FAC Explorer

Audit 290434

FY End
2022-06-30
Total Expended
$18.86M
Findings
6
Programs
12
Organization: Municipality of Utuado (PR)
Year: 2022 Accepted: 2024-02-14
Auditor: Torres Fred & CO

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
367430 2022-007 Material Weakness Yes F
367431 2022-008 Material Weakness - C
367432 2022-009 Significant Deficiency - I
943872 2022-007 Material Weakness Yes F
943873 2022-008 Material Weakness - C
943874 2022-009 Significant Deficiency - I

Programs

ALN Program Spent Major Findings
93.600 Head Start $7.04M Yes 2
97.030 Community Disaster Loans $1.65M Yes 0
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.52M Yes 0
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $1.16M Yes 0
14.871 Section 8 Housing Choice Vouchers $1.13M Yes 0
93.356 Head Start Disaster Recovery $1.11M Yes 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $966,295 Yes 1
21.019 Coronavirus Relief Fund $357,168 Yes 0
14.231 Emergency Solutions Grant Program $278,131 - 0
10.558 Child and Adult Care Food Program $191,557 - 0
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $170,212 - 0
16.034 Coronavirus Emergency Supplemental Funding Program $66,402 - 0

Contacts

Name Title Type
PWZANJ7WJZB5 Juan Galan Auditee
7878943500 Frankie Torres Fred Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: 1. The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Municipality of Utuado, Puerto Rico (Municipality) and is presented on the modified accrual basis. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the general-purpose financial statements. The reporting entity is defined in Note (1) (A) to the general-purpose combined financial statements.
Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: 1. The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. 1.       The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022.
Title: ASSISTANCE LISTING NUMBER Accounting Policies: 1. The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. The federal assistance listing number included in this Schedule are determined based on the program name, review of grant contract information and the Office of Management and Budget's Catalogue of Federal Domestic Assistance.
Title: PASS-THROUGH GRANTOR’S NUMBER Accounting Policies: 1. The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. State or local government redistribution of federal awards to the Municipality, treated as if they were received directly from the federal government. The Uniform Guidance requires the schedule to include the name of the pass-through entity and identifying number assigned by the pass-through entity for federal awards received as a sub recipient. Numbers identified as N/AV are not available.
Title: PASS-THROUGH TO SUB-RECIPIENTS Accounting Policies: 1. The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. The Uniform Guidance requires the Schedule to present the total amounts passed through to sub- recipients from each federal program. The Municipality did not have any sub-recipients during the year.
Title: MAJOR PROGRAMS Accounting Policies: 1. The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. Major programs are identified in the Summary of Auditor’s Results Section of the Schedule of Findings and Questioned Costs.
Title: RELATIONSHIP TO BASIC FINANCIAL STATEMENTS Accounting Policies: 1. The accompanying Schedule of Expenditures of Federal Awards is prepared from Municipality’s accounting records and is not intended to present financial position or the results of operations. 2. The Municipality in accordance with the terms records the financial transactions and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. 3. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable or when actually paid, whichever occurs first. 4. The Municipality has selected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance, and did not charge indirect cost to federal grants during the year ended June 30, 2022. De Minimis Rate Used: N Rate Explanation: The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. SEE NOTE TO SEFA IN FINANCIAL STATEMENT

