Finding Reference 2023-002
Federal Agency: U.S. Department of Treasury
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Reporting Test, we evaluated two (2) Project and Expenditure Reports submitted to the U.S. Department of Treasury during fiscal year 2022-2023. The first one corresponded to the quarter from January to March 2023, identified as Q1 2023. The second one corresponded to the quarter from April to June 2023, identified as Q2 2023.
The report Q1 2023 discloses the cumulative information of thirteen (13) projects. Of the total of thirteen (13) projects, four (4) have expenditures reported as incurred between January through March 2023. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system for one (1) of the four (4) projects.
The report Q2 2023 discloses the cumulative information of eighteen (18) projects of which seven (7) have expenditures reported as incurred between April through June 2023. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system for one (3) of the seven (7) projects.
Criteria The Coronavirus State and Local Fiscal Recovery Funds - Compliance and Reporting Guidance, Part I, Section 10 (d), states that all recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Appropriate accounting records must be maintained for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.
In addition, where appropriate, controls need to be established to ensure the completion and timely submission of all mandatory performance and/or compliance reporting.
Cause of Condition The working papers used as source document to prepare the quarterly reports had mathematical errors. The program administrators identified the situation and made improvements to the working papers to have more control in the accuracy and completeness of the information. Also, they have been correcting the errors in the subsequent reports to properly present the actual funds spent.
Effect of Condition The expenses reported in the Project and Expenditure Reports do not agree with the accounting records.
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the Project and Expenditure Reports. The Program fiscal area ensures that accounting records are updated at the end of each month in order to prepare accurate reports for the federal agency.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action We concur with the finding. During the quarters from January to March and April to June 2023, there were differences between the reports submitted to the Treasury Department and the accounting reports of the SIMA system. This happened because obligations that were cancelled were included in the submitted reports and not corrected within the corresponding quarter. The personnel assigned to work on the quarterly reports became aware of these situations after the submission of the reports. As a corrective measure, an internal work sheet was created where monthly cancellations and adjustments are verified. In this way, the quarterly report submitted to the Treasury Department will agree with the accounting system. Before submitting the reports, a meeting is held to validate that the worksheet is in accordance with the accounting system. After validating the accuracy of the worksheet, the report is submitted to the Treasury Department with information consistent with the accounting system. As of today, the differences identified have been corrected in subsequent quarters.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: Bárbara Castro Viruet, Accountant
Finding Reference 2023-003
Federal Agency: U.S. Department of Homeland Security
Pass-through
Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3)
Federal Emergency Management Agency (FEMA)
Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster
(ALN 97.036)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2022-2023. During our audit procedures, we noted that the reports did not agree with the accounting and project records.
Criteria 2 CFR 200.302 (a) states that the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329.
Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities.
Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records.
Recommendation We recommend the Program Administrators to reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions The QPR Reports for the months from January to March 2023, were completed by the previous POC Recovery Office. We understand that expenses were reported in the QPR on the date when the certification with the contractor´s invoice was received at the Secretary of Engineering and Conservation of Infrastructure and not on the date of payment or disbursement of the invoice. For example, if the invoice was received in the month of February, the expense was recorded in the QPR from January to March even though it was not paid until the month of April.
We are verifying each project reported in the QPR against the amount reported at the SIMA System. We expect to have updated and correct information for all the Quarterly Progress Reports for the period from January to March 2024.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: Dafne L. Claudio Sánchez, Accountant
Finding Reference 2023-003
Federal Agency: U.S. Department of Homeland Security
Pass-through
Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3)
Federal Emergency Management Agency (FEMA)
Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster
(ALN 97.036)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2022-2023. During our audit procedures, we noted that the reports did not agree with the accounting and project records.
Criteria 2 CFR 200.302 (a) states that the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329.
Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities.
Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records.
Recommendation We recommend the Program Administrators to reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions The QPR Reports for the months from January to March 2023, were completed by the previous POC Recovery Office. We understand that expenses were reported in the QPR on the date when the certification with the contractor´s invoice was received at the Secretary of Engineering and Conservation of Infrastructure and not on the date of payment or disbursement of the invoice. For example, if the invoice was received in the month of February, the expense was recorded in the QPR from January to March even though it was not paid until the month of April.
We are verifying each project reported in the QPR against the amount reported at the SIMA System. We expect to have updated and correct information for all the Quarterly Progress Reports for the period from January to March 2024.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: Dafne L. Claudio Sánchez, Accountant
Finding Reference 2023-004
Federal Agency: U.S. Department of Health and Human Services
Pass-through
Agency: Puerto Rico Department of Family
Program: Child Care and Development Block Grant (ALN 93.575)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition During our audit procedures, we noted that the Program did not submit the annual closing reports to the pass-through entity, as required by the contract agreement.
