Finding Reference 2024-003
Federal Agency: U.S. Department of the 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 in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of
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 Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively.
In our Reporting Test, we evaluated the annual Project and Expenditure Report submitted to the U.S. Department of Treasury. We found that the Report was not submitted timely.
Also, we evaluated six (6) bimonthly reports related to the Service of Excellence to Citizens Program and three (3) monthly reports related to the Municipal Strengthening Funds Program, submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority.
We found that two (2) out of six (6) Service of Excellence to Citizens Reports, and two (2) out of three (3) Municipal Strengthening Funds Reports were submitted late. Also, we found that the Municipality reported expenditures for the amounts of $550,000 and $141,030 that were not incurred.
Criteria 31 CFR 35.4(c) – Reservation of authority, reporting states that during the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds.
31 CFR 35.5(b) – Use of funds states that a cost shall be considered to have been incurred for purposes of the general use of Coronavirus State and Local Fiscal Recovery Funds described in 31 CFR 35.5(a) if the recipient has incurred an obligation with respect to such cost by December 31, 2024.
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 expenditure 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. Table 4: Annual Project and Expenditure Report in Part 2 of the Guidance establishes that the deadline of the annual reports are thirty days after the end of the period, on April 30th for the reports ended on March 31st.
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, 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 in 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 Service of Excellence to Citizens 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.
Cause of Condition There is a lack of knowledge and training for the personnel assigned. Additionally, the Municipality does not have adequate monitoring for the activity and the reports.
Effect of Condition The program is not in compliance with the Reporting Requirements as established in the contract agreements and guidelines.
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 U.S. Department of the Treasury and the pass-through agency such as: (1) submitting the reports on a timely basis and (2) reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. Also, the Municipality should establish a process to validate that the amounts reported agree with the accounting records of the corresponding period reported to strengthen the internal controls of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-002 and 2022-002.
Views of Responsible Officials and Planned Corrective Action:
We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mr. Carlos Flores, Federal Program’s Subdirector
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director
Finding Reference 2024-003
Federal Agency: U.S. Department of the 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 in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of
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 Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively.
In our Reporting Test, we evaluated the annual Project and Expenditure Report submitted to the U.S. Department of Treasury. We found that the Report was not submitted timely.
Also, we evaluated six (6) bimonthly reports related to the Service of Excellence to Citizens Program and three (3) monthly reports related to the Municipal Strengthening Funds Program, submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority.
We found that two (2) out of six (6) Service of Excellence to Citizens Reports, and two (2) out of three (3) Municipal Strengthening Funds Reports were submitted late. Also, we found that the Municipality reported expenditures for the amounts of $550,000 and $141,030 that were not incurred.
Criteria 31 CFR 35.4(c) – Reservation of authority, reporting states that during the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds.
31 CFR 35.5(b) – Use of funds states that a cost shall be considered to have been incurred for purposes of the general use of Coronavirus State and Local Fiscal Recovery Funds described in 31 CFR 35.5(a) if the recipient has incurred an obligation with respect to such cost by December 31, 2024.
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 expenditure 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. Table 4: Annual Project and Expenditure Report in Part 2 of the Guidance establishes that the deadline of the annual reports are thirty days after the end of the period, on April 30th for the reports ended on March 31st.
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, 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 in 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 Service of Excellence to Citizens 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.
Cause of Condition There is a lack of knowledge and training for the personnel assigned. Additionally, the Municipality does not have adequate monitoring for the activity and the reports.
Effect of Condition The program is not in compliance with the Reporting Requirements as established in the contract agreements and guidelines.
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 U.S. Department of the Treasury and the pass-through agency such as: (1) submitting the reports on a timely basis and (2) reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. Also, the Municipality should establish a process to validate that the amounts reported agree with the accounting records of the corresponding period reported to strengthen the internal controls of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-002 and 2022-002.
Views of Responsible Officials and Planned Corrective Action:
We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mr. Carlos Flores, Federal Program’s Subdirector
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director
Finding Reference 2024-004
Federal Agency: U.S. Department of Health and Human Services
Pass-through
Agency: Puerto Rico Department of Family
Program: Child Care and Development Block Grant (Assistance Listing No. 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 found that the Program did not submit all the annual closing reports or were submitted late to the pass-through entity, as required by the contract agreement.
