Audit 290336

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: N/A Federal Program Title: Housing Choice Voucher Section-8, IPA number RQ54 CFDA Number: 14.871 Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Federal Program Director Criteria 22 CFR § 5.801 Uniform financial reporting standards, (b) (1) Entities (or individuals) to which this subpart is applicable must provide to HUD such financial information as required by HUD. Such information must be provided on a n annual basis, except as required more accordance with Generally Accepted Accounting Principles as further defined by HUD in supplementary guidance; (2) Submitted electronically to HUD through the internet, or in such other electronic format designated by HUD, or in such non-electronic format as HUD may allow if the burden or cost of electronic reporting is determined by HUD to the excessive; and (3) Submitted in such form and substance as prescribed by HUD. Also, on Section (c) (1) the financial information to be submitted to HUD in accordance with paragraph (b) of this section, must be submitted to HUD annually, no later than 60 days after the end of the fiscal year of the reporting period, and as otherwise provided by law. In addition, on Section (d) (1) states that unaudited financial statements will be required 60 days after the PHA” s fiscal year end, and audited financial statements will then be required no later than 9 months after the PHA’s fiscal year end, in accordance with the Single Audit Act and 2 CFR Part 200, Subpart F. Condition The Municipality did not submit the required Financial Reports to the US Housing and Urban Development for the fiscal year ending June 30, 2022, during the required period. The unaudited Financial Report was not submitted on or before August 30, 2022, also, the audited Financial Report was not submitted on or before September 30, 2022. Questioned Cost None determined. Cause Control procedures were not established to provide on time finance information to prepare the required financial reports of the Housing and Urban Development. Effect The Municipality did not comply with the submission date required for the Financial Reports to the US Housing and Urban Development; this could affect the continuance and new approvals of federal program funds. Recommendation We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurate and in a timely manner. In addition, the Municipality need to implement adequate internal controls procedures I 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 Federal Financial Reports required by HUD. Management Response Agreed with the Finding: The Municipality acknowledges the finding, attributing it to a technical issue with the system. Consequently, for the upcoming fiscal year, we are actively seeking a company to provide guidance and assistance in reporting issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: N/A Federal Program Title: Housing Choice Voucher Section-8, IPA number RQ54 CFDA Number: 14.871 Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Federal Program Director Criteria 22 CFR § 5.801 Uniform financial reporting standards, (b) (1) Entities (or individuals) to which this subpart is applicable must provide to HUD such financial information as required by HUD. Such information must be provided on a n annual basis, except as required more accordance with Generally Accepted Accounting Principles as further defined by HUD in supplementary guidance; (2) Submitted electronically to HUD through the internet, or in such other electronic format designated by HUD, or in such non-electronic format as HUD may allow if the burden or cost of electronic reporting is determined by HUD to the excessive; and (3) Submitted in such form and substance as prescribed by HUD. Also, on Section (c) (1) the financial information to be submitted to HUD in accordance with paragraph (b) of this section, must be submitted to HUD annually, no later than 60 days after the end of the fiscal year of the reporting period, and as otherwise provided by law. In addition, on Section (d) (1) states that unaudited financial statements will be required 60 days after the PHA” s fiscal year end, and audited financial statements will then be required no later than 9 months after the PHA’s fiscal year end, in accordance with the Single Audit Act and 2 CFR Part 200, Subpart F. Condition The Municipality did not submit the required Financial Reports to the US Housing and Urban Development for the fiscal year ending June 30, 2022, during the required period. The unaudited Financial Report was not submitted on or before August 30, 2022, also, the audited Financial Report was not submitted on or before September 30, 2022. Questioned Cost None determined. Cause Control procedures were not established to provide on time finance information to prepare the required financial reports of the Housing and Urban Development. Effect The Municipality did not comply with the submission date required for the Financial Reports to the US Housing and Urban Development; this could affect the continuance and new approvals of federal program funds. Recommendation We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurate and in a timely manner. In addition, the Municipality need to implement adequate internal controls procedures I 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 Federal Financial Reports required by HUD. Management Response Agreed with the Finding: The Municipality acknowledges the finding, attributing it to a technical issue with the system. Consequently, for the upcoming fiscal year, we are actively seeking a company to provide guidance and assistance in reporting issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Early Head Start 02CH01049105 CFDA Number: 93.600 Compliance Requirement: Matching Non-Federal Share Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria Section 75.306 Cost sharing or matching Federal regulations require to the Municipality, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity’s cost sharing, or matching when such contributions meet all the following criteria: (1) Are verifiable from the non-Federal entity’s records. Federal regulations require award recipients’ financial management systems to be able to provide accurate, current, and complete disclosure of the financial results of each Federal award (45 CFR § 75.302 (b)(2)) and to be adequately documented. Condition The Municipality entities must record in the electronic accounting system (Monet), supporting documents must comply with Non-Federal shares required. The documents presented by the Municipality from March 2021 to February 2023 as Non-Federal Share for $2,897,167 do not agree with the recipient share presented in the Federal Financial Report sent to the Finance Management System on May 3, 2022, 0, required amount $4,909,078 as recipient share of expenditures. Cause The municipality does not record in the electronic accounting system “Monet” the In-Kind contribution to be reported in the Payment System for the year ended June 30, 2022, and the monthly reports presented to board of directors do not included. Effect: The Municipality did not comply with the requirement of Non-Federal share required by US Department of Health & Human Services for the Head Start and Early Head Start programs; this could affect the continuance and new approvals of federal program funds. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurately and in a timely manner. In addition, the Municipality needs to implement adequate internal controls procedures to assure that the supporting documentation is available on the Monet system in a timely manner. Also, proper training in the accounting system should be obtained by the personnel in charge of preparing the Federal Financial Reports required by Head Start. Management Response: Agreed with the Finding: The accounting team has been instructed to consistently record the monthly in-kind contributions in the Monet System, ensuring their inclusion in the Federal Financial Report. Contrary to the assertion that the reported contribution is inaccurate, we stand by the correctness of our records. To address any concerns, we invite you to request the amended Federal Financial Report, which will include a comprehensive reconciliation of the in-kind contribution with our meticulously maintained accounting books. We are committed to providing you with this information promptly and transparently.

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 StatementMaterial Weakness Responsible Official: Program Director Criteria Section 75.320 Equipment CFR pat 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 minimum, meet some of the following required. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost property, percentage of federal participation in the project costs for the federal award under which the property location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of property. (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. Condition The Municipality did not maintain adequate internal control over property and equipment. The Municipality did not provide a real and personnel property record of all the property and equipment acquired this year with federal funds and insurance, On August 10, 2021, the Head Start program received a transfer of Rean and tangible personal property from Centro de Servicios a la Juventud, Inc on Hatillo Head Start, Bo. Corcovada. SF 429 and SF 428 were not submitted Evidence presented was SF 428 on August 28, 2020. Cause The Municipality does not have accurate property records of federal funds to trace the real and tangible personal property activities that should be reported to federal funds. Effect: The Municipality does not present fairly the financial position of the financial statements in the Government-Wide Financial Statements. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: 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 mut be developed to keep the property in good condition. The program must identify all properties acquired with federal funds and maintain adequate accounting records in accordance with federal regulations. Management Response: Do not Agreed with the Finding: The program upholds a stringent monitoring protocol for asset management, conducting annual inventories. The auditor did not engage in verification or assessment of any property-related matters, nor did seek specific information on this subject. The Head Start office maintains comprehensive evidence within the Federal Register Form SF-428.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Head Start Disaster Recovery From Hurricanes Harvey, Irma and María CFDA Number: 93.600 and 93.356 Compliance Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria The OMB Circular 133, establishes when a non-Federal entity enters a covered transaction with an entity at a lower tier, the non-Federal entity must verity that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended, or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at http://www.sam.gov/portal/public/SAM/. We found is not recorded in http://www.sam.gov/portal/public/SAM/. We didn’t find DUNS number and is possible is not an active company and doesn’t know if that company is suspended or debarred or otherwise excluded from participating for Head Start and Head Start Disaster Recovery from Hurricanes Harvey, Irma and María programs. Condition The Municipality’s disbursement test, we tested 113 vouchers and found 2 disbursements without System Award Management number or not active with funds payments more than $25,000. Questioned costs Not determined Cause Program officials did not verify if they are Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) that the contracted entity was suspended or debarred. Effect There is a risk that the contracted entity may have been debarred and might not comply with the contract requirements, the program may recover funds. Recommendation We recommend that the potential entity to be contracted is verified on the internet http://www.sam.gov/portal/public/SAM/ to assure there is no exclusions. Management Response Agreed with the Finding: It is crucial to highlight that the companies in question were not the originally contracted ones; however, they did possess the required SAM numbers. The decision to engage these companies arose from the realization that the originally contracted entities were not in adherence to the agreed-upon contractual terms. The identified companies were subsequently brought in under emergency circumstances by the Board of Auctions to fulfill the Head Start objectives. To forestall similar situations in the future, we are actively reviewing and fortifying our supplier’s selection processes while implementing robust contractual measures. It is important to underscore that this response was an exceptional one to address non-compliance, and we are steadfast in our commitment to avoiding such occurrences in the future.

