Audit 298462

FY End
2023-06-30
Total Expended
$12.18M
Findings
8
Programs
12
Organization: Municipality of Rio Grande (PR)
Year: 2023 Accepted: 2024-03-27

Organization Exclusion Status:

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Findings

ID Ref Severity Repeat Requirement
386093 2023-003 Significant Deficiency - L
386094 2023-004 Significant Deficiency - G
386095 2023-003 Significant Deficiency - L
386096 2023-004 Significant Deficiency - G
962535 2023-003 Significant Deficiency - L
962536 2023-004 Significant Deficiency - G
962537 2023-003 Significant Deficiency - L
962538 2023-004 Significant Deficiency - G

Contacts

Name Title Type
HEQ2ZYJLJ984 Angel L. Reyes Matos Auditee
7878872370 Angel A. Lopez Vega Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Expenditures are recognized when the related liability is incurred, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures for the following programs are recognized based on other unique requirements:  Section 8 Housing Choice Voucher Program (HCV). Expenditures are reported on a statutory basis as required by the U.S. Department of Housing and Urban Development. Such expenditures should equal the net ACC subsidy for the PHA’s fiscal period.  Public assistance grants (FEMA). Expenditures are recognized in the period when: (1) FEMA has approved the PW, and (2) eligible expenditures are incurred.  Loans or loans guarantee programs. Expenditures equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. For loans with no imposed continuing compliance requirements, expenditures are recognized when the related costs financed with loan proceeds are incurred. De Minimis Rate Used: N Rate Explanation: The Municipality elected not to use the 10% de minimis cost rate and did not charge indirect cost to federal grants during the year ended June 30, 2023. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Municipality under programs of the federal government for the year ended 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 Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from the amounts presented in, or used in the preparation of, the basic financial statements. Because the schedule presents only a selected portion of the operations of the Municipality, it is not intended to and does not present the financial position and changes in net position of the Municipality.
Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Expenditures are recognized when the related liability is incurred, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures for the following programs are recognized based on other unique requirements:  Section 8 Housing Choice Voucher Program (HCV). Expenditures are reported on a statutory basis as required by the U.S. Department of Housing and Urban Development. Such expenditures should equal the net ACC subsidy for the PHA’s fiscal period.  Public assistance grants (FEMA). Expenditures are recognized in the period when: (1) FEMA has approved the PW, and (2) eligible expenditures are incurred.  Loans or loans guarantee programs. Expenditures equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. For loans with no imposed continuing compliance requirements, expenditures are recognized when the related costs financed with loan proceeds are incurred. De Minimis Rate Used: N Rate Explanation: The Municipality elected not to use the 10% de minimis cost rate and did not charge indirect cost to federal grants during the year ended June 30, 2023. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Expenditures are recognized when the related liability is incurred, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures for the following programs are recognized based on other unique requirements:  Section 8 Housing Choice Voucher Program (HCV). Expenditures are reported on a statutory basis as required by the U.S. Department of Housing and Urban Development. Such expenditures should equal the net ACC subsidy for the PHA’s fiscal period.  Public assistance grants (FEMA). Expenditures are recognized in the period when: (1) FEMA has approved the PW, and (2) eligible expenditures are incurred.  Loans or loans guarantee programs. Expenditures equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. For loans with no imposed continuing compliance requirements, expenditures are recognized when the related costs financed with loan proceeds are incurred.
Title: ASSISTANCE LISTING NUMBER AND PASS-THROUGH ENTITY IDENTIFYING NUMBER Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Expenditures are recognized when the related liability is incurred, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures for the following programs are recognized based on other unique requirements:  Section 8 Housing Choice Voucher Program (HCV). Expenditures are reported on a statutory basis as required by the U.S. Department of Housing and Urban Development. Such expenditures should equal the net ACC subsidy for the PHA’s fiscal period.  Public assistance grants (FEMA). Expenditures are recognized in the period when: (1) FEMA has approved the PW, and (2) eligible expenditures are incurred.  Loans or loans guarantee programs. Expenditures equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. For loans with no imposed continuing compliance requirements, expenditures are recognized when the related costs financed with loan proceeds are incurred. De Minimis Rate Used: N Rate Explanation: The Municipality elected not to use the 10% de minimis cost rate and did not charge indirect cost to federal grants during the year ended June 30, 2023. The Assistance Listing Number (ALN), 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. Assistance listings are detailed public descriptions of federal programs that provide grants, loans, scholarships, insurance, and other types of assistance awards. The Sam.gov assistance listing is the publicly available online database showing all available Federally funded programs. State or local government redistributions of federal awards to the Municipality, known as “pass–through awards”, should be treated by the Municipality as though they were received directly from the federal government. The Uniform Guidance requires the schedule to include the name of the pass–through entity and the identifying number assigned by the pass-through entity for the federal awards received as a sub recipient. Numbers identified as N/A are not applicable and numbers identified as N/AV are not available.