Finding Details

Finding 2022-007
FINDING 2022-007 FEDERAL PROGRAM HEAD START (ASSISTANCE LISTING NO. 93.600) DEPARTMENT OF HEALTH AND HUMAN SERVICES CATEGORY INTERNAL CONTROL-MATERIAL WEAKNESS NONCOMPLIANCE EQUIPMENT AND REAL PROPERTY MANAGEMENT CONDITIONS The Head Start Program is not maintaining adequate internal controls over property and equipment items acquired with Federal Funds. In testing property and equipment, we noted the following: The property records were not reliable because they did not include all the required information and they were incomplete or missing information. CRITERIA 2 CFR 200.313 (d) and the 45 CFR 75.320 (d) establishes that procedures for managing equipment will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (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. CAUSE The Head Start Program has inadequate internal control procedures that guarantee adequate records, registering and safeguarding of property and equipment. EFFECT Due to the lack of internal controls and property accounting records, we could not validate the accuracy and completeness of equipment and property-related reports. RECOMMENDATION The Head Start Program must prepare a report including a full description of the assets, location, use, responsible person, cost, and any other pertinent data. In addition, the Program should establish a property control account and a subsidiary ledger to provide for the reconciliation of property. QUESTIONED COSTS None PRIOR YEAR 2021-004 VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION The finding was corrected for future efforts related to the area of the property. A private company was hired to conduct the inventory. Appropriate seizures of disused equipment were carried out and an annual inventory of all existing equipment is being carried out, with ownership number, location and required information. RESPONSIBLE PERSON Mr. Angel Vélez-Program Director 787-894-9191
Finding 2022-008
FINDING 2022-008 FEDERAL PROGRAM HEAD START (ASSISTANCE LISTING NO. 93.600) DEPARTMENT OF HEALTH AND HUMAN SERVICES CATEGORY INTERNAL CONTROL-MATERIAL WEAKNESS NONCOMPLIANCE CASH MANAGEMENT-BANK OVERDRAFT CONDITIONS The Head Start Program has a negative book balance of $46,490 as of June 30, 2022. CRITERIA The 45 CFR, Subpart C, §92.20 states that the grantees and subgrantees must maintain effective controls and accountability for all grant and subgrant cash, real and personal property, and other assets, sufficient to permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restriction and prohibitions of applicable statutes and that the financial reporting must be accurate, current, and complete disclosure of the financial results in accordance with the financial reporting requirements of the grant or subgrant. CAUSE The Program did not have sufficient cash balances to cover all the checks written and released before June 30, 2022. The Administration of the program told us that on June 27, 2022, they requested through the PMS system the disbursement of the corresponding funds, but that as of June 30, 2022, the PMS system indicated that there is a hold in the account awaiting approval. EFFECT This caused the financial statement of the Head Start program to show a bank overdraft and ran the risk of issuing checks that would not be honored by its bank. Additional bank charges may also be imposed on the program with each overdraft. RECOMMENDATION The Program and the Finance department should implement adequate internal control procedures to ensure that there are sufficient funds in the bank account before releasing the checks. QUESTIONED COSTS None PRIOR YEAR Not Applicable VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION The finding was corrected. The payer of the Concessionaire, which has access to the system, was appointed. According to internal procedure, she does not issue payments until she is sure that the account has a budget. RESPONSIBLE PERSON Mr. Angel Vélez-Program Director 787-894-9191
Finding 2022-009
FINDING 2022-009 FEDERAL PROGRAM DISASTER GRANT-PUBLIC ASSISTANCE ( ASSISTANCE LISTING NO. 97.036) DEPARTMENT OF HOMELAND SECURITY CATEGORY INTERNAL CONTROL NONCOMPLIANCE PROCUREMENT-CONTRACT PROVISION CONDITIONS As part of our allowability test we verified if the contract contained the clauses required by FEMA. During our audit, we identified that the revised contracts did not contain the following required clauses: Retention of records for three years; Equal Employment Opportunity; Compliance with the Clean Air Act and Water Act; Compliance with Suspension and Debarment; Compliance with Byrd Anti Lobbying Amendment. CRITERIA 2 CFR, Section 200.327 states that the non-Federal entity's contracts must contain the applicable provisions described in appendix II, which includes the clauses mentioned above. CAUSE The Program Director and the City Clerk's Office failed to take internal control measures to ensure that FEMA-funded contracts included all clauses required by applicable regulations. EFFECT In case of noncompliance with the federal procurement rules, FEMA may apply a remedy, as appropriate, in accordance with its authorities found at 2 C.F.R. § 200.339 Remedies for Noncompliance. RECOMMENDATION The Program Director and the City Clerk’s Office should implement adequate internal control procedures to ensure that the contracts contain all the clauses required by FEMA. QUESTIONED COSTS None PRIOR YEAR Not Applicable VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION Corrective action was taken on contracts 2023 and beyond. The 2023 contracts already awarded were amended to include them and the new contracts that are being formalized in 2024 are including FEMA's mandatory clauses. RESPONSIBLE PERSON Mr. Jose González-Program Director 787-894-9191
