FAC Explorer

Audit 349402

FY End
2024-06-30
Total Expended
$12.38M
Findings
12
Programs
10
Organization: Municipality of Toa Alta (PR)
Year: 2024 Accepted: 2025-03-27
Auditor: Lopez Vega CPA Psc

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
538663 2024-004 Significant Deficiency Yes L
538664 2024-004 Significant Deficiency Yes L
538665 2024-005 Significant Deficiency Yes I
538666 2024-005 Significant Deficiency Yes I
538667 2024-006 Significant Deficiency - G
538668 2024-007 Significant Deficiency - N
1115105 2024-004 Significant Deficiency Yes L
1115106 2024-004 Significant Deficiency Yes L
1115107 2024-005 Significant Deficiency Yes I
1115108 2024-005 Significant Deficiency Yes I
1115109 2024-006 Significant Deficiency - G
1115110 2024-007 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.59M Yes 2
14.871 Section 8 Housing Choice Vouchers $1.44M Yes 1
93.575 Child Care and Development Block Grant $477,703 Yes 1
14.218 Community Development Block Grants/entitlement Grants $369,370 - 0
16.710 Public Safety Partnership and Community Policing Grants $354,485 - 0
66.818 Brownfields Multipurpose, Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements $104,602 - 0
10.558 Child and Adult Care Food Program $62,131 - 0
93.044 Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $24,048 - 0
14.241 Housing Opportunities for Persons with Aids $18,325 - 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $3,164 - 0

Contacts

Name Title Type
EELZK1K9FLZ4 Miguel A. Fonseca Fonseca Auditee
7878702100 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. The accompanying Schedule of Expenditures of Federal Awards (“the Schedule”) includes the federal grant activity of the Municipality under programs of the federal government for the year ended June 30, 2024. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulation (CFR 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. 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 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. The Assistance Listing Number, formerly known as the Catalog of Federal Domestic Assistance (CFDA) Number, is a five-digit number which is the awarding document for all Federal assistance award mechanisms, including Federal grants and cooperative agreements. 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 COST RATE 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. The Municipality has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance.
Title: MAJOR PROGRAMS 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. Major programs are identified in the Summary of Auditors’ Results Section of the Schedule of Findings and Questioned Costs.
Title: SUBRECIPIENTS 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. During fiscal year 2023-2024, there were no awards passed through to sub-recipients.
Title: RECONCILIATION OF EXPENDITURES PRESENTED IN THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TO THE EXPENDITURES PRESENTED IN THE BASIC FINANCIAL STATEMENTS 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. The reconciliation between the expenditures in the fund financial statements and the expenditures in the Schedule of Expenditures of Federal Awards is as follows: Description Amount Per Schedule of Expenditures of Federal Awards $ 12,376,682 Nonfederal programs expenditures and other adjustments 25,673,227 Total Expenditures $ 38,049,909 The Municipality receives FEMA reimbursement funds from the Central Office for Recovery, Reconstruction and Resiliency (COR3). COR3 is a division of the Puerto Rico Public Private Authority created through Executive Order 2017-65 to manage all efforts for the recovery of the Commonwealth of Puerto Rico (Commonwealth) after the passage of Hurricanes Irma and María. COR3 was authorized by the Governor to receive all disaster recovery grants of FEMA.
Title: AMERICAN RESCUE PLAN ACT (ARPA)-ASSISTANCE LISTING 21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS 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 has elected not to use the 10-percent de minimis cost rate allowed under the Uniform Guidance. 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. The Municipality of Toa Alta started receiving the funds and incurring expenditures on fiscal year 2021-2022.

