Finding Reference 2024-003
Federal Agency: U.S. Department of Treasury
Pass-Through Agency: Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing No. 21.027)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-003.
Statement of Condition In our Reporting Test, we evaluated the Project and Expenditure Report submitted to the U.S. Department of Treasury during fiscal year 2023-2024. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system.
Additionally, during the fiscal year the Municipality received new funds called Service of Excellence to Citizens also related to the Coronavirus State and Local Fiscal Recovery Funds Program. This allocation was granted through the Puerto Rico Fiscal Agency and Financial Advisory Authority. In our Reporting Test, we evaluated six (6) reports and we found the following situations:
a) We cannot validate the submission of two (2) of them;
b) Two (2) of them were not submitted in a timely manner.
Criteria The Coronavirus State and Local Fiscal Recovery Funds - Compliance and Reporting Guidance, Part I, Section 10 (d), states that all recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Appropriate accounting records must be maintained for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.
In addition, where appropriate, controls need to be established to ensure the completion and timely submission of all mandatory performance and/or compliance reporting.
On the other hand, the Resolution 2023-114 approved by Assistant Secretary of the Disbursement Oversight Committee, establishes recipients under this Program (Service of Excellence to Citizens), as with all other eligible disbursements of CSFRF funds, shall remit to FAFAA biweekly reports detailing the use of funds for the purpose of complying with federal regulations and reporting to the Office of the Inspector General. These reports must be sent on the first and third Friday of each month, even if they do not have expenses for that month.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare, review and present the reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established by the Federal agencies.
Recommendation We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and prepare timely reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports during the required time frame and where the fund expenses will be reported as incurred. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-003.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The authorized personnel understand the reporting requirements. We are in the process of training additional personnel to have more resources to comply with all reporting requirements. The Finance Department is working with external consultants to address this situation and be able to comply with all reports as required.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-003
Federal Agency: U.S. Department of Treasury
Pass-Through Agency: Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing No. 21.027)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-003.
Statement of Condition In our Reporting Test, we evaluated the Project and Expenditure Report submitted to the U.S. Department of Treasury during fiscal year 2023-2024. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system.
Additionally, during the fiscal year the Municipality received new funds called Service of Excellence to Citizens also related to the Coronavirus State and Local Fiscal Recovery Funds Program. This allocation was granted through the Puerto Rico Fiscal Agency and Financial Advisory Authority. In our Reporting Test, we evaluated six (6) reports and we found the following situations:
a) We cannot validate the submission of two (2) of them;
b) Two (2) of them were not submitted in a timely manner.
Criteria The Coronavirus State and Local Fiscal Recovery Funds - Compliance and Reporting Guidance, Part I, Section 10 (d), states that all recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Appropriate accounting records must be maintained for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.
In addition, where appropriate, controls need to be established to ensure the completion and timely submission of all mandatory performance and/or compliance reporting.
On the other hand, the Resolution 2023-114 approved by Assistant Secretary of the Disbursement Oversight Committee, establishes recipients under this Program (Service of Excellence to Citizens), as with all other eligible disbursements of CSFRF funds, shall remit to FAFAA biweekly reports detailing the use of funds for the purpose of complying with federal regulations and reporting to the Office of the Inspector General. These reports must be sent on the first and third Friday of each month, even if they do not have expenses for that month.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare, review and present the reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established by the Federal agencies.
Recommendation We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and prepare timely reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports during the required time frame and where the fund expenses will be reported as incurred. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-003.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The authorized personnel understand the reporting requirements. We are in the process of training additional personnel to have more resources to comply with all reporting requirements. The Finance Department is working with external consultants to address this situation and be able to comply with all reports as required.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-004
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Agency: P.R. Department of Housing
Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-004.
Statement of Condition In our reporting test, we found that the Municipality did not submit the corresponding reports for the fiscal year ended on June 30, 2024.