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: Other Type of Finding: Professional services cost, material weakness Responsible Official: Federal Program Director Criteria Section Head Start “Act” 653(b) Comparability of Wages No federal funds may be used to pay any part of the compensation of an individual employee by a head start Program, including non-federal funds, exceeds an amount equal to the rate payable for Level II of the Executive Schedules under section 5313 of Title 5, United States Code. Condition The Department of Health and Human Services Appropriations Act 2022 restricts the amount of salary to Executive Level II of the Federal Executive pay scale for a full time 12 months total compensation for the grant period from March 2022 to February 2023. Cause The finance department does not establish internal control procedures to verify any excess of salary limitation, in accordance with section Head Start Act 653(b) comparability of wages. Effect Grant program was limited to use the excess for program needs for children serve in the programs. Questioned cost The Executive Director received $225,671 as salary compensation for the grant period, less $203,700 for salary limitation. Excess salary received for Executive Director was …………………… $21,971 Identification of a repeated finding: None repeating findings were found. Recommendations: Establish adequate control procedures to verify employee compensation levels to determine if staff exceed executive level II threshold. Review and update annually as per revised executive level II salary scale. Management Response: Do not Agreed with the Finding: The salary of our executive director has consistently adhered to established limits, and our Programs and Finance Director, underscoring the effectiveness of our internal controls, swiftly identified any anomaly. Prior to the conclusion of the program year, a communication to the Finance Director of the municipality on February 28, 2022, initiated the process of refunding the erroneously processed funds and prompted the necessary adjustments. The funds were returned through check #705, payment receipt #146762, and wage adjustments were seamlessly executed on March 15, 2022. It is important to stress that the auditor’s claim of a questionable cost lacks merit. The report is presented in November 2023, whereas the funds were returned in March 2022. Furthermore, comprehensive evidence of this return was readily available to the auditor at the time of their assessment.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Early Head Start 02CH01049105 CFDA Number: 93.600 Compliance Requirement: Matching Non-Federal Share Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria Section 75.306 Cost sharing or matching Federal regulations require to the Municipality, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity’s cost sharing, or matching when such contributions meet all the following criteria: (1) Are verifiable from the non-Federal entity’s records. Federal regulations require award recipients’ financial management systems to be able to provide accurate, current, and complete disclosure of the financial results of each Federal award (45 CFR § 75.302 (b)(2)) and to be adequately documented. Condition The Municipality entities must record in the electronic accounting system (Monet), supporting documents must comply with Non-Federal shares required. The documents presented by the Municipality from March 2021 to February 2023 as Non-Federal Share for $2,897,167 do not agree with the recipient share presented in the Federal Financial Report sent to the Finance Management System on May 3, 2022, 0, required amount $4,909,078 as recipient share of expenditures. Cause The municipality does not record in the electronic accounting system “Monet” the In-Kind contribution to be reported in the Payment System for the year ended June 30, 2022, and the monthly reports presented to board of directors do not included. Effect: The Municipality did not comply with the requirement of Non-Federal share required by US Department of Health & Human Services for the Head Start and Early Head Start programs; this could affect the continuance and new approvals of federal program funds. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurately and in a timely manner. In addition, the Municipality needs to implement adequate internal controls procedures to assure that the supporting documentation is available on the Monet system in a timely manner. Also, proper training in the accounting system should be obtained by the personnel in charge of preparing the Federal Financial Reports required by Head Start. Management Response: Agreed with the Finding: The accounting team has been instructed to consistently record the monthly in-kind contributions in the Monet System, ensuring their inclusion in the Federal Financial Report. Contrary to the assertion that the reported contribution is inaccurate, we stand by the correctness of our records. To address any concerns, we invite you to request the amended Federal Financial Report, which will include a comprehensive reconciliation of the in-kind contribution with our meticulously maintained accounting books. We are committed to providing you with this information promptly and transparently.