Finding Details

Finding 2024-004
FINDING NUMBER 2024-004 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY PASS-THROUGH AGENCY P.R. DEPARTMENT OF TREASURY - PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT REPORTING (L) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION During the fiscal year, the Municipality administered funds from the Coronavirus State and Local Fiscal Recovery Funds. This allocation was granted directly from the Federal government and through the Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively. In our Reporting Test, we evaluated two (2) quarterly Project and Expenditure Reports submitted to U.S. Department of Treasury, three (3) monthly reports related to the Municipal Strengthening Funds Program and six (6) bimonthly reports related to the Solid Waste Landfill Program. We found that three (3) of six (6) Solid Waste Landfill Program Reports were submitted late, and two (2) of three (3) Municipal Strengthening Funds Reports were not submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority. CRITERIA The Municipal Strengthening Fund Transfer Agreement, Clause 5.1, states that the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the Transfer Agreement, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. The Transfer Plan, on Exhibit A, establishes that starting on the 15th day of the month following receipt of the funds, and by the 15th day of each month, the Transferee will submit a Use of Funds Report for the prior month’s expenses. Also, on the Municipal Strengthening Fund Program Guidelines, the Puerto Rico Fiscal Agency and Financial Advisory Authority specified on the Reporting Requirements Section that the recipients are required to submit monthly financial reports using the reporting template provided by the program. The instructions of the Solid Waste Landfill Reports, provided by the Fiscal Agency and Financial Advisory Authority, establish that the report must be updated and submitted before the first and third Friday of each month (bimonthly), starting at the date of the agreement. The U.S. Department of Treasury also established guidelines for the reporting requirements of the funds received as an Entitlement and County Unit that we determined that the Municipality was in compliance. CAUSE There is a lack of knowledge and training to personnel assigned. Additionally, the Municipality does not have an adequate monitoring for the activity and the reports. EFFECT The program is not in compliance with the Reporting Requirements as established in the transfer agreement. RECOMMENDATION We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and develop complete and accurate reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports timely. This will ensure better control for the program. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-004 and 2022-006). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditors’ finding. The Finance Director is aware of the compliance requirement. We gave instructions to the accounting staff to maintain a dateline control sheet to ascertain that required reports for all grants were submitted within the due date. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-004
FINDING NUMBER 2024-004 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY PASS-THROUGH AGENCY P.R. DEPARTMENT OF TREASURY - PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT REPORTING (L) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION During the fiscal year, the Municipality administered funds from the Coronavirus State and Local Fiscal Recovery Funds. This allocation was granted directly from the Federal government and through the Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively. In our Reporting Test, we evaluated two (2) quarterly Project and Expenditure Reports submitted to U.S. Department of Treasury, three (3) monthly reports related to the Municipal Strengthening Funds Program and six (6) bimonthly reports related to the Solid Waste Landfill Program. We found that three (3) of six (6) Solid Waste Landfill Program Reports were submitted late, and two (2) of three (3) Municipal Strengthening Funds Reports were not submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority. CRITERIA The Municipal Strengthening Fund Transfer Agreement, Clause 5.1, states that the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the Transfer Agreement, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. The Transfer Plan, on Exhibit A, establishes that starting on the 15th day of the month following receipt of the funds, and by the 15th day of each month, the Transferee will submit a Use of Funds Report for the prior month’s expenses. Also, on the Municipal Strengthening Fund Program Guidelines, the Puerto Rico Fiscal Agency and Financial Advisory Authority specified on the Reporting Requirements Section that the recipients are required to submit monthly financial reports using the reporting template provided by the program. The instructions of the Solid Waste Landfill Reports, provided by the Fiscal Agency and Financial Advisory Authority, establish that the report must be updated and submitted before the first and third Friday of each month (bimonthly), starting at the date of the agreement. The U.S. Department of Treasury also established guidelines for the reporting requirements of the funds received as an Entitlement and County Unit that we determined that the Municipality was in compliance. CAUSE There is a lack of knowledge and training to personnel assigned. Additionally, the Municipality does not have an adequate monitoring for the activity and the reports. EFFECT The program is not in compliance with the Reporting Requirements as established in the transfer agreement. RECOMMENDATION We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and develop complete and accurate reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports timely. This will ensure better control for the program. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-004 and 2022-006). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditors’ finding. The Finance Director is aware of the compliance requirement. We gave instructions to the accounting staff to maintain a dateline control sheet to ascertain that required reports for all grants were submitted within the due date. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-005