Title: INDIRECT COSTS Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Expenditures are recognized when the related liability is incurred, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures for the following programs are recognized based on other unique requirements:  Section 8 Housing Choice Voucher Program (HCV). Expenditures are reported on a statutory basis as required by the U.S. Department of Housing and Urban Development. Such expenditures should equal the net ACC subsidy for the PHA’s fiscal period.  Public assistance grants (FEMA). Expenditures are recognized in the period when: (1) FEMA has approved the PW, and (2) eligible expenditures are incurred.  Loans or loans guarantee programs. Expenditures equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. For loans with no imposed continuing compliance requirements, expenditures are recognized when the related costs financed with loan proceeds are incurred. De Minimis Rate Used: N Rate Explanation: The Municipality elected not to use the 10% de minimis cost rate and did not charge indirect cost to federal grants during the year ended June 30, 2023. The Municipality elected not to use the 10% de minimis cost rate and did not charge indirect cost to federal grants during the year ended June 30, 2023.
Title: RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Expenditures are recognized when the related liability is incurred, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures for the following programs are recognized based on other unique requirements:  Section 8 Housing Choice Voucher Program (HCV). Expenditures are reported on a statutory basis as required by the U.S. Department of Housing and Urban Development. Such expenditures should equal the net ACC subsidy for the PHA’s fiscal period.  Public assistance grants (FEMA). Expenditures are recognized in the period when: (1) FEMA has approved the PW, and (2) eligible expenditures are incurred.  Loans or loans guarantee programs. Expenditures equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. For loans with no imposed continuing compliance requirements, expenditures are recognized when the related costs financed with loan proceeds are incurred. De Minimis Rate Used: N Rate Explanation: The Municipality elected not to use the 10% de minimis cost rate and did not charge indirect cost to federal grants during the year ended June 30, 2023. Amounts reported in the accompanying Schedule are included in the Disaster Grants Fund, Special Revenue Fund – Other Federal Grants, ARPA Funds and in the Other Governmental Funds in the Municipality’s fund financial statements. The reconciliation between the expenditures in the fund financial statements and expenditures in the Schedule of Expenditures of Federal Awards is as follows:
Title: CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) Accounting Policies: Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Expenditures are recognized when the related liability is incurred, following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures for the following programs are recognized based on other unique requirements:  Section 8 Housing Choice Voucher Program (HCV). Expenditures are reported on a statutory basis as required by the U.S. Department of Housing and Urban Development. Such expenditures should equal the net ACC subsidy for the PHA’s fiscal period.  Public assistance grants (FEMA). Expenditures are recognized in the period when: (1) FEMA has approved the PW, and (2) eligible expenditures are incurred.  Loans or loans guarantee programs. Expenditures equal the value of new loans made or received during the audit period plus the beginning of the audit period balance of outstanding loans from previous years for which the federal government imposes continuing compliance requirements. For loans with no imposed continuing compliance requirements, expenditures are recognized when the related costs financed with loan proceeds are incurred. De Minimis Rate Used: N Rate Explanation: The Municipality elected not to use the 10% de minimis cost rate and did not charge indirect cost to federal grants during the year ended June 30, 2023. On March 11, 2021, was signed into law the American Rescue Plan Act (ARPA) of 2021, the latest COVID-19 stimulus package. Within ARPA, the Coronavirus State and Local Fiscal Recovery Fund provides $350 billion for states, municipalities, counties, tribes, and territories, including $130.2 billion for local governments split evenly between municipalities and counties. Accordingly, the Municipality received a grant under Counties and Non-Entitlements categories of $26.8 million to respond to the COVID-19 public health emergency and its economic impacts. The Municipality will incur ARPA grant expenditures in the following fiscal years.

Finding Details

Finding Reference 2023-003 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: Ángel L. Reyes Matos, Finance Department 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 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: Ángel L. Reyes Matos, Finance Department Director
Finding Reference 2023-003 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: Ángel L. Reyes Matos, Finance Department 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 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: Ángel L. Reyes Matos, Finance Department Director
Finding Reference 2023-003 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: Ángel L. Reyes Matos, Finance Department 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 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: Ángel L. Reyes Matos, Finance Department Director
Finding Reference 2023-003 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: Ángel L. Reyes Matos, Finance Department 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 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: Ángel L. Reyes Matos, Finance Department Director