FAC Explorer

Audit 317516

FY End
2022-06-30
Total Expended
$800,189
Findings
6
Programs
3
Organization: Corporacion Del Centro De Bellas Artes De Puerto Rico (PR)
Year: 2022 Accepted: 2024-08-20
Auditor: Crowe Pr Psc

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
484629 2022-002 Significant Deficiency - B
484630 2022-003 Significant Deficiency - I
484631 2022-004 Material Weakness - L
1061071 2022-002 Significant Deficiency - B
1061072 2022-003 Significant Deficiency - I
1061073 2022-004 Material Weakness - L

Programs

ALN Program Spent Major Findings
21.027 Coronavirus State and Local Fiscal Recovery Funds $672,018 Yes 3
59.075 Shuttered Venue Operators Program $96,365 - 0
97.036 Disaster Grants-Public Assistance (presidentially Declared Disasters) $31,806 - 0

Contacts

Name Title Type
JVHFPJE4J287 Jetppeht Perez De Corcho-Morgado Auditee
7877244747 Jose Penabaz Auditor
No contacts on file

Notes to SEFA

Title: GENERAL Accounting Policies: The Schedule is reported using the accrual basis of accounting. Expenditures awarded from the Federal Emergency Management Agency (FEMA) under the Assistance Listing Number (ALN) 97.036 must be presented on the Schedule when FEMA approves the Project Worksheet (PW) and expenditures are incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: N/A The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant and contract activity of Corporación del Centro de Bellas Artes de Puerto Rico (a component unit of the Commonwealth of Puerto Rico) (the Corporation) for the year ended June 30, 2022. The Corporation's reporting entity is defined in the notes to the financial statements.
Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES OF THE SCHEDULE Accounting Policies: The Schedule is reported using the accrual basis of accounting. Expenditures awarded from the Federal Emergency Management Agency (FEMA) under the Assistance Listing Number (ALN) 97.036 must be presented on the Schedule when FEMA approves the Project Worksheet (PW) and expenditures are incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: N/A The Schedule is reported using the accrual basis of accounting. Expenditures awarded from the Federal Emergency Management Agency (FEMA) under the Assistance Listing Number (ALN) 97.036 must be presented on the Schedule when FEMA approves the Project Worksheet (PW) and expenditures are incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
Title: RELATION TO FEDERAL FINANCIAL REPORTS Accounting Policies: The Schedule is reported using the accrual basis of accounting. Expenditures awarded from the Federal Emergency Management Agency (FEMA) under the Assistance Listing Number (ALN) 97.036 must be presented on the Schedule when FEMA approves the Project Worksheet (PW) and expenditures are incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: N/A The regulations and guidelines governing the preparation of federal financial reports vary by federal agency and among programs administered by the same agency. Accordingly, the amounts reported in the federal financial reports do not necessarily agree with the amounts reported in the Schedule, which is prepared on the basis of accounting explained in Note 2. The information in this Schedule is presented in accordance with the requirements of Office of Management and Budget (OMB) Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance). The Uniform Guidance requires that federal financial reports for claims for advances and reimbursements contain information that is supported by the books and records from which the basic financial statements have been prepared. The Corporation prepares the federal financial reports and claims for reimbursements primarily based on information from the internal accounting records of the Corporation. Therefore, some amounts presented in the Schedule may differ from amounts presented in or used in the preparation of the financial statements of the Corporation.
Title: RELATIONSHIP TO FINANCIAL STATEMENTS Accounting Policies: The Schedule is reported using the accrual basis of accounting. Expenditures awarded from the Federal Emergency Management Agency (FEMA) under the Assistance Listing Number (ALN) 97.036 must be presented on the Schedule when FEMA approves the Project Worksheet (PW) and expenditures are incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: N/A Federal awards revenues and expenses are reported in the Corporation's statement of revenues, expenses, and changes in net position in accordance with standards issued by the Government Accounting Standards Board (GASB) No. 34, as amended. Because the Schedule presents only federal activities of the Corporation, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Corporation.
Title: INDIRECT COST RATE Accounting Policies: The Schedule is reported using the accrual basis of accounting. Expenditures awarded from the Federal Emergency Management Agency (FEMA) under the Assistance Listing Number (ALN) 97.036 must be presented on the Schedule when FEMA approves the Project Worksheet (PW) and expenditures are incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: N/A The Corporation did not use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: CONTINGENCIES Accounting Policies: The Schedule is reported using the accrual basis of accounting. Expenditures awarded from the Federal Emergency Management Agency (FEMA) under the Assistance Listing Number (ALN) 97.036 must be presented on the Schedule when FEMA approves the Project Worksheet (PW) and expenditures are incurred. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures may or may not be allowable or may be limited as to reimbursement. Negative amounts shown on the Schedule, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: N/A The Corporation receives funds under various federal grant programs, and such awards are to be expended in accordance with the provisions of each grant. Compliance with each grant is subject to audit by various government agencies, which may impose sanctions in the event of non-compliance. Management believes that it has complied with all aspects of grants provisions and the results of adjustments, if any, relating to such audits would not have a material impact on the programs nor the accompanying Schedule.