FINDING NUMBER 2024-005 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT PROCUREMENT SUSPENSION & DEBARMENT (I) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for two (2) of the three (3) contract agreements evaluated. CRITERIA 2 CFR section 200.327 references Appendix II to Part 200, which establishes the contract provisions must be included in non-federal entity contracts under federal awards. CAUSE There is lack of knowledge about the contract provisions required to be included in federal awards contracts. Therefore, the Municipality has been awarding contracts without the proper procurement procedure. EFFECT The program is in noncompliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327. RECOMMENDATION We recommend the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-005 and 2022-007). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditor’s finding. We implemented policies and procedures in accordance with Uniform Guidance 2 CFR 200.214. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-005
FINDING NUMBER 2024-005 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT PROCUREMENT SUSPENSION & DEBARMENT (I) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for two (2) of the three (3) contract agreements evaluated. CRITERIA 2 CFR section 200.327 references Appendix II to Part 200, which establishes the contract provisions must be included in non-federal entity contracts under federal awards. CAUSE There is lack of knowledge about the contract provisions required to be included in federal awards contracts. Therefore, the Municipality has been awarding contracts without the proper procurement procedure. EFFECT The program is in noncompliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327. RECOMMENDATION We recommend the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-005 and 2022-007). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditor’s finding. We implemented policies and procedures in accordance with Uniform Guidance 2 CFR 200.214. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-006
FINDING NUMBER 2024-006 FEDERAL AGENCY U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES PASS-THROUGH AGENCY P.R. DEPARTMENT OF FAMILY FEDERAL PROGRAM CHILD CARE AND DEVELOPMENT BLOCK GRANT (ALN 93.575) REQUIREMENT EARMARKING (G) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. CRITERIA 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory was no less than seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50. CAUSE The program’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts. EFFECT The program is not in compliance with 45 CFR, Subpart F, Section 98.50. RECOMMENDATION We recommend the Program’s Management to request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations. QUESTIONED COST None. PRIOR YEAR FINDING No. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the finding. As part of the corrective action plan, we evaluated the approved budget by the pass-through entity for the current fiscal year (2024-2025). From the evaluation we validated that the amount assigned for the Quality Activities Category is 14.58% and the amount assigned for the Quality Infant and Toddler Category is a 5.43% from total approved budget. Therefore, the current approved budget complies with the minimum percentage required by the federal regulation of 9% and 3%, respectively. In addition, we will be evaluating the budget for the proposal of the program year 2025-2026 in order to be in compliance with federal regulation. For general knowledge, we want to make clear that the pass-through agency hasn’t made this questioning because it is the entity that approves the assigned funds. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Eileen Rosario, Program Director
Finding 2024-007
FINDING NUMBER 2024-007 FEDERAL AGENCY U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PASS-THROUGH AGENCY P.R. DEPARTMENT OF HOUSING FEDERAL PROGRAM SECTION 8 HOUSING CHOICE VOUCHERS (ALN 14.871) REQUIREMENT SPECIAL TESTS AND PROVISIONS (N) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION During our audit procedures, we observed that the Program does not meet the requirements of quality control inspections. CRITERIA 24CFR, Subpart I, Section 982.405 (c) states that the PHA must conduct supervisory quality control HQS inspections. The Administrative Plan for the Section 8 Housing Choice Voucher Programs establishes in Part 8, Section 1(d) that the program supervisor will re-inspect at least 8 units initially inspected by the Section 8 Housing Representative. The quality control inspections will be performed throughout the year, and a record of all such quality control inspections will be maintained in a separate file, as SEMAP documentation. The quality control sampling will include units that initially passed and failed Housing Quality Standards to assure consistency between representatives, and uniform application for Housing Quality Standards. CAUSE The quality control re-inspections corresponding to fiscal year 2023-2024 were not documented. EFFECT The Program is not in compliance with 24CFR, Subpart I, Section 982.405 (c) and the Municipality’s Administrative Plan. RECOMMENDATION We recommend the Municipality to keep a documented file of evidence for quality control re-inspections. QUESTIONED COST None. PRIOR YEAR FINDING No. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditors’ finding. As a corrective action for the noncompliance with the requirement of the Quality Control Reinspections during fiscal year 2023-2024, I have been performing the corresponding re-inspections since July 2024, when I started in the position of Director of the Federal Programs Department. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Miguel Fonseca, Federal Programs Director
Finding 2024-004
