Finding Reference 2023-003
Federal Agency: U.S. Department of Health and Human Services
Pass-through Agency: Puerto Rico Department of Family
Program: Head Start Program Cluster (ALN 93.600 & 93.365)
Compliance Requirement: Reporting - Financial Administration (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding(s) 2022-003, 2021-003 and 2020-004.
Statement of Condition In our Reporting Test, we did not find evidence of the submission of the Federal Financial Report SF-425 to the pass-through agency and the trial balance. Also, the financial reports do not agree with the program accounting records. Alternate procedures were used to report the expense.
Criteria The OMB Common Rules, Subpart C, Section .20 (b) (1), states that the grantee must maintain internal control procedures that permit proper tracing of funds to the accounting records. Also, it requires accurate, current and complete disclosure of financial results.
The agreement with the pass-through entity, the Commonwealth of Puerto Rico – Department of Family (ACUDEN), Clause eight (8), Section 11, states that the utilization of the official accounting system of the program, Abila MIP Fund Accounting Software, is required. Other accounting systems will not be considered as the official accounting systems of the program for the purpose of federal, state, or local audits. All journal entries of the project should be registered in the system. Disbursement not registered in the Abila MIP Fund Accounting Software will not be processed. It is the responsibility of the grantee to keep the information up to date for it to reflect an accurate financial position of the institution.
Also, the agreement with the pass-through entity states in the twentieth (20) Clause that all the files related to the federal funds received under the contract must be available to all authorized representatives of the Department of Health and Federal Human Services, the Office of General Accounting of the United States, the Commonwealth of Puerto Rico – Contralor Office, the Commonwealth of Puerto Rico - General Inspector Office and the Commonwealth of Puerto Rico – Department of Family (ACUDEN). The files must be available for ten (10) years after the end of program year, unless the Secretary of the Department of Health and Federal Human Services authorizes the destruction of documents and the Act for the Administration of Public Documents of Puerto Rico (Act No. 5, from December 8, 1995, as amended), is no violated.
Cause of Condition The required accounting system is not used as a reporting source. Adequate internal controls do not exist to assure that the required accounting system is used, and the information is reconciled with the closing reports submitted to the federal agencies. Also, appropriate files are not kept documenting the compliance with the reporting requirement.
Effect of Condition The program is not in compliance with the Common Rules, Subpart C, Section .20 (b) (1).
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the closing 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. In addition, the accountant must ensure that the Abila MIP Fund Accounting Software is used to present the financial position of the Program and as the reporting source as established by the pass-through entity. The Program must establish a file system to ensure that all the documents related to the program are filed and available for inspection.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action At the beginning of the fiscal year 2023-2024, ACUDEN authorized the use of Rock Solid’s Streamline Accounting System as the official accounting system for the Head Start Program. (Contract 2023-001904). This action corrects this finding. Regarding the delivery of the Federal Financial Report SF-425, the report was delivered to ACUDEN, although at the time of the audit evidence of its delivery could not be shown. ACUDEN was asked to send us a copy of the process sheet for the delivery of the report. Internal controls will be implemented to ensure this type of situation does not occur.
Implementation Date: During fiscal year 2024-2025.
Responsible Person: Mrs. Idenisse Díaz
Head Start Program Director
Finding Reference 2023-003
Federal Agency: U.S. Department of Health and Human Services
Pass-through Agency: Puerto Rico Department of Family
Program: Head Start Program Cluster (ALN 93.600 & 93.365)
Compliance Requirement: Reporting - Financial Administration (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding(s) 2022-003, 2021-003 and 2020-004.
Statement of Condition In our Reporting Test, we did not find evidence of the submission of the Federal Financial Report SF-425 to the pass-through agency and the trial balance. Also, the financial reports do not agree with the program accounting records. Alternate procedures were used to report the expense.
Criteria The OMB Common Rules, Subpart C, Section .20 (b) (1), states that the grantee must maintain internal control procedures that permit proper tracing of funds to the accounting records. Also, it requires accurate, current and complete disclosure of financial results.
