Federal Program:
ALN 14.218 - Community Development Block Grants/Entitlement Grants
Category:
Compliance/Internal control
Compliance Requirement:
Allowable Costs/Cost Principles
Criteria:
As part of the standards for documentation of personnel expenses (2 CFR §200.430 (i)), it is required that charges
to Federal awards for salaries and wages be based on records that accurately reflect the work performed and be
supported by a system of internal control that ensures accuracy, allowability, and proper allocation.
According to the record retention requirements (2 CFR §200.334), recipients and subrecipients are required to retain
all records for three years from the date of submission of their final financial report, or from the date of submission
of the respective reports if the award is renewed quarterly or annually.
The federal regulations require employers to verify the identity and employment authorization of individuals hired for
employment in the United States using the Employment Eligibility Verification form (I-9).
The EEOC's Enforcement Guidance on Harassment in the Workplace recommends that employers periodically
update their sexual harassment policies and conduct regular training to ensure compliance with federal antidiscrimination
laws.
2 CFR §200.112 requires that Federal agencies establish conflict of interest policies for Federal awards. Recipients
or subrecipients must disclose in writing any potential conflict of interest to the Federal agency or pass-through entity
in accordance with the established Federal agency policies. Regular updates to conflict-of-interest certifications are
recommended to ensure ongoing compliance.
As part of the BGCPR recruitment, selection, and hiring process, it is required that the employee file includes a copy
of form I-9 and a signed copy of the job description.
The protocol for disclosure of conflicts of interest establishes that as part of the recruitment procedures and on an
annual basis, all candidates for the board of directors, management teams, employees, and, in certain cases,
investors and donors are required to complete a conflict-of-interest disclosure form.
Condition:
There were significant gaps in the documentation of employee files, which pose potential noncompliance risks.
Cause:
Lack of monitoring procedures to ascertain compliance with federal, local and internal requirements.Effect or potential effect:
Failure to maintain proper documentation can result in non-compliance with federal regulations and organizational
policies, potentially leading to legal penalties and ethical breaches.
Questioned costs:
Not determined
Context:
The allowable activities/cost test revealed the following:
• One (1) of fifty (50) employees’ files tested did not have a copy of the Employment eligibility verification form (I-
9)
• Nineteen (19) of fifty (50) employees’ files tested did not have a copy of the signed job description.
• Forty-nine (49) of fifty (50) employees’ files tested did not have evidence of certification regarding compliance
with conflicts of interest protocol.
• Twenty-nine (29) of fifty (50) employees’ files tested did not have evidence of annual training of sexual
harassment.
Recommendation:
We recommended that BGCPR implement comprehensive record retention policies and ensure strict adherence to
established procedures. Additionally, BGCPR should establish monitoring procedures to ascertain the completeness
of employee files in compliance with regulatory requirements.
Views of responsible officials:
BGCPR acknowledges that document retention policy does not comply with the requirements set forth in Title 2 of
the Code of Federal Regulations (2 CFR §200.334). This regulation requires that all financial records, supporting
documents, statistical data, and other files related to federal grants be retained for a minimum period of three years
from the date of submission of the final financial report. In the absence of this policy, BGCPR exposes itself to risks
of non-compliance and possible sanctions during federal audits or reviews. Therefore, it is considered a priority to
develop and implement a document retention policy that ensures compliance with this regulation and strengthens
institutional transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Establish clear guidelines for the creation, storage, access, updating, and disposal of records.
b. Define retention periods in accordance with legal requirements.
c. Develop periodic monitoring procedures to verify record completeness and compliance.
d. Implement scheduled internal reviews and standardized checklists.
e. Assign specific responsibilities to Human Resources personnel for policy enforcement.
Federal Program:
ALN 93.600 Head Start
Category:
Compliance/internal controlCompliance requirement:
Allowable cost/Procurement
Criteria:
Head Start grants policies state that small purchase procurements involve simple procurement methods for securing
services, supplies, or other property less than the simplified acquisition threshold ($250,000) for which non-federal
entities must obtain price or rate quotes from sufficient qualified sources.
BGCPR established in its purchasing and procurement procedures that for all purchases between $10,001 and
$200,000, a minimum of three (3) quotations is required, or alternatively, two (2) quotations with written and
documented justification for efforts made to obtain the third quotation for not receiving it. This should demonstrate
fair competition and reasonable costs.