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 StatementMaterial Weakness Responsible Official: Program Director Criteria Section 75.320 Equipment CFR pat 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 minimum, meet some of the following required. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost property, percentage of federal participation in the project costs for the federal award under which the property location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of property. (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. Condition The Municipality did not maintain adequate internal control over property and equipment. The Municipality did not provide a real and personnel property record of all the property and equipment acquired this year with federal funds and insurance, On August 10, 2021, the Head Start program received a transfer of Rean and tangible personal property from Centro de Servicios a la Juventud, Inc on Hatillo Head Start, Bo. Corcovada. SF 429 and SF 428 were not submitted Evidence presented was SF 428 on August 28, 2020. Cause The Municipality does not have accurate property records of federal funds to trace the real and tangible personal property activities that should be reported to federal funds. Effect: The Municipality does not present fairly the financial position of the financial statements in the Government-Wide Financial Statements. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: 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 mut be developed to keep the property in good condition. The program must identify all properties acquired with federal funds and maintain adequate accounting records in accordance with federal regulations. Management Response: Do not Agreed with the Finding: The program upholds a stringent monitoring protocol for asset management, conducting annual inventories. The auditor did not engage in verification or assessment of any property-related matters, nor did seek specific information on this subject. The Head Start office maintains comprehensive evidence within the Federal Register Form SF-428.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Head Start Disaster Recovery From Hurricanes Harvey, Irma and María CFDA Number: 93.600 and 93.356 Compliance Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria The OMB Circular 133, establishes when a non-Federal entity enters a covered transaction with an entity at a lower tier, the non-Federal entity must verity that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended, or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at http://www.sam.gov/portal/public/SAM/. We found is not recorded in http://www.sam.gov/portal/public/SAM/. We didn’t find DUNS number and is possible is not an active company and doesn’t know if that company is suspended or debarred or otherwise excluded from participating for Head Start and Head Start Disaster Recovery from Hurricanes Harvey, Irma and María programs. Condition The Municipality’s disbursement test, we tested 113 vouchers and found 2 disbursements without System Award Management number or not active with funds payments more than $25,000. Questioned costs Not determined Cause Program officials did not verify if they are Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) that the contracted entity was suspended or debarred. Effect There is a risk that the contracted entity may have been debarred and might not comply with the contract requirements, the program may recover funds. Recommendation We recommend that the potential entity to be contracted is verified on the internet http://www.sam.gov/portal/public/SAM/ to assure there is no exclusions. Management Response Agreed with the Finding: It is crucial to highlight that the companies in question were not the originally contracted ones; however, they did possess the required SAM numbers. The decision to engage these companies arose from the realization that the originally contracted entities were not in adherence to the agreed-upon contractual terms. The identified companies were subsequently brought in under emergency circumstances by the Board of Auctions to fulfill the Head Start objectives. To forestall similar situations in the future, we are actively reviewing and fortifying our supplier’s selection processes while implementing robust contractual measures. It is important to underscore that this response was an exceptional one to address non-compliance, and we are steadfast in our commitment to avoiding such occurrences in the future.

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 StatementMaterial Weakness Responsible Official: Program Director Criteria Section 75.320 Equipment CFR pat 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 minimum, meet some of the following required. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost property, percentage of federal participation in the project costs for the federal award under which the property location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of property. (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. Condition The Municipality did not maintain adequate internal control over property and equipment. The Municipality did not provide a real and personnel property record of all the property and equipment acquired this year with federal funds and insurance, On August 10, 2021, the Head Start program received a transfer of Rean and tangible personal property from Centro de Servicios a la Juventud, Inc on Hatillo Head Start, Bo. Corcovada. SF 429 and SF 428 were not submitted Evidence presented was SF 428 on August 28, 2020. Cause The Municipality does not have accurate property records of federal funds to trace the real and tangible personal property activities that should be reported to federal funds. Effect: The Municipality does not present fairly the financial position of the financial statements in the Government-Wide Financial Statements. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: 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 mut be developed to keep the property in good condition. The program must identify all properties acquired with federal funds and maintain adequate accounting records in accordance with federal regulations. Management Response: Do not Agreed with the Finding: The program upholds a stringent monitoring protocol for asset management, conducting annual inventories. The auditor did not engage in verification or assessment of any property-related matters, nor did seek specific information on this subject. The Head Start office maintains comprehensive evidence within the Federal Register Form SF-428.