The agreement with the pass-through entity, the Commonwealth of Puerto Rico – Department of Family (ACUDEN), Clause eight (8), Section 11, states that the utilization of the official accounting system of the program, Abila MIP Fund Accounting Software, is required. Other accounting systems will not be considered as the official accounting systems of the program for the purpose of federal, state, or local audits. All journal entries of the project should be registered in the system. Disbursement not registered in the Abila MIP Fund Accounting Software will not be processed. It is the responsibility of the grantee to keep the information up to date for it to reflect an accurate financial position of the institution.
Also, the agreement with the pass-through entity states in the twentieth (20) Clause that all the files related to the federal funds received under the contract must be available to all authorized representatives of the Department of Health and Federal Human Services, the Office of General Accounting of the United States, the Commonwealth of Puerto Rico – Contralor Office, the Commonwealth of Puerto Rico - General Inspector Office and the Commonwealth of Puerto Rico – Department of Family (ACUDEN). The files must be available for ten (10) years after the end of program year, unless the Secretary of the Department of Health and Federal Human Services authorizes the destruction of documents and the Act for the Administration of Public Documents of Puerto Rico (Act No. 5, from December 8, 1995, as amended), is no violated.
Cause of Condition The required accounting system is not used as a reporting source. Adequate internal controls do not exist to assure that the required accounting system is used, and the information is reconciled with the closing reports submitted to the federal agencies. Also, appropriate files are not kept documenting the compliance with the reporting requirement.
Effect of Condition The program is not in compliance with the Common Rules, Subpart C, Section .20 (b) (1).
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the closing 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. In addition, the accountant must ensure that the Abila MIP Fund Accounting Software is used to present the financial position of the Program and as the reporting source as established by the pass-through entity. The Program must establish a file system to ensure that all the documents related to the program are filed and available for inspection.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action At the beginning of the fiscal year 2023-2024, ACUDEN authorized the use of Rock Solid’s Streamline Accounting System as the official accounting system for the Head Start Program. (Contract 2023-001904). This action corrects this finding. Regarding the delivery of the Federal Financial Report SF-425, the report was delivered to ACUDEN, although at the time of the audit evidence of its delivery could not be shown. ACUDEN was asked to send us a copy of the process sheet for the delivery of the report. Internal controls will be implemented to ensure this type of situation does not occur.
Implementation Date: During fiscal year 2024-2025.
Responsible Person: Mrs. Idenisse Díaz
Head Start Program Director
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: Earmarking (G)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. Also, we found that the Program did not comply with the direct spending earmark limitation that requires the program to spend not less than seventy percent (70%) to fund direct services.
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 than 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 (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’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts.
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 request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action In this case, for the year 2023-2024, it has already been verified that ACUDEN complies with the provisions of the contract. As an internal control and prevention measure, the budget sent by the Agency will be verified with the percentages (%) established in the contract. If they do not match, ACUDEN will be asked to amend the budget.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director
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: Earmarking (G)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. Also, we found that the Program did not comply with the direct spending earmark limitation that requires the program to spend not less than seventy percent (70%) to fund direct services.
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 than 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 (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’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts.
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 request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action In this case, for the year 2023-2024, it has already been verified that ACUDEN complies with the provisions of the contract. As an internal control and prevention measure, the budget sent by the Agency will be verified with the percentages (%) established in the contract. If they do not match, ACUDEN will be asked to amend the budget.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director
Finding Reference 2023-005
Federal Agency: U.S. Department of Treasury
Pass-through Agency: P.R. Department of Treasury – Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance Requirement: Procurement Suspension & Debarment (I)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for none of the contract agreements evaluated.
Criteria 2 CFR Section 200.327 references Appendix II to Part 200, which establishes contract provisions that must be included in non-federal entity contracts under federal awards.
Cause of Condition The Municipality has been disclosing the federal contract provisions in the Public Notices inviting to Bid Auctions or Request for Proposals as a requirement to be awarded for a federal award contract. However, the contract provisions have not been included in the signed agreements.
Effect of Condition The program is not in compliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327.