Condition:
The quotes observed for one of the items tested did not match the specifications of the final purchased equipment.
Cause:
During the testing phase of the equipment, BGCPR determined that the initially quoted electric generator did not
meet the power requirements. Consequently, BGCPR decided to change the order to a generator with higher power
capacity. However, during these procedures, they did not follow the proper procurement process to obtain new
quotations for the different type of equipment that was needed.
Effect or potential effect:
This condition will result in a lack of fair competition and potentially noncompliance with the allowable costs/cost
principles requirements.
Questioned costs:
$63,805.88
Context:
On the review of 32 procurement instances under the Head Start program, one error was identified related to the
procurement of equipment. Specifically, while the procurement process was generally adhered to, one instance
revealed a failure to follow properly the procurement procedures.
Recommendation:
To address this issue, BGCPR should implement a robust review process to ensure that any changes in equipment
specifications are accompanied by a new round of quotations. This process should include clear documentation of
the reasons for the change and efforts made to obtain competitive quotes. Additionally, training staff on procurement
policies and procedures can help prevent similar issues in the future. Ensuring compliance with these policies will
maintain fair competition, reasonable costs, and adherence to allowable costs/cost principles requirements.Views of responsible officials:
BGCPR recognizes that its current purchasing and procurement policies require comprehensive review and strategic
enhancement to ensure they are fully aligned with both internal operational procedures and applicable federal
regulations. This need for improvement reflects the BGCPR’s proactive commitment to strengthening internal
controls, fostering greater accountability, and ensuring that procurement activities are conducted with the highest
standards of transparency and integrity. By refining these policies, BGCPR aims to optimize the efficiency of its
procurement processes, reduce the risk of non-compliance, and promote the responsible stewardship of financial
and material resources. This initiative is also part of a broader effort to support sustainable operational practices and
reinforce public trust in BGCPR’s use of funds.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Develop and adopt a procurement checklist to be completed and reviewed before any purchase is approved.
b. Use the checklist to verify compliance with technical, budgetary, and legal requirements
c. Establish rigorous mechanisms for the authorization, review, and documentation of all purchases.
d. Implement monitoring procedures to control at every stage of the procurement process—from solicitation to
award.
Federal Program:
ALN 93.600 Head Start
Category:
Compliance/internal control significant deficiency
Compliance Requirement:
Allowable Costs/Cost Principles
Condition:
BGCPR real and personal property records are not complete and did not follow the program requirements.
Additionally, prior approval from the Head Start program was not requested for some acquisitions.
Criteria:
2 CFR §200.313 (d) establishes that in the management requirements of equipment that regardless of whether
equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage
equipment (including replacement equipment) utilizing procedures that meet the following requirements:
(1) Property records must include a description of the property, a serial number or another identification number, the
source of funding for the property (including the Federal Award Identification Number), the title holder, the acquisition
date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the
location, use and condition of the property, and any disposition data including the date of disposal and sale price of
the property. The recipient and subrecipient are responsible for maintaining and updating property records when
there is a change in the status of the property.
2 CFR §200.1 defines equipment as a tangible personal property (including information technology systems) having
a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the
capitalization level established by the non-Federal entity for financial statement purposes, or $5,000.Under U.S. Generally Accepted Accounting Principles (GAAP), the acquisition cost of capital equipment includes all
expenses necessary to acquire the asset and prepare it for its intended use. This encompasses the purchase price,
import duties, freight and handling charges, installation and assembly costs, site preparation expenses, and
professional fees.
As per established on BGCPR’s policy of Property and Equipment, the BGCPR will capitalize all items that have a
unit cost greater than five thousand dollars ($5,000).
Cause:
BGCPR did not maintain essential details, such as acquisition costs, funding sources, or the Federal Award
Identification Numbers, nor did it obtain the necessary prior approvals from the Head Start program for these
acquisitions.
Effect or potential effect:
Failure to capitalize property and equipment and obtain the necessary approvals to comply with the federal
regulations.
Questioned Costs:
Amount is below the threshold to be considered a questioned cost.
Context:
Upon reviewing 32 instances, two errors were found where BGCPR failed to properly account for equipment
acquisitions exceeding $5,000.
Recommendation:
BGCPR must identify all properties acquired with Federal funds and maintain adequate accounting records in
accordance with Federal regulations. The program must maintain an automated accounting and record keeping
system adequate for effective oversight. Additionally, establish a robust internal control system to ensure all
equipment purchases exceeding $5,000 are properly capitalized and that prior approvals are obtained.