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: N/A Federal Program Title: Housing Choice Voucher Section-8, IPA number RQ54 CFDA Number: 14.871 Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Federal Program Director Criteria 22 CFR § 5.801 Uniform financial reporting standards, (b) (1) Entities (or individuals) to which this subpart is applicable must provide to HUD such financial information as required by HUD. Such information must be provided on a n annual basis, except as required more accordance with Generally Accepted Accounting Principles as further defined by HUD in supplementary guidance; (2) Submitted electronically to HUD through the internet, or in such other electronic format designated by HUD, or in such non-electronic format as HUD may allow if the burden or cost of electronic reporting is determined by HUD to the excessive; and (3) Submitted in such form and substance as prescribed by HUD. Also, on Section (c) (1) the financial information to be submitted to HUD in accordance with paragraph (b) of this section, must be submitted to HUD annually, no later than 60 days after the end of the fiscal year of the reporting period, and as otherwise provided by law. In addition, on Section (d) (1) states that unaudited financial statements will be required 60 days after the PHA” s fiscal year end, and audited financial statements will then be required no later than 9 months after the PHA’s fiscal year end, in accordance with the Single Audit Act and 2 CFR Part 200, Subpart F. Condition The Municipality did not submit the required Financial Reports to the US Housing and Urban Development for the fiscal year ending June 30, 2022, during the required period. The unaudited Financial Report was not submitted on or before August 30, 2022, also, the audited Financial Report was not submitted on or before September 30, 2022. Questioned Cost None determined. Cause Control procedures were not established to provide on time finance information to prepare the required financial reports of the Housing and Urban Development. Effect The Municipality did not comply with the submission date required for the Financial Reports to the US Housing and Urban Development; this could affect the continuance and new approvals of federal program funds. Recommendation We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurate and in a timely manner. In addition, the Municipality need to implement adequate internal controls procedures I 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 Federal Financial Reports required by HUD. Management Response Agreed with the Finding: The Municipality acknowledges the finding, attributing it to a technical issue with the system. Consequently, for the upcoming fiscal year, we are actively seeking a company to provide guidance and assistance in reporting issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: N/A Federal Program Title: Housing Choice Voucher Section-8, IPA number RQ54 CFDA Number: 14.871 Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Federal Program Director Criteria 22 CFR § 5.801 Uniform financial reporting standards, (b) (1) Entities (or individuals) to which this subpart is applicable must provide to HUD such financial information as required by HUD. Such information must be provided on a n annual basis, except as required more accordance with Generally Accepted Accounting Principles as further defined by HUD in supplementary guidance; (2) Submitted electronically to HUD through the internet, or in such other electronic format designated by HUD, or in such non-electronic format as HUD may allow if the burden or cost of electronic reporting is determined by HUD to the excessive; and (3) Submitted in such form and substance as prescribed by HUD. Also, on Section (c) (1) the financial information to be submitted to HUD in accordance with paragraph (b) of this section, must be submitted to HUD annually, no later than 60 days after the end of the fiscal year of the reporting period, and as otherwise provided by law. In addition, on Section (d) (1) states that unaudited financial statements will be required 60 days after the PHA” s fiscal year end, and audited financial statements will then be required no later than 9 months after the PHA’s fiscal year end, in accordance with the Single Audit Act and 2 CFR Part 200, Subpart F. Condition The Municipality did not submit the required Financial Reports to the US Housing and Urban Development for the fiscal year ending June 30, 2022, during the required period. The unaudited Financial Report was not submitted on or before August 30, 2022, also, the audited Financial Report was not submitted on or before September 30, 2022. Questioned Cost None determined. Cause Control procedures were not established to provide on time finance information to prepare the required financial reports of the Housing and Urban Development. Effect The Municipality did not comply with the submission date required for the Financial Reports to the US Housing and Urban Development; this could affect the continuance and new approvals of federal program funds. Recommendation We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurate and in a timely manner. In addition, the Municipality need to implement adequate internal controls procedures I 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 Federal Financial Reports required by HUD. Management Response Agreed with the Finding: The Municipality acknowledges the finding, attributing it to a technical issue with the system. Consequently, for the upcoming fiscal year, we are actively seeking a company to provide guidance and assistance in reporting issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Early Head Start 02CH01049105 CFDA Number: 93.600 Compliance Requirement: Matching Non-Federal Share Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria Section 75.306 Cost sharing or matching Federal regulations require to the Municipality, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity’s cost sharing, or matching when such contributions meet all the following criteria: (1) Are verifiable from the non-Federal entity’s records. Federal regulations require award recipients’ financial management systems to be able to provide accurate, current, and complete disclosure of the financial results of each Federal award (45 CFR § 75.302 (b)(2)) and to be adequately documented. Condition The Municipality entities must record in the electronic accounting system (Monet), supporting documents must comply with Non-Federal shares required. The documents presented by the Municipality from March 2021 to February 2023 as Non-Federal Share for $2,897,167 do not agree with the recipient share presented in the Federal Financial Report sent to the Finance Management System on May 3, 2022, 0, required amount $4,909,078 as recipient share of expenditures. Cause The municipality does not record in the electronic accounting system “Monet” the In-Kind contribution to be reported in the Payment System for the year ended June 30, 2022, and the monthly reports presented to board of directors do not included. Effect: The Municipality did not comply with the requirement of Non-Federal share required by US Department of Health & Human Services for the Head Start and Early Head Start programs; this could affect the continuance and new approvals of federal program funds. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurately and in a timely manner. In addition, the Municipality needs to implement adequate internal controls procedures to assure that the supporting documentation is available on the Monet system in a timely manner. Also, proper training in the accounting system should be obtained by the personnel in charge of preparing the Federal Financial Reports required by Head Start. Management Response: Agreed with the Finding: The accounting team has been instructed to consistently record the monthly in-kind contributions in the Monet System, ensuring their inclusion in the Federal Financial Report. Contrary to the assertion that the reported contribution is inaccurate, we stand by the correctness of our records. To address any concerns, we invite you to request the amended Federal Financial Report, which will include a comprehensive reconciliation of the in-kind contribution with our meticulously maintained accounting books. We are committed to providing you with this information promptly and transparently.