Recommendation We recommend to the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action Although the sample selected in relation to the contracts did not contain the required federal clauses, the contracted companies did comply with the main provisions established by 2 CFR Section 200.327 in Appendix II Part 200, such as equal employment opportunity under 41 CFR Part 60, Davis-Bacon Act as amended 40 USC 3141-3148 and the Contract Work Hours and Safety Standards Act 40 USC 3701-3708. Also, for the three contracts, it was reviewed and validated that they had their SAM registration on the day prior to the formalization of the contract and/or disbursement of any payment. However, this situation has already been remedied since the federal clauses required by 2 CFR Section 200 Appendix II Part 200 were and are included in all contracts financed with federal funds.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director
Finding Reference 2023-005
Federal Agency: U.S. Department of Treasury
Pass-through Agency: P.R. Department of Treasury – Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance Requirement: Procurement Suspension & Debarment (I)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for none of the contract agreements evaluated.
Criteria 2 CFR Section 200.327 references Appendix II to Part 200, which establishes contract provisions that must be included in non-federal entity contracts under federal awards.
Cause of Condition The Municipality has been disclosing the federal contract provisions in the Public Notices inviting to Bid Auctions or Request for Proposals as a requirement to be awarded for a federal award contract. However, the contract provisions have not been included in the signed agreements.
Effect of Condition The program is not in compliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327.
Recommendation We recommend to the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action Although the sample selected in relation to the contracts did not contain the required federal clauses, the contracted companies did comply with the main provisions established by 2 CFR Section 200.327 in Appendix II Part 200, such as equal employment opportunity under 41 CFR Part 60, Davis-Bacon Act as amended 40 USC 3141-3148 and the Contract Work Hours and Safety Standards Act 40 USC 3701-3708. Also, for the three contracts, it was reviewed and validated that they had their SAM registration on the day prior to the formalization of the contract and/or disbursement of any payment. However, this situation has already been remedied since the federal clauses required by 2 CFR Section 200 Appendix II Part 200 were and are included in all contracts financed with federal funds.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director
Finding Reference 2023-003
Federal Agency: U.S. Department of Health and Human Services
Pass-through Agency: Puerto Rico Department of Family
Program: Head Start Program Cluster (ALN 93.600 & 93.365)
Compliance Requirement: Reporting - Financial Administration (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding(s) 2022-003, 2021-003 and 2020-004.
Statement of Condition In our Reporting Test, we did not find evidence of the submission of the Federal Financial Report SF-425 to the pass-through agency and the trial balance. Also, the financial reports do not agree with the program accounting records. Alternate procedures were used to report the expense.
Criteria The OMB Common Rules, Subpart C, Section .20 (b) (1), states that the grantee must maintain internal control procedures that permit proper tracing of funds to the accounting records. Also, it requires accurate, current and complete disclosure of financial results.
The agreement with the pass-through entity, the Commonwealth of Puerto Rico – Department of Family (ACUDEN), Clause eight (8), Section 11, states that the utilization of the official accounting system of the program, Abila MIP Fund Accounting Software, is required. Other accounting systems will not be considered as the official accounting systems of the program for the purpose of federal, state, or local audits. All journal entries of the project should be registered in the system. Disbursement not registered in the Abila MIP Fund Accounting Software will not be processed. It is the responsibility of the grantee to keep the information up to date for it to reflect an accurate financial position of the institution.
Also, the agreement with the pass-through entity states in the twentieth (20) Clause that all the files related to the federal funds received under the contract must be available to all authorized representatives of the Department of Health and Federal Human Services, the Office of General Accounting of the United States, the Commonwealth of Puerto Rico – Contralor Office, the Commonwealth of Puerto Rico - General Inspector Office and the Commonwealth of Puerto Rico – Department of Family (ACUDEN). The files must be available for ten (10) years after the end of program year, unless the Secretary of the Department of Health and Federal Human Services authorizes the destruction of documents and the Act for the Administration of Public Documents of Puerto Rico (Act No. 5, from December 8, 1995, as amended), is no violated.