Criteria Based on the CDBG agreements, the Municipality must submit to the Department of Housing reports on records, collections, and disbursements of Program Income on an annual and quarterly basis. Including the progress of the projects developed with the CDBG program. In addition, the Municipality will submit all the reports required by the Agency. Failure to comply with this provision will be just cause for the Department to stop the fund requisition process.
§ 200.332 Requirements for pass-through entities. (1) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. (2) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare and present reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established in the contract agreement.
Recommendation We recommend that the Municipality maintain constant monitoring to improve program controls. The reports must be presented as established in the agreement and guidelines of the Department of Housing. This will ensure compliance with the reporting requirements under the Community Development Block Grants/State’s Program and Non-entitlement Grant in Hawaii agreement.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-004.
Views of Responsible Officials and Planned Corrective Action The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply. We were able to submit all past reports on January 2025. And subsequently we are complying with the reporting requirements.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-004
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Agency: P.R. Department of Housing
Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-004.
Statement of Condition In our reporting test, we found that the Municipality did not submit the corresponding reports for the fiscal year ended on June 30, 2024.
Criteria Based on the CDBG agreements, the Municipality must submit to the Department of Housing reports on records, collections, and disbursements of Program Income on an annual and quarterly basis. Including the progress of the projects developed with the CDBG program. In addition, the Municipality will submit all the reports required by the Agency. Failure to comply with this provision will be just cause for the Department to stop the fund requisition process.
§ 200.332 Requirements for pass-through entities. (1) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. (2) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare and present reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established in the contract agreement.
Recommendation We recommend that the Municipality maintain constant monitoring to improve program controls. The reports must be presented as established in the agreement and guidelines of the Department of Housing. This will ensure compliance with the reporting requirements under the Community Development Block Grants/State’s Program and Non-entitlement Grant in Hawaii agreement.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-004.
Views of Responsible Officials and Planned Corrective Action The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply. We were able to submit all past reports on January 2025. And subsequently we are complying with the reporting requirements.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-005
Federal Agency: U.S. Department of Homeland Security
Pass-Through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3)
Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster) (ALN 97.036)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-005.
Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of twelve (12) projects for two quarters of fiscal year 2023-2024. During our audit procedures, we noted that the reports did not agree with the accounting and project records.
Criteria 2 CFR 200.302 (a) states that the state’s and the other non-Federal entity’s financial management system, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329.
Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities.
Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records.
Recommendation We recommend Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-005.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. We understand that only two (2) reports did not agree with the accounting records. We have consultants that are responsible for the preparation of these reports. Instructions were given to the consultants in order to correct the reports that do not agree with the accounting records. There was a misunderstanding with the reports, in which the past-through entity instructed that purchase orders and expenditures incurred should be reported. As subsequently clarified, only the expenditures incurred should be reported.
Implementation Date: June 30, 2025
Responsible Person: Carmen López
Interim Finance Director
Finding Reference 2024-006
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 were not able to corroborate compliance with the earmarking requirements because the Municipality did not submit the program annual closing reports.
Criteria The contract agreement states in Clause four point eight (4.8) that the Municipality will be responsible for ensuring that all administrative, programmatic and fiscal requirements of the Proposal are met.
The contract agreement states in Clause thirteen (13) 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 reports and supporting documentation are submitted to the pass-through agency in the requested time frame.
Effect of Condition We could not corroborate that Municipality expended the Program funds for administrative costs and service categories according to the budget limitations of the approved Proposal.
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.
Prior Year Finding No.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply. We are in compliance with the earmarking requirements, once reports are submitted, evidence will be provided.
Implementation Date: June 30, 2025
Responsible Person: Carmen López
Interim Finance Director
Finding Reference 2024-007
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 thirteen (13) 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 reports and supporting documentation 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.
Prior Year Finding No.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply; once all reports are submitted, evidence will be provided.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-003
Federal Agency: U.S. Department of Treasury
Pass-Through Agency: Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing No. 21.027)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-003.
Statement of Condition In our Reporting Test, we evaluated the Project and Expenditure Report submitted to the U.S. Department of Treasury during fiscal year 2023-2024. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system.