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 StatementMaterial Weakness Responsible Official: Program Director Criteria Section 75.320 Equipment CFR pat 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 minimum, meet some of the following required. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost property, percentage of federal participation in the project costs for the federal award under which the property location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of property. (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. Condition The Municipality did not maintain adequate internal control over property and equipment. The Municipality did not provide a real and personnel property record of all the property and equipment acquired this year with federal funds and insurance, On August 10, 2021, the Head Start program received a transfer of Rean and tangible personal property from Centro de Servicios a la Juventud, Inc on Hatillo Head Start, Bo. Corcovada. SF 429 and SF 428 were not submitted Evidence presented was SF 428 on August 28, 2020. Cause The Municipality does not have accurate property records of federal funds to trace the real and tangible personal property activities that should be reported to federal funds. Effect: The Municipality does not present fairly the financial position of the financial statements in the Government-Wide Financial Statements. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: 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 mut be developed to keep the property in good condition. The program must identify all properties acquired with federal funds and maintain adequate accounting records in accordance with federal regulations. Management Response: Do not Agreed with the Finding: The program upholds a stringent monitoring protocol for asset management, conducting annual inventories. The auditor did not engage in verification or assessment of any property-related matters, nor did seek specific information on this subject. The Head Start office maintains comprehensive evidence within the Federal Register Form SF-428.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Head Start Disaster Recovery From Hurricanes Harvey, Irma and María CFDA Number: 93.600 and 93.356 Compliance Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria The OMB Circular 133, establishes when a non-Federal entity enters a covered transaction with an entity at a lower tier, the non-Federal entity must verity that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended, or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at http://www.sam.gov/portal/public/SAM/. We found is not recorded in http://www.sam.gov/portal/public/SAM/. We didn’t find DUNS number and is possible is not an active company and doesn’t know if that company is suspended or debarred or otherwise excluded from participating for Head Start and Head Start Disaster Recovery from Hurricanes Harvey, Irma and María programs. Condition The Municipality’s disbursement test, we tested 113 vouchers and found 2 disbursements without System Award Management number or not active with funds payments more than $25,000. Questioned costs Not determined Cause Program officials did not verify if they are Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) that the contracted entity was suspended or debarred. Effect There is a risk that the contracted entity may have been debarred and might not comply with the contract requirements, the program may recover funds. Recommendation We recommend that the potential entity to be contracted is verified on the internet http://www.sam.gov/portal/public/SAM/ to assure there is no exclusions. Management Response Agreed with the Finding: It is crucial to highlight that the companies in question were not the originally contracted ones; however, they did possess the required SAM numbers. The decision to engage these companies arose from the realization that the originally contracted entities were not in adherence to the agreed-upon contractual terms. The identified companies were subsequently brought in under emergency circumstances by the Board of Auctions to fulfill the Head Start objectives. To forestall similar situations in the future, we are actively reviewing and fortifying our supplier’s selection processes while implementing robust contractual measures. It is important to underscore that this response was an exceptional one to address non-compliance, and we are steadfast in our commitment to avoiding such occurrences in the future.

