of Subpart C?Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. This can be done by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Cause Internal controls do not appear to have been adequately implemented due to lack of awareness of the federal requirement. Effect The Institute may have entered into contracts with ineligible contractors and exposed itself to potential liability and loss of federal funds. Recommendation We recommend the Institute: ? Document controls to ensure compliance with federal procurement regulation and its federal procurement policy. ? Implement policies and procedures to verify the suspension and debarment status of contractors before awarding contracts using federal funds. ? Include the required suspension and debarment clause in its contracts with contractors using federal funds. View of Responsible Officials We accept the finding. Although after the fact, all vendors subject to verification for debarment and suspension were verified on the SAM web platform and none were found. Therefore, no payments were made to any debarred or suspended vendor and there was no exposure to liability. Going forward, we will check all vendors that require this verification and will also include the suspension and debarment clause in all necessary contracts. Finding resolved timeline: The finding was resolved in September 2023. Designated employee?s name and position responsible for meeting this deadline: Bruce Young Candelaria ? President / Ricardo A. Colon Padilla, Vice-President
2022?002?ALLOWABLE COSTS AND ACTIVITIES?PAYROLL AND RELATED ITEMS Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.048 Federal Award Identification Number and Year: Multiple Award Period: Project period 06/01/2018-05/31/2023; Budget period: Multiple Questioned Costs: Approximately $13,000 Type of Finding ? Significant Deficiency in Internal Control Over Compliance of Federal Awards (E) ? Instances of Noncompliance related to Federal Awards (F) Statement of Condition During our audit, we noted instances in which timesheets were not approved, and inconsistent allocations were applied to the grants. In some instances, the percentages of allocations calculated in timesheets were incorrect and did not match the allocation in the general ledger. It appears that allocations are based mainly on budget rather than actual direct and indirect time spent on the grant. Context 20 payroll transactions out of 21 tested, including wages and payroll taxes, could not be traced in such a manner that provided reasonable assurance that the charges to the grant were accurate and properly allocated. It appears that salaries and taxes are allocated based on budget rather than direct time spent on grant. The dollar amount of the exceptions was approximately $13,000. Criteria According to ?75.430 (i) select standards for documentation of personal expenses are as follows: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Effect The organization does not appear to have sufficient internal controls in place and does not appear to be in compliance with grant requirements as set forth in 45 CFR Part 75. A potential effect of noncompliance of the federal award or future funding decisions could result in disallowance of costs, suspension or termination of the award, or reduction of future allocations. Cause Internal controls over compliance do not appear to have been adequately implemented due to a lack of confirmation that the timesheet expenses match the general ledger. Recommendation We recommend the organization prevent recurrence of conducting regular reviews, and reconciliations, provide timesheets training and guidance to staff and monitoring compliance. We also recommend a re-design of the timesheets, so grant allocations and calculations for direct and indirect cost are more easily performed and traceable to the grant general ledger. View of Responsible Official We accept the finding. We have implemented a new timesheet for all employees that makes the match between allocations of time worked and allocation of compensation from different sources in the general ledger. Finding resolved timeline: The finding was resolved in September 2023. Designated of employee position responsible for meeting this deadline: Bruce Young Candelaria ? President / Ricardo A. Colon Padilla, Vice-President
2022?001?PROCUREMENT AND SUSPENSION AND DEBARMENT Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.048 Federal Award Identification Number and Year: Multiple Award Period: Project period 06/01/2018-05/31/2023; Budget period: Multiple Questioned Costs: Unknown Type of Findings ? Significant Deficiency in Internal Control Over Compliance of Federal Awards (E) ? Instance of Non-compliance Related to Federal Awards (F)Statement of Condition The Institute did not follow federal procurement and suspension and debarment regulations. Context We sampled 60 disbursements including payroll. Out of 17 vendors, 3 vendors were paid over $25,000 over the life of the grant. These vendors were not checked for suspension and debarment prior to the purchase goods and services. Out of 17 vendors, 4 had payments/contracts over the micro-purchase threshold of $10,000. Although some procurement selection processes were explained during the audit, sufficient documentation was not kept in the file explaining why sole