Additionally, during the fiscal year the Municipality received new funds called Service of Excellence to Citizens also related to the Coronavirus State and Local Fiscal Recovery Funds Program. This allocation was granted through the Puerto Rico Fiscal Agency and Financial Advisory Authority. In our Reporting Test, we evaluated six (6) reports and we found the following situations:
a) We cannot validate the submission of two (2) of them;
b) Two (2) of them were not submitted in a timely manner.
Criteria The Coronavirus State and Local Fiscal Recovery Funds - Compliance and Reporting Guidance, Part I, Section 10 (d), states that all recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Appropriate accounting records must be maintained for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.
In addition, where appropriate, controls need to be established to ensure the completion and timely submission of all mandatory performance and/or compliance reporting.
On the other hand, the Resolution 2023-114 approved by Assistant Secretary of the Disbursement Oversight Committee, establishes recipients under this Program (Service of Excellence to Citizens), as with all other eligible disbursements of CSFRF funds, shall remit to FAFAA biweekly reports detailing the use of funds for the purpose of complying with federal regulations and reporting to the Office of the Inspector General. These reports must be sent on the first and third Friday of each month, even if they do not have expenses for that month.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare, review and present the reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established by the Federal agencies.
Recommendation We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and prepare timely reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports during the required time frame and where the fund expenses will be reported as incurred. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-003.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The authorized personnel understand the reporting requirements. We are in the process of training additional personnel to have more resources to comply with all reporting requirements. The Finance Department is working with external consultants to address this situation and be able to comply with all reports as required.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-003
Federal Agency: U.S. Department of Treasury
Pass-Through Agency: Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing No. 21.027)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-003.
Statement of Condition In our Reporting Test, we evaluated the Project and Expenditure Report submitted to the U.S. Department of Treasury during fiscal year 2023-2024. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system.
Additionally, during the fiscal year the Municipality received new funds called Service of Excellence to Citizens also related to the Coronavirus State and Local Fiscal Recovery Funds Program. This allocation was granted through the Puerto Rico Fiscal Agency and Financial Advisory Authority. In our Reporting Test, we evaluated six (6) reports and we found the following situations:
a) We cannot validate the submission of two (2) of them;
b) Two (2) of them were not submitted in a timely manner.
Criteria The Coronavirus State and Local Fiscal Recovery Funds - Compliance and Reporting Guidance, Part I, Section 10 (d), states that all recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Appropriate accounting records must be maintained for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.
In addition, where appropriate, controls need to be established to ensure the completion and timely submission of all mandatory performance and/or compliance reporting.
On the other hand, the Resolution 2023-114 approved by Assistant Secretary of the Disbursement Oversight Committee, establishes recipients under this Program (Service of Excellence to Citizens), as with all other eligible disbursements of CSFRF funds, shall remit to FAFAA biweekly reports detailing the use of funds for the purpose of complying with federal regulations and reporting to the Office of the Inspector General. These reports must be sent on the first and third Friday of each month, even if they do not have expenses for that month.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare, review and present the reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established by the Federal agencies.
Recommendation We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and prepare timely reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports during the required time frame and where the fund expenses will be reported as incurred. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-003.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The authorized personnel understand the reporting requirements. We are in the process of training additional personnel to have more resources to comply with all reporting requirements. The Finance Department is working with external consultants to address this situation and be able to comply with all reports as required.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-004
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Agency: P.R. Department of Housing
Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-004.
Statement of Condition In our reporting test, we found that the Municipality did not submit the corresponding reports for the fiscal year ended on June 30, 2024.
Criteria Based on the CDBG agreements, the Municipality must submit to the Department of Housing reports on records, collections, and disbursements of Program Income on an annual and quarterly basis. Including the progress of the projects developed with the CDBG program. In addition, the Municipality will submit all the reports required by the Agency. Failure to comply with this provision will be just cause for the Department to stop the fund requisition process.
§ 200.332 Requirements for pass-through entities. (1) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. (2) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare and present reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established in the contract agreement.