FINDING NUMBER 2024-004 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY PASS-THROUGH AGENCY P.R. DEPARTMENT OF TREASURY - PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT REPORTING (L) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION During the fiscal year, the Municipality administered funds from the Coronavirus State and Local Fiscal Recovery Funds. This allocation was granted directly from the Federal government and through the Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively. In our Reporting Test, we evaluated two (2) quarterly Project and Expenditure Reports submitted to U.S. Department of Treasury, three (3) monthly reports related to the Municipal Strengthening Funds Program and six (6) bimonthly reports related to the Solid Waste Landfill Program. We found that three (3) of six (6) Solid Waste Landfill Program Reports were submitted late, and two (2) of three (3) Municipal Strengthening Funds Reports were not submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority. CRITERIA The Municipal Strengthening Fund Transfer Agreement, Clause 5.1, states that the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the Transfer Agreement, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. The Transfer Plan, on Exhibit A, establishes that starting on the 15th day of the month following receipt of the funds, and by the 15th day of each month, the Transferee will submit a Use of Funds Report for the prior month’s expenses. Also, on the Municipal Strengthening Fund Program Guidelines, the Puerto Rico Fiscal Agency and Financial Advisory Authority specified on the Reporting Requirements Section that the recipients are required to submit monthly financial reports using the reporting template provided by the program. The instructions of the Solid Waste Landfill Reports, provided by the Fiscal Agency and Financial Advisory Authority, establish that the report must be updated and submitted before the first and third Friday of each month (bimonthly), starting at the date of the agreement. The U.S. Department of Treasury also established guidelines for the reporting requirements of the funds received as an Entitlement and County Unit that we determined that the Municipality was in compliance. CAUSE There is a lack of knowledge and training to personnel assigned. Additionally, the Municipality does not have an adequate monitoring for the activity and the reports. EFFECT The program is not in compliance with the Reporting Requirements as established in the transfer agreement. RECOMMENDATION We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and develop complete and accurate reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports timely. This will ensure better control for the program. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-004 and 2022-006). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditors’ finding. The Finance Director is aware of the compliance requirement. We gave instructions to the accounting staff to maintain a dateline control sheet to ascertain that required reports for all grants were submitted within the due date. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-004
FINDING NUMBER 2024-004 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY PASS-THROUGH AGENCY P.R. DEPARTMENT OF TREASURY - PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT REPORTING (L) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION During the fiscal year, the Municipality administered funds from the Coronavirus State and Local Fiscal Recovery Funds. This allocation was granted directly from the Federal government and through the Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively. In our Reporting Test, we evaluated two (2) quarterly Project and Expenditure Reports submitted to U.S. Department of Treasury, three (3) monthly reports related to the Municipal Strengthening Funds Program and six (6) bimonthly reports related to the Solid Waste Landfill Program. We found that three (3) of six (6) Solid Waste Landfill Program Reports were submitted late, and two (2) of three (3) Municipal Strengthening Funds Reports were not submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority. CRITERIA The Municipal Strengthening Fund Transfer Agreement, Clause 5.1, states that the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the Transfer Agreement, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. The Transfer Plan, on Exhibit A, establishes that starting on the 15th day of the month following receipt of the funds, and by the 15th day of each month, the Transferee will submit a Use of Funds Report for the prior month’s expenses. Also, on the Municipal Strengthening Fund Program Guidelines, the Puerto Rico Fiscal Agency and Financial Advisory Authority specified on the Reporting Requirements Section that the recipients are required to submit monthly financial reports using the reporting template provided by the program. The instructions of the Solid Waste Landfill Reports, provided by the Fiscal Agency and Financial Advisory Authority, establish that the report must be updated and submitted before the first and third Friday of each month (bimonthly), starting at the date of the agreement. The U.S. Department of Treasury also established guidelines for the reporting requirements of the funds received as an Entitlement and County Unit that we determined that the Municipality was in compliance. CAUSE There is a lack of knowledge and training to personnel assigned. Additionally, the Municipality does not have an adequate monitoring for the activity and the reports. EFFECT The program is not in compliance with the Reporting Requirements as established in the transfer agreement. RECOMMENDATION We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and develop complete and accurate reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the passthrough agency such as: submitting the reports timely. This will ensure better control for the program. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-004 and 2022-006). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditors’ finding. The Finance Director is aware of the compliance requirement. We gave instructions to the accounting staff to maintain a dateline control sheet to ascertain that required reports for all grants were submitted within the due date. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-005
FINDING NUMBER 2024-005 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT PROCUREMENT SUSPENSION & DEBARMENT (I) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for two (2) of the three (3) contract agreements evaluated. CRITERIA 2 CFR section 200.327 references Appendix II to Part 200, which establishes the contract provisions must be included in non-federal entity contracts under federal awards. CAUSE There is lack of knowledge about the contract provisions required to be included in federal awards contracts. Therefore, the Municipality has been awarding contracts without the proper procurement procedure. EFFECT The program is in noncompliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327. RECOMMENDATION We recommend the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-005 and 2022-007). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditor’s finding. We implemented policies and procedures in accordance with Uniform Guidance 2 CFR 200.214. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-005