source procurement was used or what type of unique qualifications the selected vendors had. One vendor was selected in 2018 and the documentation was not readily available. Criteria or Specific Requirement The Institute is required to verify that entities it plans to do business with are not excluded or disqualified under the federal procurement regulations and non-procurement common rule, or otherwise declared ineligible under statutory or regulatory authority. According to ?75.303 Internal controls of 45 CFR Part 75, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to ?75.327 General procurement standards of 45 CFR Part 75, the non-federal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. According to ?180.300 of Subpart C?Responsibilities of Participants Regarding Transactions Doing Business with Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. This can be done by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Cause Internal controls do not appear to have been adequately implemented due to lack of awareness of the federal requirement. Effect The Institute may have entered into contracts with ineligible contractors and exposed itself to potential liability and loss of federal funds. Recommendation We recommend the Institute: ? Document controls to ensure compliance with federal procurement regulation and its federal procurement policy. ? Implement policies and procedures to verify the suspension and debarment status of contractors before awarding contracts using federal funds. ? Include the required suspension and debarment clause in its contracts with contractors using federal funds. View of Responsible Officials We accept the finding. Although after the fact, all vendors subject to verification for debarment and suspension were verified on the SAM web platform and none were found. Therefore, no payments were made to any debarred or suspended vendor and there was no exposure to liability. Going forward, we will check all vendors that require this verification and will also include the suspension and debarment clause in all necessary contracts. Finding resolved timeline: The finding was resolved in September 2023. Designated employee?s name and position responsible for meeting this deadline: Bruce Young Candelaria ? President / Ricardo A. Colon Padilla, Vice-President
2022?002?ALLOWABLE COSTS AND ACTIVITIES?PAYROLL AND RELATED ITEMS Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging, Title IV, and Title II, Discretionary Projects Grants for New and Expanded Services under the Health Center Program Assistance Listing Number: 93.048 Federal Award Identification Number and Year: Multiple Award Period: Project period 06/01/2018-05/31/2023; Budget period: Multiple Questioned Costs: Approximately $13,000 Type of Finding ? Significant Deficiency in Internal Control Over Compliance of Federal Awards (E) ? Instances of Noncompliance related to Federal Awards (F) Statement of Condition During our audit, we noted instances in which timesheets were not approved, and inconsistent allocations were applied to the grants. In some instances, the percentages of allocations calculated in timesheets were incorrect and did not match the allocation in the general ledger. It appears that allocations are based mainly on budget rather than actual direct and indirect time spent on the grant. Context 20 payroll transactions out of 21 tested, including wages and payroll taxes, could not be traced in such a manner that provided reasonable assurance that the charges to the grant were accurate and properly allocated. It appears that salaries and taxes are allocated based on budget rather than direct time spent on grant. The dollar amount of the exceptions was approximately $13,000. Criteria According to ?75.430 (i) select standards for documentation of personal expenses are as follows: (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity and (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Effect The organization does not appear to have sufficient internal controls in place and does not appear to be in compliance with grant requirements as set forth in 45 CFR Part 75. A potential effect of noncompliance of the federal award or future funding decisions could result in disallowance of costs, suspension or termination of the award, or reduction of future allocations. Cause Internal controls over compliance do not appear to have been adequately implemented due to a lack of confirmation that the timesheet expenses match the general ledger. Recommendation We recommend the organization prevent recurrence of conducting regular reviews, and reconciliations, provide timesheets training and guidance to staff and monitoring compliance. We also recommend a re-design of the timesheets, so grant allocations and calculations for direct and indirect cost are more easily performed and traceable to the grant general ledger. View of Responsible Official We accept the finding. We have implemented a new timesheet for all employees that makes the match between allocations of time worked and allocation of compensation from different sources in the general ledger. Finding resolved timeline: The finding was resolved in September 2023. Designated of employee position responsible for meeting this deadline: Bruce Young Candelaria ? President / Ricardo A. Colon Padilla, Vice-President