Recommendation We recommend that the Municipality maintain constant monitoring to improve program controls. The reports must be presented as established in the agreement and guidelines of the Department of Housing. This will ensure compliance with the reporting requirements under the Community Development Block Grants/State’s Program and Non-entitlement Grant in Hawaii agreement.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-004.
Views of Responsible Officials and Planned Corrective Action The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply. We were able to submit all past reports on January 2025. And subsequently we are complying with the reporting requirements.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-004
Federal Agency: U.S. Department of Housing and Urban Development
Pass-Through Agency: P.R. Department of Housing
Program: Community Development Block Grant/State’s Program and Non-Entitlement Grants in Hawaii (Assistance Listing No. 14.228)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-004.
Statement of Condition In our reporting test, we found that the Municipality did not submit the corresponding reports for the fiscal year ended on June 30, 2024.
Criteria Based on the CDBG agreements, the Municipality must submit to the Department of Housing reports on records, collections, and disbursements of Program Income on an annual and quarterly basis. Including the progress of the projects developed with the CDBG program. In addition, the Municipality will submit all the reports required by the Agency. Failure to comply with this provision will be just cause for the Department to stop the fund requisition process.
§ 200.332 Requirements for pass-through entities. (1) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award. (2) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports.
Cause of Condition The Municipality does not have the necessary personnel assigned to prepare and present reports in a timely manner.
Effect of Condition The program is not in compliance with the reporting requirements as established in the contract agreement.
Recommendation We recommend that the Municipality maintain constant monitoring to improve program controls. The reports must be presented as established in the agreement and guidelines of the Department of Housing. This will ensure compliance with the reporting requirements under the Community Development Block Grants/State’s Program and Non-entitlement Grant in Hawaii agreement.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-004.
Views of Responsible Officials and Planned Corrective Action The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply. We were able to submit all past reports on January 2025. And subsequently we are complying with the reporting requirements.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director
Finding Reference 2024-005
Federal Agency: U.S. Department of Homeland Security
Pass-Through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3)
Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster) (ALN 97.036)
Compliance Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding 2023-005.
Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of twelve (12) projects for two quarters of fiscal year 2023-2024. During our audit procedures, we noted that the reports did not agree with the accounting and project records.
Criteria 2 CFR 200.302 (a) states that the state’s and the other non-Federal entity’s financial management system, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329.
Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities.
Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records.
Recommendation We recommend Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity.
Questioned Cost None.
Prior Year Finding Yes. This finding is similar to prior-year finding 2023-005.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. We understand that only two (2) reports did not agree with the accounting records. We have consultants that are responsible for the preparation of these reports. Instructions were given to the consultants in order to correct the reports that do not agree with the accounting records. There was a misunderstanding with the reports, in which the past-through entity instructed that purchase orders and expenditures incurred should be reported. As subsequently clarified, only the expenditures incurred should be reported.
Implementation Date: June 30, 2025
Responsible Person: Carmen López
Interim Finance Director
Finding Reference 2024-006
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 were not able to corroborate compliance with the earmarking requirements because the Municipality did not submit the program annual closing reports.
Criteria The contract agreement states in Clause four point eight (4.8) that the Municipality will be responsible for ensuring that all administrative, programmatic and fiscal requirements of the Proposal are met.
The contract agreement states in Clause thirteen (13) 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 reports and supporting documentation are submitted to the pass-through agency in the requested time frame.
Effect of Condition We could not corroborate that Municipality expended the Program funds for administrative costs and service categories according to the budget limitations of the approved Proposal.
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.
Prior Year Finding No.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply. We are in compliance with the earmarking requirements, once reports are submitted, evidence will be provided.
Implementation Date: June 30, 2025
Responsible Person: Carmen López
Interim Finance Director
Finding Reference 2024-007
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 thirteen (13) 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 reports and supporting documentation 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.
Prior Year Finding No.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The Municipality appointed a person to work on all the required reports and instructed them on the deadlines that apply; once all reports are submitted, evidence will be provided.
Implementation Date: June 30, 2025
Responsible Person: Carmen I. López
Interim Finance Director