FINDING NUMBER 2024-005 FEDERAL AGENCY U.S. DEPARTMENT OF THE TREASURY FEDERAL PROGRAM CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (ALN 21.027) REQUIREMENT PROCUREMENT SUSPENSION & DEBARMENT (I) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Procurement Contract Provision Test, we evaluated three (3) contract agreements. We found that the Municipality did not include all contract provisions required for non-federal entity contracts under federal awards for two (2) of the three (3) contract agreements evaluated. CRITERIA 2 CFR section 200.327 references Appendix II to Part 200, which establishes the contract provisions must be included in non-federal entity contracts under federal awards. CAUSE There is lack of knowledge about the contract provisions required to be included in federal awards contracts. Therefore, the Municipality has been awarding contracts without the proper procurement procedure. EFFECT The program is in noncompliance with the Procurement Suspension and Debarment requirements as established in 2 CFR section 200.327. RECOMMENDATION We recommend the program administrators to include in the requisition for contracts a description of the requirements that need to be fulfilled to award a federal contract. Contracts should not be signed, and payments should not be disbursed without the required contract provisions. QUESTIONED COST None. PRIOR YEAR FINDING A similar finding was presented in prior year Schedule of Findings and Questioned Costs (2023-005 and 2022-007). VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditor’s finding. We implemented policies and procedures in accordance with Uniform Guidance 2 CFR 200.214. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Aracelis Suárez, Finance Director
Finding 2024-006
FINDING NUMBER 2024-006 FEDERAL AGENCY U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES PASS-THROUGH AGENCY P.R. DEPARTMENT OF FAMILY FEDERAL PROGRAM CHILD CARE AND DEVELOPMENT BLOCK GRANT (ALN 93.575) REQUIREMENT EARMARKING (G) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Earmarking Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities and at least an additional three percent (3%) on quality improvement for infants and toddlers on the program. CRITERIA 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory was no less than seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50. CAUSE The program’s budget, approved by the pass-through entity, was not distributed according to the cost limitations required for the administrative, quality and direct costs. Therefore, the amounts spent per category of expenditure did not meet the minimum amounts. EFFECT The program is not in compliance with 45 CFR, Subpart F, Section 98.50. RECOMMENDATION We recommend the Program’s Management to request to the pass-through entity a revision of the approved budgeted amounts in order to make all the required adjustments to comply with the program cost limitations. QUESTIONED COST None. PRIOR YEAR FINDING No. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the finding. As part of the corrective action plan, we evaluated the approved budget by the pass-through entity for the current fiscal year (2024-2025). From the evaluation we validated that the amount assigned for the Quality Activities Category is 14.58% and the amount assigned for the Quality Infant and Toddler Category is a 5.43% from total approved budget. Therefore, the current approved budget complies with the minimum percentage required by the federal regulation of 9% and 3%, respectively. In addition, we will be evaluating the budget for the proposal of the program year 2025-2026 in order to be in compliance with federal regulation. For general knowledge, we want to make clear that the pass-through agency hasn’t made this questioning because it is the entity that approves the assigned funds. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Eileen Rosario, Program Director
Finding 2024-007
FINDING NUMBER 2024-007 FEDERAL AGENCY U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PASS-THROUGH AGENCY P.R. DEPARTMENT OF HOUSING FEDERAL PROGRAM SECTION 8 HOUSING CHOICE VOUCHERS (ALN 14.871) REQUIREMENT SPECIAL TESTS AND PROVISIONS (N) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION During our audit procedures, we observed that the Program does not meet the requirements of quality control inspections. CRITERIA 24CFR, Subpart I, Section 982.405 (c) states that the PHA must conduct supervisory quality control HQS inspections. The Administrative Plan for the Section 8 Housing Choice Voucher Programs establishes in Part 8, Section 1(d) that the program supervisor will re-inspect at least 8 units initially inspected by the Section 8 Housing Representative. The quality control inspections will be performed throughout the year, and a record of all such quality control inspections will be maintained in a separate file, as SEMAP documentation. The quality control sampling will include units that initially passed and failed Housing Quality Standards to assure consistency between representatives, and uniform application for Housing Quality Standards. CAUSE The quality control re-inspections corresponding to fiscal year 2023-2024 were not documented. EFFECT The Program is not in compliance with 24CFR, Subpart I, Section 982.405 (c) and the Municipality’s Administrative Plan. RECOMMENDATION We recommend the Municipality to keep a documented file of evidence for quality control re-inspections. QUESTIONED COST None. PRIOR YEAR FINDING No. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION We concur with the auditors’ finding. As a corrective action for the noncompliance with the requirement of the Quality Control Reinspections during fiscal year 2023-2024, I have been performing the corresponding re-inspections since July 2024, when I started in the position of Director of the Federal Programs Department. Implementation Date: Fiscal Year 2024-2025. Responsible Person: Miguel Fonseca, Federal Programs Director