Views of responsible officials:
BGCPR recognizes that it must keep and improve the asset capitalization processes and policies, particularly within
the accounting system of record. It acknowledges the need to strengthen these processes to ensure accurate and
compliant management of equipment acquisitions. To address this, BGCPR will implement a system capable of
recording, classifying, and monitoring all capital assets in alignment with the criteria established under federal
regulation 2 CFR §200. This improvement is essential to ensure that all asset capitalization activities meet regulatory
standards and support greater financial transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Implement and maintain an automated accounting and financial records system to enable real-time oversight
of the asset capitalization policy.
b. Establish a robust internal control framework including pre-approvals for equipment purchases and
cross-validations of financial data.
c. Periodic internal monitoring’s to ensure compliance and documentation.d. Update BGCPR’s fiscal management guidance to include a formal provision requiring the capitalization policy to
be reviewed every three (3) years in compliance with the ensure compliance with federal regulation 2 CFR
§200 regarding asset capitalization criteria.
e. Conduct a training program for accounting and financial personnel.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
Category:
Compliance/Internal control significant deficiency
Compliance Requirement:
Reporting
Criteria:
According to the subaward agreement with the Department of Education of Puerto Rico, BGCPR must submit three
reports during the contract period regarding the execution and progress of the objectives implemented, each with a
specific due date. The due dates for these reports were January 19, 2024, June 21, 2024, and July 12, 2024.
Condition:
One of the required programmatic reports, due on June 21, 2024, was not submitted on time, resulting in a delay in
compliance with the reporting requirements as outlined in the subaward agreement with the Department of Education
of Puerto Rico.
Cause:
The cause of this delay was that a new employee, who was in charge of the submission, was not fully familiar with
the reporting schedule and requirements.
Effect or potential effect:
The report being submitted late and non-compliance with reporting requirements.
Context:
One (1) of the three (3) programmatic reports required by lead agency was submitted after its due date.
Recommendation:
We recommend that BGCPR implement comprehensive training and onboarding programs to provide clear
documentation of the reporting process, schedule regular check-ins with new employees, and use automated
reminders to help track important deadlines.Views of responsible officials:
BGCPR acknowledges that it failed to submit the required report to the agency within the established deadline. This
delay highlights the need to strengthen internal reporting processes and enhance staff training on timely report
submission and its implications. To address this issue, BGCPR will implement measures to reinforce accountability,
improve understanding of reporting timelines, and ensure that all personnel are aware of the potential consequences
of non-compliance. These efforts aim to promote a culture of responsibility and ensure that future reporting
obligations are met consistently and on time.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2026:
a. BGCPR will launch a comprehensive training program for all employees.
b. Clear and accessible documentation will outline reporting processes, responsibilities, and timelines.
c. Employees will receive structured guidance on using reporting systems and meeting compliance requirements.
d. Regular check-ins between employees and supervisors will support learning and alignment with goals.
e. Automated reminders will help staff track deadlines and report milestones.
ALN 14.218-CDBG-DR/Entitlement Grant
Category:
Compliance/internal control significant deficiency
Compliance requirement:
Real property and equipment
Criteria:
BGCPR Finance Policies to administer CDBG-DR funds, established by the Puerto Rico Department of Housing in
Chapter 15, Section 2, require that sub-recipients must capitalize property and equipment with a cost of $500 or
more.
Condition:
The capitalization threshold used for property and equipment acquired with CDBG funds is not in compliance with
Finance Policies to administer CDBG-DR funds, as established by the Puerto Rico Department of Housing.
Cause:
The capitalization policy followed by BGCPR, with the exception of CDBG funds, is to capitalize property and
equipment with a cost of $5,000 or more.
Effect or potential effect:
Property and equipment acquired with CDBG-DR funds is being expensed instead of capitalizedContext:
In two instances reviewed, property and equipment acquired with CDBG-DR funds were not recorded in the
equipment detail, resulting in the assets being expensed instead of capitalized as required by the Finance Policies
to administer CDBG-DR funds.
Prior year finding:
During the year ended June 30, 2023, this condition was associated with finding 2023-002.
Recommendation:
We recommend that management updates its capitalization policy to include this specific requirement for property
and equipment acquired with CDBG-DR funds.
