Audit 297671

FY End

2023-06-30

Total Expended

$4.02M

Findings

2

Programs

3

Organization: Local Area of the Workforce Development in the Northeast (PR)

Year: 2023 Accepted: 2024-03-26

Auditor: CPA Diaz-Martinez Csp

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
384587	2023-001	Significant Deficiency	-	G
961029	2023-001	Significant Deficiency	-	G

ALN	Program	Spent	Major	Findings
17.278	Wia Dislocated Workers	$1.76M	Yes	0
17.258	Wia Adult Program	$1.20M	Yes	0
17.259	Wia Youth Activities	$1.06M	Yes	1

Contacts

Name	Title	Type
NZU6VXHG5HB9	Ramses Aguayo	Auditee
7878014700	Jose E Diaz Martinez	Auditor
No contacts on file

Notes to SEFA

Title: GENERAL Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Local Area of Workforce Development in the Northeast (Local Area) under programs of the Federal government for the fiscal year ending June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Local Area, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Local Area. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Local Area has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Local Area of Workforce Development in the Northeast (Local Area) under programs of the Federal government for the fiscal year ending June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Local Area, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Local Area.

Title: SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Local Area of Workforce Development in the Northeast (Local Area) under programs of the Federal government for the fiscal year ending June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Local Area, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Local Area. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Local Area has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. A. Negative amounts, if any, shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. B. Pass-through entity identifying numbers are presented where available. C. The Local Area has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.

Title: FEDERAL ASSISTANCE LISTING NUMBER Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Local Area of Workforce Development in the Northeast (Local Area) under programs of the Federal government for the fiscal year ending June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Local Area, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Local Area. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Local Area has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. The Assistance Listing Number, formerly known as the Catalog of Federal Domestic Assistance (CFDA) Number, is a five-digit number assigned in the awarding document for all Federal assistance award mechanisms, including Federal grants and cooperative agreements.

Title: RELATIONSHIPS TO FEDERAL FINANCIAL REPORTS Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Local Area of Workforce Development in the Northeast (Local Area) under programs of the Federal government for the fiscal year ending June 30, 2023. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Local Area, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Local Area. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: The Local Area has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. Expenditures of Federal awards reported in the Local Area's Statement of Activities and Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances differed with those reported to Federal agency.

Finding Details

Finding 2023-001

FEDERAL PROGRAM (ALN 17.258, 17.259 AND 17.278) WORKFORCE INNOVATION AND OPPORTUNITY ACT (WIOA) (CLUSTER) PASS-THROUGH – ECONOMIC DEVELOPMENT AND COMMERCE DEPARTMENT OF THE COMMONWEALTH OF PUERTO RICO U.S. DEPARTMENT OF LABOR AWARD NUMBER 2022-0000126 (Federal Award Year 2021-2022) COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY CRITERIA WOIA Youth Activities required that not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Also, a minimum of 75 percent of the Youth Activity funds allocated to States and local areas, except for the local area expenditures for administration, must be used to provide services to Out-of-School Youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). STATEMENT OF CONDITION During our audits test of the earmarking compliance requirement for the Youth Program funds of the program year 2021-2022, we noted that the Local Area only expended 16% of the funds allocated to programmatic activities on paid and unpaid work experiences at the end of the two years of funds availability which ended June 30, 2023. Also, the Local Area only expended 37% of the Youth Program funds allocated for program year 2021-2022 on services for Out-of-School. QUESTIONED COSTS None PERSPECTIVE INFORMATION This represents a systematic problem per our evaluation. STATEMENT OF CAUSE The Local Area to fail to timely identify the lack of compliance with the earmarking requirement for the Youth Program and failed to planned activities for participants related to paid and unpaid work experience and activities for Out-of-School Youth during the two years of funds availability. POSSIBLE ASSERTED EFFECT The Local Area failed to comply with a programmatic requirement of the Youth Program. IDENTIFICATION OF REPEAT FINDING This is a new finding. RECOMMENDATIONS We recommend that a formal monitoring of the earmark requirements for the Youth Program, as well as other earmark requirements, takes place at least on a quarterly basis during the funds period of performance. Staff that should participate in the monitoring include finance, planning, youth program staff and executive staff. If deviations or failure to meet the earmark are noted, communications must be generated to the youth program staff in order to take corrective actions before the elapse of the funding period.

Finding 2023-001

FEDERAL PROGRAM (ALN 17.258, 17.259 AND 17.278) WORKFORCE INNOVATION AND OPPORTUNITY ACT (WIOA) (CLUSTER) PASS-THROUGH – ECONOMIC DEVELOPMENT AND COMMERCE DEPARTMENT OF THE COMMONWEALTH OF PUERTO RICO U.S. DEPARTMENT OF LABOR AWARD NUMBER 2022-0000126 (Federal Award Year 2021-2022) COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY CRITERIA WOIA Youth Activities required that not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Also, a minimum of 75 percent of the Youth Activity funds allocated to States and local areas, except for the local area expenditures for administration, must be used to provide services to Out-of-School Youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). STATEMENT OF CONDITION During our audits test of the earmarking compliance requirement for the Youth Program funds of the program year 2021-2022, we noted that the Local Area only expended 16% of the funds allocated to programmatic activities on paid and unpaid work experiences at the end of the two years of funds availability which ended June 30, 2023. Also, the Local Area only expended 37% of the Youth Program funds allocated for program year 2021-2022 on services for Out-of-School. QUESTIONED COSTS None PERSPECTIVE INFORMATION This represents a systematic problem per our evaluation. STATEMENT OF CAUSE The Local Area to fail to timely identify the lack of compliance with the earmarking requirement for the Youth Program and failed to planned activities for participants related to paid and unpaid work experience and activities for Out-of-School Youth during the two years of funds availability. POSSIBLE ASSERTED EFFECT The Local Area failed to comply with a programmatic requirement of the Youth Program. IDENTIFICATION OF REPEAT FINDING This is a new finding. RECOMMENDATIONS We recommend that a formal monitoring of the earmark requirements for the Youth Program, as well as other earmark requirements, takes place at least on a quarterly basis during the funds period of performance. Staff that should participate in the monitoring include finance, planning, youth program staff and executive staff. If deviations or failure to meet the earmark are noted, communications must be generated to the youth program staff in order to take corrective actions before the elapse of the funding period.