Criteria 45 CFR Part 98.67 (c) Fiscal control and accounting procedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provisions of this part.
Also, the contract agreement states in Clause eleven (11) that the Municipality is responsible for the presentation of the trial balance and annual partial closing report fifteen (15) calendar days after the end of the contract. Ninety (90) days after, the Municipality should liquidate all obligations and present to the pass-through entity the final annual closing report (CC-006).
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame. The personnel in charge of the fiscal area have been changed again. The current program accountant has been correcting prior year programs situations, as requested by the pass-through entity. Therefore, the preparation of annual closing reports has not been achieved.
Effect of Condition The Program is not in compliance with 45 CFR Part 98.67- Fiscal Requirements (c) (1) (2).
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 pass-through agency. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-003.
Views of Responsible Officials and Planned Corrective Action: We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mrs. Erika J. Acevedo, Program’s Accountant
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director
Finding Reference 2024-005
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 (Assistance Listing No. 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’s annual closing reports.
Criteria 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less 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.
45 CFR, Subpart F, Section 95.50 (d) states of the aggregate amount of funds expended, no more than five percent may be used for administrative activities as described in 45 CFR 98.54.
45 CFR, Subpart F, Section 95.50 (e) states that not less than 70 percent of the Mandatory and Federal and State share of Matching Funds shall be used to meet the child care need of families.
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame. The personnel in charge of the fiscal area have been changed again. The current program accountant has been correcting prior year programs situations, as requested by the pass-through entity. Therefore, the preparation of annual closing reports has not been achieved.
Effect of Condition The program is not in compliance with 45 CFR, Subpart F, Section 98.50.
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 pass-through agency. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-004.
Views of Responsible Officials and Planned Corrective Action: We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mrs. Erika J. Acevedo, Program’s Accountant
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director
Finding Reference 2024-003
Federal Agency: U.S. Department of the 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 in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of
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 Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively.
In our Reporting Test, we evaluated the annual Project and Expenditure Report submitted to the U.S. Department of Treasury. We found that the Report was not submitted timely.
Also, we evaluated six (6) bimonthly reports related to the Service of Excellence to Citizens Program and three (3) monthly reports related to the Municipal Strengthening Funds Program, submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority.
We found that two (2) out of six (6) Service of Excellence to Citizens Reports, and two (2) out of three (3) Municipal Strengthening Funds Reports were submitted late. Also, we found that the Municipality reported expenditures for the amounts of $550,000 and $141,030 that were not incurred.
Criteria 31 CFR 35.4(c) – Reservation of authority, reporting states that during the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds.
31 CFR 35.5(b) – Use of funds states that a cost shall be considered to have been incurred for purposes of the general use of Coronavirus State and Local Fiscal Recovery Funds described in 31 CFR 35.5(a) if the recipient has incurred an obligation with respect to such cost by December 31, 2024.
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 expenditure 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. Table 4: Annual Project and Expenditure Report in Part 2 of the Guidance establishes that the deadline of the annual reports are thirty days after the end of the period, on April 30th for the reports ended on March 31st.
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, 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 in 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 Service of Excellence to Citizens 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.
Cause of Condition There is a lack of knowledge and training for the personnel assigned. Additionally, the Municipality does not have adequate monitoring for the activity and the reports.
Effect of Condition The program is not in compliance with the Reporting Requirements as established in the contract agreements and guidelines.
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 U.S. Department of the Treasury and the pass-through agency such as: (1) submitting the reports on a timely basis and (2) reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. Also, the Municipality should establish a process to validate that the amounts reported agree with the accounting records of the corresponding period reported to strengthen the internal controls of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-002 and 2022-002.
Views of Responsible Officials and Planned Corrective Action:
We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mr. Carlos Flores, Federal Program’s Subdirector
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director
Finding Reference 2024-003
Federal Agency: U.S. Department of the 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 in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of
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 Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively.
In our Reporting Test, we evaluated the annual Project and Expenditure Report submitted to the U.S. Department of Treasury. We found that the Report was not submitted timely.
Also, we evaluated six (6) bimonthly reports related to the Service of Excellence to Citizens Program and three (3) monthly reports related to the Municipal Strengthening Funds Program, submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority.