Finding Details

Finding 2022-002
2022-002 Financial Management and Internal Controls Compliance Requirement Allowable Costs/Cost Principles Category Significant Deficiency in Internal Control and Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Criteria 2 CFR section 200.302 Financial management. (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, 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. (b) ….. (1) ….. (2) ….. (3) ..... (5) ….. (6) ….. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR section 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. Condition Written Policies The Corporation has no written policies for determining the activities allowed or unallowed and the allowability of costs as described in subpart E, Cost Principles of 2 CFR Part 200. Cause It is the first year for the Corporation to be subjected to a single audit compliance requirements. However, since the Commonwealth of Puerto Rico (the Commonwealth) filed for Title III under the PROMESA, all the instrumentalities of the Commonwealth had to reduce their staff as part of the Fiscal Plan to reduce expenditures. This has disrupted the segregation of duties, which is a key control. Effect The Corporation could incurred in unallowable costs failing to comply with 2 CFR sections 200.302 and 202.305, the Corporation could then be subjected to temporarily withholding of cash payments pending correction of the deficiency and/or withholding further federal awards for the program. Questioned Costs None Recommendations We recommend the Corporation obtain a thorough understanding of the provisions of federal statutes, regulations, or the terms and conditions of federal awards to prepare the required written policies under subpart E, Cost Principles of 2 CFR Part 200. Views of responsible officials Refer to Corrective Action Plan section.
Finding 2022-003
2022-003 Procurement Policies and Covered Transactions Compliance Requirement Procurement, Suspension, and Debarment Category Significant Deficiency in Internal Control and Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Criteria 2 CFR section 200.318 General procurement standards. (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR section 180.220 Are any procurement contracts included as covered transactions? (a) Covered transactions under this part— (1) Do not include any procurement contracts awarded directly by a Federal agency; but (2) Do include some procurement contracts awarded by non-Federal participants in nonprocurement covered transactions. (b) Specifically, a contract for goods or services is a covered transaction if any of the following applies: (1) The contract is awarded by a participant in a nonprocurement transaction that is covered under § 180.210, and the amount of the contract is expected to equal or exceed $25,000. (2) The contract requires the consent of an official of a Federal agency. In that case, the contract, regardless of the amount, always is a covered transaction, and it does not matter who awarded it. For example, it could be a subcontract awarded by a contractor at a tier below a nonprocurement transaction, as shown in the appendix to this part. (3) The contract is for Federally-required audit services. (c) A subcontract also is a covered transaction if,— (1) It is awarded by a participant in a procurement transaction under a nonprocurement transaction of a Federal agency that extends the coverage of paragraph (b)(1) of this section to additional tiers of contracts (see the diagram in the appendix to this part showing that optional lower tier coverage); and (2) The value of the subcontract is expected to equal or exceed $25,000. Condition General Procurement Standards - Written Policies The Corporation has an outdated institutional procurement manual approved in 2014 that lacks written policies to ascertain compliance with the provisions of federal statutes, regulations, or the terms and conditions of federal awards regarding procurement, suspension, and debarment requirements. Suspension and Debarment - Covered Transaction From a population of nineteen disbursements, we selected nine disbursements to ascertain compliance with 2 CFR section 180.220 by examining the procurement documents provided by the Corporation. From that sample, we identified nine instances in which the SAM.gov registration verification process was not performed. Of the nine instances, we found eight suppliers properly registered, but one supplier appears as validated as unique and existing but not registered in SAM.gov. Cause Lack of understanding of procurement compliance requirements for federal awards. Fiscal year 2023 was the first year for the Corporation to be subjected to a single audit compliance requirement for receiving and expending COVID-19 public health emergency programs. Effect Noncompliance with sections 200.318 and 180.220 of 2 CFR may lead to temporary withholding of cash payments until the deficiency is corrected, and/or withholding further federal program awards. Questioned Costs None Recommendation General Procurement Standards - Written Policies and Suspension and Debarment - Covered Transaction We recommend the Corporation update its internal procurement written policies following the provisions of current state statutes and regulations and develop separate procurement written policies following the provisions of federal laws and regulations or the terms and conditions of federal awards, which includes the Procurement Standards described in 2 CFR section 200.317 through 200.327, as applicable. By updating, developing, and implementing the required written procurement policies, the Corporation will be able to comply with the federal government compliance requirements. Views of responsible officials Refer to Corrective Action Plan section.