Views of responsible officials:
BGCPR acknowledges a significant oversight in the financial management of assets acquired with Community
Development Block Grant – Disaster Recovery (CDBG-DR) funds. Specifically, it has been identified that certain
property and equipment purchased using these funds were not properly recorded in the equipment detail ledger. As
a result of this omission, these assets were incorrectly treated as expenses in the financial records, rather than being
capitalized in accordance with BGCPR’s established financial policies and the federal guidelines governing the
administration of CDBG-DR funds. This misclassification not only affects the accuracy of BGCPR’s financial
statements but also represents a deviation from required asset management practices, which mandate the
capitalization and tracking of equipment to ensure accountability, proper depreciation, and compliance with grant
conditions
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. BGCPR will implement a corrective action plan to strengthen accounting processes related to account
registration and equipment capitalization related to the CDBG-DR.
b. Procurement procedures for requesting, approving, and accepting goods and services, Include agency
consultation
c. Ensure accuracy in financial records that Maintain compliance with applicable regulations.
d. Account for taxes and support service costs (e.g., installation, delivery).
e. Ensure all purchases align with federal regulations.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.
Federal Program:
ALN 14.218 - Community Development Block Grants/Entitlement Grants
Category:
Compliance/Internal control
Compliance Requirement:
Allowable Costs/Cost Principles
Criteria:
As part of the standards for documentation of personnel expenses (2 CFR §200.430 (i)), it is required that charges
to Federal awards for salaries and wages be based on records that accurately reflect the work performed and be
supported by a system of internal control that ensures accuracy, allowability, and proper allocation.
According to the record retention requirements (2 CFR §200.334), recipients and subrecipients are required to retain
all records for three years from the date of submission of their final financial report, or from the date of submission
of the respective reports if the award is renewed quarterly or annually.
The federal regulations require employers to verify the identity and employment authorization of individuals hired for
employment in the United States using the Employment Eligibility Verification form (I-9).
The EEOC's Enforcement Guidance on Harassment in the Workplace recommends that employers periodically
update their sexual harassment policies and conduct regular training to ensure compliance with federal antidiscrimination
laws.
2 CFR §200.112 requires that Federal agencies establish conflict of interest policies for Federal awards. Recipients
or subrecipients must disclose in writing any potential conflict of interest to the Federal agency or pass-through entity
in accordance with the established Federal agency policies. Regular updates to conflict-of-interest certifications are
recommended to ensure ongoing compliance.
As part of the BGCPR recruitment, selection, and hiring process, it is required that the employee file includes a copy
of form I-9 and a signed copy of the job description.
The protocol for disclosure of conflicts of interest establishes that as part of the recruitment procedures and on an
annual basis, all candidates for the board of directors, management teams, employees, and, in certain cases,
investors and donors are required to complete a conflict-of-interest disclosure form.
Condition:
There were significant gaps in the documentation of employee files, which pose potential noncompliance risks.
Cause:
Lack of monitoring procedures to ascertain compliance with federal, local and internal requirements.Effect or potential effect:
Failure to maintain proper documentation can result in non-compliance with federal regulations and organizational
policies, potentially leading to legal penalties and ethical breaches.
Questioned costs:
Not determined
Context:
The allowable activities/cost test revealed the following:
• One (1) of fifty (50) employees’ files tested did not have a copy of the Employment eligibility verification form (I-
9)
• Nineteen (19) of fifty (50) employees’ files tested did not have a copy of the signed job description.
• Forty-nine (49) of fifty (50) employees’ files tested did not have evidence of certification regarding compliance
with conflicts of interest protocol.
• Twenty-nine (29) of fifty (50) employees’ files tested did not have evidence of annual training of sexual
harassment.
Recommendation:
We recommended that BGCPR implement comprehensive record retention policies and ensure strict adherence to
established procedures. Additionally, BGCPR should establish monitoring procedures to ascertain the completeness
of employee files in compliance with regulatory requirements.
Views of responsible officials:
BGCPR acknowledges that document retention policy does not comply with the requirements set forth in Title 2 of
the Code of Federal Regulations (2 CFR §200.334). This regulation requires that all financial records, supporting
documents, statistical data, and other files related to federal grants be retained for a minimum period of three years
from the date of submission of the final financial report. In the absence of this policy, BGCPR exposes itself to risks
of non-compliance and possible sanctions during federal audits or reviews. Therefore, it is considered a priority to
develop and implement a document retention policy that ensures compliance with this regulation and strengthens
institutional transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Establish clear guidelines for the creation, storage, access, updating, and disposal of records.
b. Define retention periods in accordance with legal requirements.
c. Develop periodic monitoring procedures to verify record completeness and compliance.
d. Implement scheduled internal reviews and standardized checklists.
e. Assign specific responsibilities to Human Resources personnel for policy enforcement.