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: Other Type of Finding: Professional services cost, material weakness Responsible Official: Federal Program Director Criteria Section Head Start “Act” 653(b) Comparability of Wages No federal funds may be used to pay any part of the compensation of an individual employee by a head start Program, including non-federal funds, exceeds an amount equal to the rate payable for Level II of the Executive Schedules under section 5313 of Title 5, United States Code. Condition The Department of Health and Human Services Appropriations Act 2022 restricts the amount of salary to Executive Level II of the Federal Executive pay scale for a full time 12 months total compensation for the grant period from March 2022 to February 2023. Cause The finance department does not establish internal control procedures to verify any excess of salary limitation, in accordance with section Head Start Act 653(b) comparability of wages. Effect Grant program was limited to use the excess for program needs for children serve in the programs. Questioned cost The Executive Director received $225,671 as salary compensation for the grant period, less $203,700 for salary limitation. Excess salary received for Executive Director was …………………… $21,971 Identification of a repeated finding: None repeating findings were found. Recommendations: Establish adequate control procedures to verify employee compensation levels to determine if staff exceed executive level II threshold. Review and update annually as per revised executive level II salary scale. Management Response: Do not Agreed with the Finding: The salary of our executive director has consistently adhered to established limits, and our Programs and Finance Director, underscoring the effectiveness of our internal controls, swiftly identified any anomaly. Prior to the conclusion of the program year, a communication to the Finance Director of the municipality on February 28, 2022, initiated the process of refunding the erroneously processed funds and prompted the necessary adjustments. The funds were returned through check #705, payment receipt #146762, and wage adjustments were seamlessly executed on March 15, 2022. It is important to stress that the auditor’s claim of a questionable cost lacks merit. The report is presented in November 2023, whereas the funds were returned in March 2022. Furthermore, comprehensive evidence of this return was readily available to the auditor at the time of their assessment.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Early Head Start 02CH01049105 CFDA Number: 93.600 Compliance Requirement: Matching Non-Federal Share Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria Section 75.306 Cost sharing or matching Federal regulations require to the Municipality, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity’s cost sharing, or matching when such contributions meet all the following criteria: (1) Are verifiable from the non-Federal entity’s records. Federal regulations require award recipients’ financial management systems to be able to provide accurate, current, and complete disclosure of the financial results of each Federal award (45 CFR § 75.302 (b)(2)) and to be adequately documented. Condition The Municipality entities must record in the electronic accounting system (Monet), supporting documents must comply with Non-Federal shares required. The documents presented by the Municipality from March 2021 to February 2023 as Non-Federal Share for $2,897,167 do not agree with the recipient share presented in the Federal Financial Report sent to the Finance Management System on May 3, 2022, 0, required amount $4,909,078 as recipient share of expenditures. Cause The municipality does not record in the electronic accounting system “Monet” the In-Kind contribution to be reported in the Payment System for the year ended June 30, 2022, and the monthly reports presented to board of directors do not included. Effect: The Municipality did not comply with the requirement of Non-Federal share required by US Department of Health & Human Services for the Head Start and Early Head Start programs; this could affect the continuance and new approvals of federal program funds. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: We recommend the Municipality maintain adequate accounting records related to the federal funds to properly prepare the financial statements accurately and in a timely manner. In addition, the Municipality needs to implement adequate internal controls procedures to assure that the supporting documentation is available on the Monet system in a timely manner. Also, proper training in the accounting system should be obtained by the personnel in charge of preparing the Federal Financial Reports required by Head Start. Management Response: Agreed with the Finding: The accounting team has been instructed to consistently record the monthly in-kind contributions in the Monet System, ensuring their inclusion in the Federal Financial Report. Contrary to the assertion that the reported contribution is inaccurate, we stand by the correctness of our records. To address any concerns, we invite you to request the amended Federal Financial Report, which will include a comprehensive reconciliation of the in-kind contribution with our meticulously maintained accounting books. We are committed to providing you with this information promptly and transparently.