We found that two (2) out of six (6) Service of Excellence to Citizens Reports, and two (2) out of three (3) Municipal Strengthening Funds Reports were submitted late. Also, we found that the Municipality reported expenditures for the amounts of $550,000 and $141,030 that were not incurred.
Criteria 31 CFR 35.4(c) – Reservation of authority, reporting states that during the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds.
31 CFR 35.5(b) – Use of funds states that a cost shall be considered to have been incurred for purposes of the general use of Coronavirus State and Local Fiscal Recovery Funds described in 31 CFR 35.5(a) if the recipient has incurred an obligation with respect to such cost by December 31, 2024.
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 expenditure 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. Table 4: Annual Project and Expenditure Report in Part 2 of the Guidance establishes that the deadline of the annual reports are thirty days after the end of the period, on April 30th for the reports ended on March 31st.
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, 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 in 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 Service of Excellence to Citizens 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.
Cause of Condition There is a lack of knowledge and training for the personnel assigned. Additionally, the Municipality does not have adequate monitoring for the activity and the reports.
Effect of Condition The program is not in compliance with the Reporting Requirements as established in the contract agreements and guidelines.
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 U.S. Department of the Treasury and the pass-through agency such as: (1) submitting the reports on a timely basis and (2) reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. Also, the Municipality should establish a process to validate that the amounts reported agree with the accounting records of the corresponding period reported to strengthen the internal controls of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-002 and 2022-002.
Views of Responsible Officials and Planned Corrective Action:
We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mr. Carlos Flores, Federal Program’s Subdirector
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director
Finding Reference 2024-004
Federal Agency: U.S. Department of Health and Human Services
Pass-through
Agency: Puerto Rico Department of Family
Program: Child Care and Development Block Grant (Assistance Listing No. 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 found that the Program did not submit all the annual closing reports or were submitted late to the pass-through entity, as required by the contract agreement.
Criteria 45 CFR Part 98.67 (c) Fiscal control and accounting procedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provisions of this part.
Also, the contract agreement states in Clause eleven (11) that the Municipality is responsible for the presentation of the trial balance and annual partial closing report fifteen (15) calendar days after the end of the contract. Ninety (90) days after, the Municipality should liquidate all obligations and present to the pass-through entity the final annual closing report (CC-006).
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame. The personnel in charge of the fiscal area have been changed again. The current program accountant has been correcting prior year programs situations, as requested by the pass-through entity. Therefore, the preparation of annual closing reports has not been achieved.
Effect of Condition The Program is not in compliance with 45 CFR Part 98.67- Fiscal Requirements (c) (1) (2).
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 pass-through agency. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-003.
Views of Responsible Officials and Planned Corrective Action: We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mrs. Erika J. Acevedo, Program’s Accountant
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director
Finding Reference 2024-005
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 (Assistance Listing No. 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’s annual closing reports.
Criteria 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less 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.
45 CFR, Subpart F, Section 95.50 (d) states of the aggregate amount of funds expended, no more than five percent may be used for administrative activities as described in 45 CFR 98.54.
45 CFR, Subpart F, Section 95.50 (e) states that not less than 70 percent of the Mandatory and Federal and State share of Matching Funds shall be used to meet the child care need of families.
Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame. The personnel in charge of the fiscal area have been changed again. The current program accountant has been correcting prior year programs situations, as requested by the pass-through entity. Therefore, the preparation of annual closing reports has not been achieved.
Effect of Condition The program is not in compliance with 45 CFR, Subpart F, Section 98.50.
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 pass-through agency. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2023-004.
Views of Responsible Officials and Planned Corrective Action: We concur with the finding.
Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences.
Corrective Actions:
1. Schedule restructuring:
• Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission)
2. Implementation of alerts and reminders:
• Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline)
3. Review and Quality Control:
• Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency.
Compliance Monitoring:
• Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines.
• Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time.
Evaluation:
• Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency.
• Adjustments to the processes according to the response of the team.
Implementation Date: March 2025
Responsible persons:
• Person responsible for the implementation:
Mrs. Erika J. Acevedo, Program’s Accountant
• Person responsible for the supervision:
Mrs. Yolanda Maldonado, Federal Program’s Director