Federal Program:
ALN 93.600 Head Start
Category:
Compliance/internal controlCompliance requirement:
Allowable cost/Procurement
Criteria:
Head Start grants policies state that small purchase procurements involve simple procurement methods for securing
services, supplies, or other property less than the simplified acquisition threshold ($250,000) for which non-federal
entities must obtain price or rate quotes from sufficient qualified sources.
BGCPR established in its purchasing and procurement procedures that for all purchases between $10,001 and
$200,000, a minimum of three (3) quotations is required, or alternatively, two (2) quotations with written and
documented justification for efforts made to obtain the third quotation for not receiving it. This should demonstrate
fair competition and reasonable costs.
Condition:
The quotes observed for one of the items tested did not match the specifications of the final purchased equipment.
Cause:
During the testing phase of the equipment, BGCPR determined that the initially quoted electric generator did not
meet the power requirements. Consequently, BGCPR decided to change the order to a generator with higher power
capacity. However, during these procedures, they did not follow the proper procurement process to obtain new
quotations for the different type of equipment that was needed.
Effect or potential effect:
This condition will result in a lack of fair competition and potentially noncompliance with the allowable costs/cost
principles requirements.
Questioned costs:
$63,805.88
Context:
On the review of 32 procurement instances under the Head Start program, one error was identified related to the
procurement of equipment. Specifically, while the procurement process was generally adhered to, one instance
revealed a failure to follow properly the procurement procedures.
Recommendation:
To address this issue, BGCPR should implement a robust review process to ensure that any changes in equipment
specifications are accompanied by a new round of quotations. This process should include clear documentation of
the reasons for the change and efforts made to obtain competitive quotes. Additionally, training staff on procurement
policies and procedures can help prevent similar issues in the future. Ensuring compliance with these policies will
maintain fair competition, reasonable costs, and adherence to allowable costs/cost principles requirements.Views of responsible officials:
BGCPR recognizes that its current purchasing and procurement policies require comprehensive review and strategic
enhancement to ensure they are fully aligned with both internal operational procedures and applicable federal
regulations. This need for improvement reflects the BGCPR’s proactive commitment to strengthening internal
controls, fostering greater accountability, and ensuring that procurement activities are conducted with the highest
standards of transparency and integrity. By refining these policies, BGCPR aims to optimize the efficiency of its
procurement processes, reduce the risk of non-compliance, and promote the responsible stewardship of financial
and material resources. This initiative is also part of a broader effort to support sustainable operational practices and
reinforce public trust in BGCPR’s use of funds.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Develop and adopt a procurement checklist to be completed and reviewed before any purchase is approved.
b. Use the checklist to verify compliance with technical, budgetary, and legal requirements
c. Establish rigorous mechanisms for the authorization, review, and documentation of all purchases.
d. Implement monitoring procedures to control at every stage of the procurement process—from solicitation to
award.
Federal Program:
ALN 93.600 Head Start
Category:
Compliance/internal control significant deficiency
Compliance Requirement:
Allowable Costs/Cost Principles
Condition:
BGCPR real and personal property records are not complete and did not follow the program requirements.
Additionally, prior approval from the Head Start program was not requested for some acquisitions.
Criteria:
2 CFR §200.313 (d) establishes that in the management requirements of equipment that regardless of whether
equipment is acquired in part or its entirety under the Federal award, the recipient or subrecipient must manage
equipment (including replacement equipment) utilizing procedures that meet the following requirements:
(1) Property records must include a description of the property, a serial number or another identification number, the
source of funding for the property (including the Federal Award Identification Number), the title holder, the acquisition
date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the
location, use and condition of the property, and any disposition data including the date of disposal and sale price of
the property. The recipient and subrecipient are responsible for maintaining and updating property records when
there is a change in the status of the property.