Cause of Condition The required accounting system is not used as a reporting source. Adequate internal controls do not exist to assure that the required accounting system is used, and the information is reconciled with the closing reports submitted to the federal agencies. Also, appropriate files are not kept documenting the compliance with the reporting requirement.
Effect of Condition The program is not in compliance with the Common Rules, Subpart C, Section .20 (b) (1).
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the closing 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. In addition, the accountant must ensure that the Abila MIP Fund Accounting Software is used to present the financial position of the Program and as the reporting source as established by the pass-through entity. The Program must establish a file system to ensure that all the documents related to the program are filed and available for inspection.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action At the beginning of the fiscal year 2023-2024, ACUDEN authorized the use of Rock Solid’s Streamline Accounting System as the official accounting system for the Head Start Program. (Contract 2023-001904). This action corrects this finding. Regarding the delivery of the Federal Financial Report SF-425, the report was delivered to ACUDEN, although at the time of the audit evidence of its delivery could not be shown. ACUDEN was asked to send us a copy of the process sheet for the delivery of the report. Internal controls will be implemented to ensure this type of situation does not occur.
Implementation Date: During fiscal year 2024-2025.
Responsible Person: Mrs. Idenisse Díaz
Head Start Program Director
Finding Reference 2023-003
Federal Agency: U.S. Department of Health and Human Services
Pass-through Agency: Puerto Rico Department of Family
Program: Head Start Program Cluster (ALN 93.600 & 93.365)
Compliance Requirement: Reporting - Financial Administration (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding(s) 2022-003, 2021-003 and 2020-004.
Statement of Condition In our Reporting Test, we did not find evidence of the submission of the Federal Financial Report SF-425 to the pass-through agency and the trial balance. Also, the financial reports do not agree with the program accounting records. Alternate procedures were used to report the expense.
Criteria The OMB Common Rules, Subpart C, Section .20 (b) (1), states that the grantee must maintain internal control procedures that permit proper tracing of funds to the accounting records. Also, it requires accurate, current and complete disclosure of financial results.
The agreement with the pass-through entity, the Commonwealth of Puerto Rico – Department of Family (ACUDEN), Clause eight (8), Section 11, states that the utilization of the official accounting system of the program, Abila MIP Fund Accounting Software, is required. Other accounting systems will not be considered as the official accounting systems of the program for the purpose of federal, state, or local audits. All journal entries of the project should be registered in the system. Disbursement not registered in the Abila MIP Fund Accounting Software will not be processed. It is the responsibility of the grantee to keep the information up to date for it to reflect an accurate financial position of the institution.
Also, the agreement with the pass-through entity states in the twentieth (20) Clause that all the files related to the federal funds received under the contract must be available to all authorized representatives of the Department of Health and Federal Human Services, the Office of General Accounting of the United States, the Commonwealth of Puerto Rico – Contralor Office, the Commonwealth of Puerto Rico - General Inspector Office and the Commonwealth of Puerto Rico – Department of Family (ACUDEN). The files must be available for ten (10) years after the end of program year, unless the Secretary of the Department of Health and Federal Human Services authorizes the destruction of documents and the Act for the Administration of Public Documents of Puerto Rico (Act No. 5, from December 8, 1995, as amended), is no violated.
Cause of Condition The required accounting system is not used as a reporting source. Adequate internal controls do not exist to assure that the required accounting system is used, and the information is reconciled with the closing reports submitted to the federal agencies. Also, appropriate files are not kept documenting the compliance with the reporting requirement.
Effect of Condition The program is not in compliance with the Common Rules, Subpart C, Section .20 (b) (1).
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the closing 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. In addition, the accountant must ensure that the Abila MIP Fund Accounting Software is used to present the financial position of the Program and as the reporting source as established by the pass-through entity. The Program must establish a file system to ensure that all the documents related to the program are filed and available for inspection.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action At the beginning of the fiscal year 2023-2024, ACUDEN authorized the use of Rock Solid’s Streamline Accounting System as the official accounting system for the Head Start Program. (Contract 2023-001904). This action corrects this finding. Regarding the delivery of the Federal Financial Report SF-425, the report was delivered to ACUDEN, although at the time of the audit evidence of its delivery could not be shown. ACUDEN was asked to send us a copy of the process sheet for the delivery of the report. Internal controls will be implemented to ensure this type of situation does not occur.