Criteria 45 CFR Part 98.67 (c) Fiscal control and accounting procedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provisions of this part.
Also, the contract agreement states in Clause eleven (11) that the Municipality is responsible for the presentation of the trial balance and annual partial closing report fifteen (15) calendar days after the end of the contract. Ninety (90) days after, the Municipality should liquidate all obligations and present to the pass-through entity the final annual closing report (CC-006).
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame.
Effect of Condition The Program is not in compliance with 45 CFR Part 98.67- Fiscal Requirements (c) (1) (2).
Recommendation Management should take the necessary steps to ensure that the Program submits its financial reports within the time frame required by the state pass-through agency.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions As an internal control, the accountant in charge of the program will keep monthly reports of the expenditures to expedite the collection of information and submit timely and complete reports. The documentation of the reports will be physically filed and digitally saved in the accounting files.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: José A. Mathews Maisonet, Accountant
Finding Reference 2023-005
Federal Agency: U.S. Department of Health and Human Services
Pass-through
Agency: Puerto Rico Department of Family
Program: Child Care and Development Block Grant (ALN 93.575)
Compliance
Requirement: Earmarking (G)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition We were not able to determine the compliance of the Program with the Earmarking costs limitations because the annual closing reports were not available.
Criteria 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less that seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50.
45 CFR, Subpart F, Section 95.50 (d) states of the aggregate amount of funds expended, no more than five percent may be used for administrative activities as described in 45 CFR 98.54.
45 CFR, Subpart F, Section 95.50 (f) (2) states that from Discretionary amounts provided for a fiscal year, the Lead Agency shall use not less than 70 percent to fund direct services (provided by the Lead Agency).
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame.
Effect of Condition The program is not in compliance with 45 CFR, Subpart F, Section 98.50.
Recommendation We recommend the Program’s Management to take the necessary steps to ensure that the Program submits its financial reports within the time frame required by the state pass-through agency.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions The implementation of the Corrective Action Plan 2023-004 will ensure that complete reports are submitted for the validation of the compliance with this finding. Additionally, we will analyze our approved budget by ACUDEN to meet supplemental the terms and conditions of the Child Care and Development Fund Program.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: José A. Mathews Maisonet, Accountant
Finding Reference 2023-002
Federal Agency: U.S. Department of Treasury
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Reporting Test, we evaluated two (2) Project and Expenditure Reports submitted to the U.S. Department of Treasury during fiscal year 2022-2023. The first one corresponded to the quarter from January to March 2023, identified as Q1 2023. The second one corresponded to the quarter from April to June 2023, identified as Q2 2023.
The report Q1 2023 discloses the cumulative information of thirteen (13) projects. Of the total of thirteen (13) projects, four (4) have expenditures reported as incurred between January through March 2023. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system for one (1) of the four (4) projects.
The report Q2 2023 discloses the cumulative information of eighteen (18) projects of which seven (7) have expenditures reported as incurred between April through June 2023. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system for one (3) of the seven (7) projects.
Criteria The Coronavirus State and Local Fiscal Recovery Funds - Compliance and Reporting Guidance, Part I, Section 10 (d), states that all recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Appropriate accounting records must be maintained for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.
In addition, where appropriate, controls need to be established to ensure the completion and timely submission of all mandatory performance and/or compliance reporting.
Cause of Condition The working papers used as source document to prepare the quarterly reports had mathematical errors. The program administrators identified the situation and made improvements to the working papers to have more control in the accuracy and completeness of the information. Also, they have been correcting the errors in the subsequent reports to properly present the actual funds spent.
Effect of Condition The expenses reported in the Project and Expenditure Reports do not agree with the accounting records.
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the Project and Expenditure Reports. The Program fiscal area ensures that accounting records are updated at the end of each month in order to prepare accurate reports for the federal agency.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action We concur with the finding. During the quarters from January to March and April to June 2023, there were differences between the reports submitted to the Treasury Department and the accounting reports of the SIMA system. This happened because obligations that were cancelled were included in the submitted reports and not corrected within the corresponding quarter. The personnel assigned to work on the quarterly reports became aware of these situations after the submission of the reports. As a corrective measure, an internal work sheet was created where monthly cancellations and adjustments are verified. In this way, the quarterly report submitted to the Treasury Department will agree with the accounting system. Before submitting the reports, a meeting is held to validate that the worksheet is in accordance with the accounting system. After validating the accuracy of the worksheet, the report is submitted to the Treasury Department with information consistent with the accounting system. As of today, the differences identified have been corrected in subsequent quarters.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: Bárbara Castro Viruet, Accountant
Finding Reference 2023-003
Federal Agency: U.S. Department of Homeland Security
Pass-through
Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3)
Federal Emergency Management Agency (FEMA)
Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster
(ALN 97.036)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2022-2023. During our audit procedures, we noted that the reports did not agree with the accounting and project records.