2 CFR §200.1 defines equipment as a tangible personal property (including information technology systems) having
a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the
capitalization level established by the non-Federal entity for financial statement purposes, or $5,000.Under U.S. Generally Accepted Accounting Principles (GAAP), the acquisition cost of capital equipment includes all
expenses necessary to acquire the asset and prepare it for its intended use. This encompasses the purchase price,
import duties, freight and handling charges, installation and assembly costs, site preparation expenses, and
professional fees.
As per established on BGCPR’s policy of Property and Equipment, the BGCPR will capitalize all items that have a
unit cost greater than five thousand dollars ($5,000).
Cause:
BGCPR did not maintain essential details, such as acquisition costs, funding sources, or the Federal Award
Identification Numbers, nor did it obtain the necessary prior approvals from the Head Start program for these
acquisitions.
Effect or potential effect:
Failure to capitalize property and equipment and obtain the necessary approvals to comply with the federal
regulations.
Questioned Costs:
Amount is below the threshold to be considered a questioned cost.
Context:
Upon reviewing 32 instances, two errors were found where BGCPR failed to properly account for equipment
acquisitions exceeding $5,000.
Recommendation:
BGCPR must identify all properties acquired with Federal funds and maintain adequate accounting records in
accordance with Federal regulations. The program must maintain an automated accounting and record keeping
system adequate for effective oversight. Additionally, establish a robust internal control system to ensure all
equipment purchases exceeding $5,000 are properly capitalized and that prior approvals are obtained.
Views of responsible officials:
BGCPR recognizes that it must keep and improve the asset capitalization processes and policies, particularly within
the accounting system of record. It acknowledges the need to strengthen these processes to ensure accurate and
compliant management of equipment acquisitions. To address this, BGCPR will implement a system capable of
recording, classifying, and monitoring all capital assets in alignment with the criteria established under federal
regulation 2 CFR §200. This improvement is essential to ensure that all asset capitalization activities meet regulatory
standards and support greater financial transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Implement and maintain an automated accounting and financial records system to enable real-time oversight
of the asset capitalization policy.
b. Establish a robust internal control framework including pre-approvals for equipment purchases and
cross-validations of financial data.
c. Periodic internal monitoring’s to ensure compliance and documentation.d. Update BGCPR’s fiscal management guidance to include a formal provision requiring the capitalization policy to
be reviewed every three (3) years in compliance with the ensure compliance with federal regulation 2 CFR
§200 regarding asset capitalization criteria.
e. Conduct a training program for accounting and financial personnel.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
Category:
Compliance/Internal control significant deficiency
Compliance Requirement:
Reporting
Criteria:
According to the subaward agreement with the Department of Education of Puerto Rico, BGCPR must submit three
reports during the contract period regarding the execution and progress of the objectives implemented, each with a
specific due date. The due dates for these reports were January 19, 2024, June 21, 2024, and July 12, 2024.
Condition:
One of the required programmatic reports, due on June 21, 2024, was not submitted on time, resulting in a delay in
compliance with the reporting requirements as outlined in the subaward agreement with the Department of Education
of Puerto Rico.
Cause:
The cause of this delay was that a new employee, who was in charge of the submission, was not fully familiar with
the reporting schedule and requirements.
Effect or potential effect:
The report being submitted late and non-compliance with reporting requirements.
Context:
One (1) of the three (3) programmatic reports required by lead agency was submitted after its due date.
Recommendation:
We recommend that BGCPR implement comprehensive training and onboarding programs to provide clear
documentation of the reporting process, schedule regular check-ins with new employees, and use automated
reminders to help track important deadlines.Views of responsible officials:
BGCPR acknowledges that it failed to submit the required report to the agency within the established deadline. This
delay highlights the need to strengthen internal reporting processes and enhance staff training on timely report
submission and its implications. To address this issue, BGCPR will implement measures to reinforce accountability,
improve understanding of reporting timelines, and ensure that all personnel are aware of the potential consequences
of non-compliance. These efforts aim to promote a culture of responsibility and ensure that future reporting
obligations are met consistently and on time.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2026:
a. BGCPR will launch a comprehensive training program for all employees.
b. Clear and accessible documentation will outline reporting processes, responsibilities, and timelines.
c. Employees will receive structured guidance on using reporting systems and meeting compliance requirements.
d. Regular check-ins between employees and supervisors will support learning and alignment with goals.
e. Automated reminders will help staff track deadlines and report milestones.