Finding 2022-004
2022-004 Reporting Compliance Requirement Reporting Category Material Weakness in Internal Control and Material Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Criteria Puerto Rico Cultural Rescue Program Guidelines (Published on December 7, 2021, and Revised on March 31, 2022). – Reporting Requirements To ensure timely reporting, the Government of Puerto Rico requires the Recipients to adhere to the following reporting frequency: On a biweekly basis, the recipients will be required to submit financial reports using the reporting template provided by the program……. 2 CFR § 200.512 Report submission. General. (1) The audit must be completed and the data collection form described in of this section and reporting package described in of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Condition Pass-Through Entity Reporting Requirements The Corporation submitted just two reports during the year, the first and second required submission. Single Audit Reporting Package The Corporation did not comply with the Single Audit Reporting Package submission requirements for the year ended June 30, 2022 and 2023. Cause Lack of understanding of reporting compliance requirements for federal awards. Fiscal year 2022 was the first year for the Corporation to be subjected to a single audit compliance requirement for receiving and expending COVID-19 public health emergency programs. Effect By failing to comply with 2 CFR sections 200.512 and the pass-through entity reporting guidelines, the Corporation could be subjected to temporary withholding of cash payments pending correction of the deficiency, withholding further federal awards for the program, and/or wholly or partly suspending or terminating the Federal award. Questioned Costs None Recommendation We recommend that the Corporation implement the provisions of federal statutes, regulations, or the terms and conditions of federal awards regarding reporting requirements, together with the necessary internal controls, to ascertain compliance. Furthermore, to comply with the reporting compliance requirement, the Corporation must submit the compliance reporting packages in default for the fiscal year ended June 30, 2022 and 2023. Moving forward, the Corporation needs to establish controls to ensure all federal reports, including requirements set by pass-through entities, are filed on time. Views of responsible officials Refer to Corrective Action Plan section.
Finding 2022-002
2022-002 Financial Management and Internal Controls Compliance Requirement Allowable Costs/Cost Principles Category Significant Deficiency in Internal Control and Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Criteria 2 CFR section 200.302 Financial management. (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, 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. (b) ….. (1) ….. (2) ….. (3) ..... (5) ….. (6) ….. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR section 200.303 Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. Condition Written Policies The Corporation has no written policies for determining the activities allowed or unallowed and the allowability of costs as described in subpart E, Cost Principles of 2 CFR Part 200. Cause It is the first year for the Corporation to be subjected to a single audit compliance requirements. However, since the Commonwealth of Puerto Rico (the Commonwealth) filed for Title III under the PROMESA, all the instrumentalities of the Commonwealth had to reduce their staff as part of the Fiscal Plan to reduce expenditures. This has disrupted the segregation of duties, which is a key control. Effect The Corporation could incurred in unallowable costs failing to comply with 2 CFR sections 200.302 and 202.305, the Corporation could then be subjected to temporarily withholding of cash payments pending correction of the deficiency and/or withholding further federal awards for the program. Questioned Costs None Recommendations We recommend the Corporation obtain a thorough understanding of the provisions of federal statutes, regulations, or the terms and conditions of federal awards to prepare the required written policies under subpart E, Cost Principles of 2 CFR Part 200. Views of responsible officials Refer to Corrective Action Plan section.
Finding 2022-003
2022-003 Procurement Policies and Covered Transactions Compliance Requirement Procurement, Suspension, and Debarment Category Significant Deficiency in Internal Control and Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Criteria 2 CFR section 200.318 General procurement standards. (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. 