Criteria 2 CFR 200.302 (a) states that the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329.
Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities.
Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records.
Recommendation We recommend the Program Administrators to reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions The QPR Reports for the months from January to March 2023, were completed by the previous POC Recovery Office. We understand that expenses were reported in the QPR on the date when the certification with the contractor´s invoice was received at the Secretary of Engineering and Conservation of Infrastructure and not on the date of payment or disbursement of the invoice. For example, if the invoice was received in the month of February, the expense was recorded in the QPR from January to March even though it was not paid until the month of April.
We are verifying each project reported in the QPR against the amount reported at the SIMA System. We expect to have updated and correct information for all the Quarterly Progress Reports for the period from January to March 2024.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: Dafne L. Claudio Sánchez, Accountant
Finding Reference 2023-003
Federal Agency: U.S. Department of Homeland Security
Pass-through
Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3)
Federal Emergency Management Agency (FEMA)
Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster
(ALN 97.036)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2022-2023. During our audit procedures, we noted that the reports did not agree with the accounting and project records.
Criteria 2 CFR 200.302 (a) states that the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329.
Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities.
Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records.
Recommendation We recommend the Program Administrators to reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions The QPR Reports for the months from January to March 2023, were completed by the previous POC Recovery Office. We understand that expenses were reported in the QPR on the date when the certification with the contractor´s invoice was received at the Secretary of Engineering and Conservation of Infrastructure and not on the date of payment or disbursement of the invoice. For example, if the invoice was received in the month of February, the expense was recorded in the QPR from January to March even though it was not paid until the month of April.
We are verifying each project reported in the QPR against the amount reported at the SIMA System. We expect to have updated and correct information for all the Quarterly Progress Reports for the period from January to March 2024.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: Dafne L. Claudio Sánchez, Accountant
Finding Reference 2023-004
Federal Agency: U.S. Department of Health and Human Services
Pass-through
Agency: Puerto Rico Department of Family
Program: Child Care and Development Block Grant (ALN 93.575)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition During our audit procedures, we noted that the Program did not submit the annual closing reports to the pass-through entity, as required by the contract agreement.
Criteria 45 CFR Part 98.67 (c) Fiscal control and accounting procedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provisions of this part.
Also, the contract agreement states in Clause eleven (11) that the Municipality is responsible for the presentation of the trial balance and annual partial closing report fifteen (15) calendar days after the end of the contract. Ninety (90) days after, the Municipality should liquidate all obligations and present to the pass-through entity the final annual closing report (CC-006).
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame.
Effect of Condition The Program is not in compliance with 45 CFR Part 98.67- Fiscal Requirements (c) (1) (2).
Recommendation Management should take the necessary steps to ensure that the Program submits its financial reports within the time frame required by the state pass-through agency.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions As an internal control, the accountant in charge of the program will keep monthly reports of the expenditures to expedite the collection of information and submit timely and complete reports. The documentation of the reports will be physically filed and digitally saved in the accounting files.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: José A. Mathews Maisonet, Accountant
Finding Reference 2023-005
Federal Agency: U.S. Department of Health and Human Services
Pass-through
Agency: Puerto Rico Department of Family
Program: Child Care and Development Block Grant (ALN 93.575)
Compliance
Requirement: Earmarking (G)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition We were not able to determine the compliance of the Program with the Earmarking costs limitations because the annual closing reports were not available.
Criteria 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less that seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50.
45 CFR, Subpart F, Section 95.50 (d) states of the aggregate amount of funds expended, no more than five percent may be used for administrative activities as described in 45 CFR 98.54.
45 CFR, Subpart F, Section 95.50 (f) (2) states that from Discretionary amounts provided for a fiscal year, the Lead Agency shall use not less than 70 percent to fund direct services (provided by the Lead Agency).
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame.
Effect of Condition The program is not in compliance with 45 CFR, Subpart F, Section 98.50.
Recommendation We recommend the Program’s Management to take the necessary steps to ensure that the Program submits its financial reports within the time frame required by the state pass-through agency.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Actions The implementation of the Corrective Action Plan 2023-004 will ensure that complete reports are submitted for the validation of the compliance with this finding. Additionally, we will analyze our approved budget by ACUDEN to meet supplemental the terms and conditions of the Child Care and Development Fund Program.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: José A. Mathews Maisonet, Accountant