ALN 14.218-CDBG-DR/Entitlement Grant
Category:
Compliance/internal control significant deficiency
Compliance requirement:
Real property and equipment
Criteria:
BGCPR Finance Policies to administer CDBG-DR funds, established by the Puerto Rico Department of Housing in
Chapter 15, Section 2, require that sub-recipients must capitalize property and equipment with a cost of $500 or
more.
Condition:
The capitalization threshold used for property and equipment acquired with CDBG funds is not in compliance with
Finance Policies to administer CDBG-DR funds, as established by the Puerto Rico Department of Housing.
Cause:
The capitalization policy followed by BGCPR, with the exception of CDBG funds, is to capitalize property and
equipment with a cost of $5,000 or more.
Effect or potential effect:
Property and equipment acquired with CDBG-DR funds is being expensed instead of capitalizedContext:
In two instances reviewed, property and equipment acquired with CDBG-DR funds were not recorded in the
equipment detail, resulting in the assets being expensed instead of capitalized as required by the Finance Policies
to administer CDBG-DR funds.
Prior year finding:
During the year ended June 30, 2023, this condition was associated with finding 2023-002.
Recommendation:
We recommend that management updates its capitalization policy to include this specific requirement for property
and equipment acquired with CDBG-DR funds.
Views of responsible officials:
BGCPR acknowledges a significant oversight in the financial management of assets acquired with Community
Development Block Grant – Disaster Recovery (CDBG-DR) funds. Specifically, it has been identified that certain
property and equipment purchased using these funds were not properly recorded in the equipment detail ledger. As
a result of this omission, these assets were incorrectly treated as expenses in the financial records, rather than being
capitalized in accordance with BGCPR’s established financial policies and the federal guidelines governing the
administration of CDBG-DR funds. This misclassification not only affects the accuracy of BGCPR’s financial
statements but also represents a deviation from required asset management practices, which mandate the
capitalization and tracking of equipment to ensure accountability, proper depreciation, and compliance with grant
conditions
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. BGCPR will implement a corrective action plan to strengthen accounting processes related to account
registration and equipment capitalization related to the CDBG-DR.
b. Procurement procedures for requesting, approving, and accepting goods and services, Include agency
consultation
c. Ensure accuracy in financial records that Maintain compliance with applicable regulations.
d. Account for taxes and support service costs (e.g., installation, delivery).
e. Ensure all purchases align with federal regulations.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.
Federal Program:
ALN 84.287 Twenty-First Century Community Learning Center
ALN 93.600 Head Start
ALN 14.218 CDBG-DR/Entitlement Grant
ALN 84.215J Full-Service Community School
Category:
Compliance/Internal control
Compliance Requirement:
ReportingCriteria:
2 CFR §200.512 (a) (1) establishes that the audit must be completed and the data collection form described
in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted
within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period.
Condition:
BGCPR did not submit the required data collection form and reporting package for the year ended June 30, 2024,
within the required period.
Cause:
BGCPR did not have available the financial information necessary to complete the audit procedures and single audit
reporting package.
Effect or potential effect:
Condition may result in noncompliance with the requirements for Reporting.
Recommendation:
We recommend management establish calendars to ascertain submission of data collection form and reporting
package within the required dates.
Views of responsible officials:
BGCPR acknowledges that the delay in the preparation and submission of its audited financial statements was
influenced by several interrelated factors, primarily stemming from the challenges associated with a transitional
period and the unexpected resignation of the Chief Financial Officer (CFO). The absence of a key financial executive
during this period significantly impacted on BGCPR’s ability to compile, review, and finalize the required financial
documentation in accordance with established timelines. As a result, BGCPR was unable to meet the statutory
deadlines for submitting the audited financial statements, including the data collection form and the complete
reporting package, thereby resulting in non-compliance with applicable legal and regulatory reporting requirements.
Recognizing the importance of timely and accurate financial reporting, BGCPR is committed to implementing
corrective measures. These include the development and enforcement of a structured reporting calendar, the
allocation of dedicated resources to support audit preparation, and the establishment of internal checkpoints to
monitor progress. These actions are intended to ensure that future submissions are completed within the required
deadlines, thereby restoring compliance and reinforcing BGCPR’s commitment to transparency and accountability.
As a corrective measure, BGCPR will take the following actions and will anticipate completing on June 30, 2025:
a. Developing and enforcing a structured reporting calendar.
b. Allocating dedicated resources to support audit preparation.
c. Establishing internal checkpoints to monitor progress and ensure accountability.
d. Ensure future submissions meet the required deadlines.