Finding 2022-007
FINDING 2022-007 FEDERAL PROGRAM HEAD START (ASSISTANCE LISTING NO. 93.600) DEPARTMENT OF HEALTH AND HUMAN SERVICES CATEGORY INTERNAL CONTROL-MATERIAL WEAKNESS NONCOMPLIANCE EQUIPMENT AND REAL PROPERTY MANAGEMENT CONDITIONS The Head Start Program is not maintaining adequate internal controls over property and equipment items acquired with Federal Funds. In testing property and equipment, we noted the following: The property records were not reliable because they did not include all the required information and they were incomplete or missing information. CRITERIA 2 CFR 200.313 (d) and the 45 CFR 75.320 (d) establishes that procedures for managing equipment will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (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. CAUSE The Head Start Program has inadequate internal control procedures that guarantee adequate records, registering and safeguarding of property and equipment. EFFECT Due to the lack of internal controls and property accounting records, we could not validate the accuracy and completeness of equipment and property-related reports. RECOMMENDATION The Head Start Program must prepare a report including a full description of the assets, location, use, responsible person, cost, and any other pertinent data. In addition, the Program should establish a property control account and a subsidiary ledger to provide for the reconciliation of property. QUESTIONED COSTS None PRIOR YEAR 2021-004 VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION The finding was corrected for future efforts related to the area of the property. A private company was hired to conduct the inventory. Appropriate seizures of disused equipment were carried out and an annual inventory of all existing equipment is being carried out, with ownership number, location and required information. RESPONSIBLE PERSON Mr. Angel Vélez-Program Director 787-894-9191
Finding 2022-008
FINDING 2022-008 FEDERAL PROGRAM HEAD START (ASSISTANCE LISTING NO. 93.600) DEPARTMENT OF HEALTH AND HUMAN SERVICES CATEGORY INTERNAL CONTROL-MATERIAL WEAKNESS NONCOMPLIANCE CASH MANAGEMENT-BANK OVERDRAFT CONDITIONS The Head Start Program has a negative book balance of $46,490 as of June 30, 2022. CRITERIA The 45 CFR, Subpart C, §92.20 states that the grantees and subgrantees must maintain effective controls and accountability for all grant and subgrant cash, real and personal property, and other assets, sufficient to permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restriction and prohibitions of applicable statutes and that the financial reporting must be accurate, current, and complete disclosure of the financial results in accordance with the financial reporting requirements of the grant or subgrant. CAUSE The Program did not have sufficient cash balances to cover all the checks written and released before June 30, 2022. The Administration of the program told us that on June 27, 2022, they requested through the PMS system the disbursement of the corresponding funds, but that as of June 30, 2022, the PMS system indicated that there is a hold in the account awaiting approval. EFFECT This caused the financial statement of the Head Start program to show a bank overdraft and ran the risk of issuing checks that would not be honored by its bank. Additional bank charges may also be imposed on the program with each overdraft. RECOMMENDATION The Program and the Finance department should implement adequate internal control procedures to ensure that there are sufficient funds in the bank account before releasing the checks. QUESTIONED COSTS None PRIOR YEAR Not Applicable VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION The finding was corrected. The payer of the Concessionaire, which has access to the system, was appointed. According to internal procedure, she does not issue payments until she is sure that the account has a budget. RESPONSIBLE PERSON Mr. Angel Vélez-Program Director 787-894-9191
Finding 2022-009
FINDING 2022-009 FEDERAL PROGRAM DISASTER GRANT-PUBLIC ASSISTANCE ( ASSISTANCE LISTING NO. 97.036) DEPARTMENT OF HOMELAND SECURITY CATEGORY INTERNAL CONTROL NONCOMPLIANCE PROCUREMENT-CONTRACT PROVISION CONDITIONS As part of our allowability test we verified if the contract contained the clauses required by FEMA. During our audit, we identified that the revised contracts did not contain the following required clauses: Retention of records for three years; Equal Employment Opportunity; Compliance with the Clean Air Act and Water Act; Compliance with Suspension and Debarment; Compliance with Byrd Anti Lobbying Amendment. CRITERIA 2 CFR, Section 200.327 states that the non-Federal entity's contracts must contain the applicable provisions described in appendix II, which includes the clauses mentioned above. CAUSE The Program Director and the City Clerk's Office failed to take internal control measures to ensure that FEMA-funded contracts included all clauses required by applicable regulations. EFFECT In case of noncompliance with the federal procurement rules, FEMA may apply a remedy, as appropriate, in accordance with its authorities found at 2 C.F.R. § 200.339 Remedies for Noncompliance. RECOMMENDATION The Program Director and the City Clerk’s Office should implement adequate internal control procedures to ensure that the contracts contain all the clauses required by FEMA. QUESTIONED COSTS None PRIOR YEAR Not Applicable VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION Corrective action was taken on contracts 2023 and beyond. The 2023 contracts already awarded were amended to include them and the new contracts that are being formalized in 2024 are including FEMA's mandatory clauses. RESPONSIBLE PERSON Mr. Jose González-Program Director 787-894-9191