2 CFR section 180.220 Are any procurement contracts included as covered transactions? (a) Covered transactions under this part— (1) Do not include any procurement contracts awarded directly by a Federal agency; but (2) Do include some procurement contracts awarded by non-Federal participants in nonprocurement covered transactions. (b) Specifically, a contract for goods or services is a covered transaction if any of the following applies: (1) The contract is awarded by a participant in a nonprocurement transaction that is covered under § 180.210, and the amount of the contract is expected to equal or exceed $25,000. (2) The contract requires the consent of an official of a Federal agency. In that case, the contract, regardless of the amount, always is a covered transaction, and it does not matter who awarded it. For example, it could be a subcontract awarded by a contractor at a tier below a nonprocurement transaction, as shown in the appendix to this part. (3) The contract is for Federally-required audit services. (c) A subcontract also is a covered transaction if,— (1) It is awarded by a participant in a procurement transaction under a nonprocurement transaction of a Federal agency that extends the coverage of paragraph (b)(1) of this section to additional tiers of contracts (see the diagram in the appendix to this part showing that optional lower tier coverage); and (2) The value of the subcontract is expected to equal or exceed $25,000. Condition General Procurement Standards - Written Policies The Corporation has an outdated institutional procurement manual approved in 2014 that lacks written policies to ascertain compliance with the provisions of federal statutes, regulations, or the terms and conditions of federal awards regarding procurement, suspension, and debarment requirements. Suspension and Debarment - Covered Transaction From a population of nineteen disbursements, we selected nine disbursements to ascertain compliance with 2 CFR section 180.220 by examining the procurement documents provided by the Corporation. From that sample, we identified nine instances in which the SAM.gov registration verification process was not performed. Of the nine instances, we found eight suppliers properly registered, but one supplier appears as validated as unique and existing but not registered in SAM.gov. Cause Lack of understanding of procurement compliance requirements for federal awards. Fiscal year 2023 was the first year for the Corporation to be subjected to a single audit compliance requirement for receiving and expending COVID-19 public health emergency programs. Effect Noncompliance with sections 200.318 and 180.220 of 2 CFR may lead to temporary withholding of cash payments until the deficiency is corrected, and/or withholding further federal program awards. Questioned Costs None Recommendation General Procurement Standards - Written Policies and Suspension and Debarment - Covered Transaction We recommend the Corporation update its internal procurement written policies following the provisions of current state statutes and regulations and develop separate procurement written policies following the provisions of federal laws and regulations or the terms and conditions of federal awards, which includes the Procurement Standards described in 2 CFR section 200.317 through 200.327, as applicable. By updating, developing, and implementing the required written procurement policies, the Corporation will be able to comply with the federal government compliance requirements. Views of responsible officials Refer to Corrective Action Plan section.
Finding 2022-004
2022-004 Reporting Compliance Requirement Reporting Category Material Weakness in Internal Control and Material Noncompliance Federal Agency U.S. Department of the Treasury Pass-Through Entity Puerto Rico Fiscal Agency and Financial Advisory Authority ALN 21.027 Federal Program COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Criteria Puerto Rico Cultural Rescue Program Guidelines (Published on December 7, 2021, and Revised on March 31, 2022). – Reporting Requirements To ensure timely reporting, the Government of Puerto Rico requires the Recipients to adhere to the following reporting frequency: On a biweekly basis, the recipients will be required to submit financial reports using the reporting template provided by the program……. 2 CFR § 200.512 Report submission. General. (1) The audit must be completed and the data collection form described in of this section and reporting package described in of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Condition Pass-Through Entity Reporting Requirements The Corporation submitted just two reports during the year, the first and second required submission. Single Audit Reporting Package The Corporation did not comply with the Single Audit Reporting Package submission requirements for the year ended June 30, 2022 and 2023. Cause Lack of understanding of reporting compliance requirements for federal awards. Fiscal year 2022 was the first year for the Corporation to be subjected to a single audit compliance requirement for receiving and expending COVID-19 public health emergency programs. Effect By failing to comply with 2 CFR sections 200.512 and the pass-through entity reporting guidelines, the Corporation could be subjected to temporary withholding of cash payments pending correction of the deficiency, withholding further federal awards for the program, and/or wholly or partly suspending or terminating the Federal award. Questioned Costs None Recommendation We recommend that the Corporation implement the provisions of federal statutes, regulations, or the terms and conditions of federal awards regarding reporting requirements, together with the necessary internal controls, to ascertain compliance. Furthermore, to comply with the reporting compliance requirement, the Corporation must submit the compliance reporting packages in default for the fiscal year ended June 30, 2022 and 2023. Moving forward, the Corporation needs to establish controls to ensure all federal reports, including requirements set by pass-through entities, are filed on time. Views of responsible officials Refer to Corrective Action Plan section.