Implementation Date: During fiscal year 2024-2025.
Responsible Person: Mrs. Idenisse Díaz
Head Start Program Director
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: Earmarking (G)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. Also, we found that the Program did not comply with the direct spending earmark limitation that requires the program to spend not less than seventy percent (70%) to fund direct services.
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 than 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 (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’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts.
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 request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action In this case, for the year 2023-2024, it has already been verified that ACUDEN complies with the provisions of the contract. As an internal control and prevention measure, the budget sent by the Agency will be verified with the percentages (%) established in the contract. If they do not match, ACUDEN will be asked to amend the budget.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director
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: Earmarking (G)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. Also, we found that the Program did not comply with the direct spending earmark limitation that requires the program to spend not less than seventy percent (70%) to fund direct services.
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 than 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 (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’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts.
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 request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action In this case, for the year 2023-2024, it has already been verified that ACUDEN complies with the provisions of the contract. As an internal control and prevention measure, the budget sent by the Agency will be verified with the percentages (%) established in the contract. If they do not match, ACUDEN will be asked to amend the budget.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director
Finding Reference 2023-005
Federal Agency: U.S. Department of Treasury
Pass-through Agency: P.R. Department of Treasury – Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance Requirement: Procurement Suspension & Debarment (I)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for none of the contract agreements evaluated.
Criteria 2 CFR Section 200.327 references Appendix II to Part 200, which establishes contract provisions that must be included in non-federal entity contracts under federal awards.
Cause of Condition The Municipality has been disclosing the federal contract provisions in the Public Notices inviting to Bid Auctions or Request for Proposals as a requirement to be awarded for a federal award contract. However, the contract provisions have not been included in the signed agreements.
Effect of Condition The program is not in compliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327.
Recommendation We recommend to the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action Although the sample selected in relation to the contracts did not contain the required federal clauses, the contracted companies did comply with the main provisions established by 2 CFR Section 200.327 in Appendix II Part 200, such as equal employment opportunity under 41 CFR Part 60, Davis-Bacon Act as amended 40 USC 3141-3148 and the Contract Work Hours and Safety Standards Act 40 USC 3701-3708. Also, for the three contracts, it was reviewed and validated that they had their SAM registration on the day prior to the formalization of the contract and/or disbursement of any payment. However, this situation has already been remedied since the federal clauses required by 2 CFR Section 200 Appendix II Part 200 were and are included in all contracts financed with federal funds.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director
Finding Reference 2023-005
Federal Agency: U.S. Department of Treasury
Pass-through Agency: P.R. Department of Treasury – Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance Requirement: Procurement Suspension & Debarment (I)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for none of the contract agreements evaluated.
Criteria 2 CFR Section 200.327 references Appendix II to Part 200, which establishes contract provisions that must be included in non-federal entity contracts under federal awards.
Cause of Condition The Municipality has been disclosing the federal contract provisions in the Public Notices inviting to Bid Auctions or Request for Proposals as a requirement to be awarded for a federal award contract. However, the contract provisions have not been included in the signed agreements.
Effect of Condition The program is not in compliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327.
Recommendation We recommend to the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action Although the sample selected in relation to the contracts did not contain the required federal clauses, the contracted companies did comply with the main provisions established by 2 CFR Section 200.327 in Appendix II Part 200, such as equal employment opportunity under 41 CFR Part 60, Davis-Bacon Act as amended 40 USC 3141-3148 and the Contract Work Hours and Safety Standards Act 40 USC 3701-3708. Also, for the three contracts, it was reviewed and validated that they had their SAM registration on the day prior to the formalization of the contract and/or disbursement of any payment. However, this situation has already been remedied since the federal clauses required by 2 CFR Section 200 Appendix II Part 200 were and are included in all contracts financed with federal funds.
Implementation Date: During fiscal year 2023-2024.
Responsible Person: Mrs. Natasha Vásquez
Federal Programs Director