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 StatementMaterial Weakness Responsible Official: Program Director Criteria Section 75.320 Equipment CFR pat 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 minimum, meet some of the following required. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost property, percentage of federal participation in the project costs for the federal award under which the property location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of property. (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. Condition The Municipality did not maintain adequate internal control over property and equipment. The Municipality did not provide a real and personnel property record of all the property and equipment acquired this year with federal funds and insurance, On August 10, 2021, the Head Start program received a transfer of Rean and tangible personal property from Centro de Servicios a la Juventud, Inc on Hatillo Head Start, Bo. Corcovada. SF 429 and SF 428 were not submitted Evidence presented was SF 428 on August 28, 2020. Cause The Municipality does not have accurate property records of federal funds to trace the real and tangible personal property activities that should be reported to federal funds. Effect: The Municipality does not present fairly the financial position of the financial statements in the Government-Wide Financial Statements. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: 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 mut be developed to keep the property in good condition. The program must identify all properties acquired with federal funds and maintain adequate accounting records in accordance with federal regulations. Management Response: Do not Agreed with the Finding: The program upholds a stringent monitoring protocol for asset management, conducting annual inventories. The auditor did not engage in verification or assessment of any property-related matters, nor did seek specific information on this subject. The Head Start office maintains comprehensive evidence within the Federal Register Form SF-428.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start and Head Start Disaster Recovery From Hurricanes Harvey, Irma and María CFDA Number: 93.600 and 93.356 Compliance Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Federal Program Director Criteria The OMB Circular 133, establishes when a non-Federal entity enters a covered transaction with an entity at a lower tier, the non-Federal entity must verity that the entity, as defined in 2 CFR Section 180.995 and agency adopting regulations, is not suspended, or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at http://www.sam.gov/portal/public/SAM/. We found is not recorded in http://www.sam.gov/portal/public/SAM/. We didn’t find DUNS number and is possible is not an active company and doesn’t know if that company is suspended or debarred or otherwise excluded from participating for Head Start and Head Start Disaster Recovery from Hurricanes Harvey, Irma and María programs. Condition The Municipality’s disbursement test, we tested 113 vouchers and found 2 disbursements without System Award Management number or not active with funds payments more than $25,000. Questioned costs Not determined Cause Program officials did not verify if they are Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) that the contracted entity was suspended or debarred. Effect There is a risk that the contracted entity may have been debarred and might not comply with the contract requirements, the program may recover funds. Recommendation We recommend that the potential entity to be contracted is verified on the internet http://www.sam.gov/portal/public/SAM/ to assure there is no exclusions. Management Response Agreed with the Finding: It is crucial to highlight that the companies in question were not the originally contracted ones; however, they did possess the required SAM numbers. The decision to engage these companies arose from the realization that the originally contracted entities were not in adherence to the agreed-upon contractual terms. The identified companies were subsequently brought in under emergency circumstances by the Board of Auctions to fulfill the Head Start objectives. To forestall similar situations in the future, we are actively reviewing and fortifying our supplier’s selection processes while implementing robust contractual measures. It is important to underscore that this response was an exceptional one to address non-compliance, and we are steadfast in our commitment to avoiding such occurrences in the future.

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 StatementMaterial Weakness Responsible Official: Program Director Criteria Section 75.320 Equipment CFR pat 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 minimum, meet some of the following required. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost property, percentage of federal participation in the project costs for the federal award under which the property location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of property. (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. Condition The Municipality did not maintain adequate internal control over property and equipment. The Municipality did not provide a real and personnel property record of all the property and equipment acquired this year with federal funds and insurance, On August 10, 2021, the Head Start program received a transfer of Rean and tangible personal property from Centro de Servicios a la Juventud, Inc on Hatillo Head Start, Bo. Corcovada. SF 429 and SF 428 were not submitted Evidence presented was SF 428 on August 28, 2020. Cause The Municipality does not have accurate property records of federal funds to trace the real and tangible personal property activities that should be reported to federal funds. Effect: The Municipality does not present fairly the financial position of the financial statements in the Government-Wide Financial Statements. Questioned cost: Not determined Identification of a repeated finding: None repeating findings were found. Recommendations: 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 mut be developed to keep the property in good condition. The program must identify all properties acquired with federal funds and maintain adequate accounting records in accordance with federal regulations. Management Response: Do not Agreed with the Finding: The program upholds a stringent monitoring protocol for asset management, conducting annual inventories. The auditor did not engage in verification or assessment of any property-related matters, nor did seek specific information on this subject. The Head Start office maintains comprehensive evidence within the Federal Register Form SF-428.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Program Title: All Federal Programs CFDA Number: N/A Compliance Requirement: Reporting Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Criteria 2 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 receipt of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Preliminary Financial reports and programs financial information were available on August 22, 2023 to prepare the Single Audit Reporting Package. Questioned cost Not determined. Cause Control procedures were not established to provide on time finance information to prepare the Single Audit reporting package. Effect The Municipality did not comply with the submission date required for the Data Collection Form and Reporting Package, this could affect the continuance and new approvals of federal funds. In addition, for the next two (2) fiscal years the Municipality cannot be considered by the auditor as a low-risk auditee. Recommendation: To prepare a calendar responsibility 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: Agreed with the Finding: We are actively seeking a company to provide guidance and assistance in report issuance, aiming to streamline and address these processes effectively.