FINDING REFERENCE NUMBER 2023-029 (See Finding Reference Number 2023-001)
FEDERAL PROGRAM (ALN – 10.542) PANDEMIC EBT FOOD BENEFITS (P-EBT)
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 221PR456S9032; 2301PR456S9032 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our internal control procedures for the financial management system, allowable activities and reporting requirements, we found the following deficiencies:
•
Of ten (10) expenditure accounting transactions, three (3) were selected for documentation review. It was found that a transaction posted in August 2022 for $193,642,697.32 included $54,195,406.92, corresponding to benefit payrolls for May 2022, which had previously been claimed in June 2022. They subsequently adjusted the expenditure reported for this amount.
•
All expenditure transactions are coded under the ID number PANDEMICEBT-B22; although, in the SF-778 report for the quarter ended June 30, 2023, for the grant award period for 2023, expenditures in the amount of $29,606,939 were reported as incurred. This data does not agree with the accounting information of PRIFAS.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systematic deficiency. After conducting several interviews, we were able to identify the staff responsible for validating the benefit payrolls. This person told us these benefit payrolls were processed via email, which indicated that the information submitted was preliminary. However, the finance staff proceeded with the adjustment in the accounting system. We conducted interviews to determine if anything had been modified in the benefit payroll processing process. To prevent this situation from happening again, they told us it wasn't necessary because it hasn't happened again.
Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency.
STATEMENT OF CAUSE ADSEF has not established an adequate control procedure to identify duplicate claims before they are filed and recorded.
During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF-425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT The failure to have an internal control procedure that identifies standard documentation or forms, personnel responsible for validating the information included, and controls payroll and benefit expenses and other previously claimed expenses allowed for the recognition and claim of an expense incurred twice. ADSEF is not ensuring that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statements.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an adequate internal controls process that identifies documentation, personnel responsible, authorizations, and validations that can prevent this situation from recurring. In addition, we recommend management to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002)
FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date.
QUESTIONED COSTS $208,823.33.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment.
STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation.
POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002)
FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date.
QUESTIONED COSTS $208,823.33.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment.
STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation.
POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002)
FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date.
QUESTIONED COSTS $208,823.33.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment.
STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation.
POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-031 (See Finding Reference Number 2023-003)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 Subpart E §200.403, Factor affecting allowability of costs, establishes that:
“Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards:
(a)
Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.
(b)
Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.
(c)
Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient.
(d)
Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
(e)
Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian Tribes only, as otherwise provided for in this part.
(f)
Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).
(g)
Be adequately documented. See §§ 200.300 through 200.309.”
STATEMENT OF CONDITION As part of our audit procedures over allowable costs requirements for TANF program, we selected seven (7) voucher payments related to activities of prevention. We found the following deficiencies:
(a)
When we obtained the vouchers related to payments of a contractor, we also requested the contract and the proposal, we noted that the Entity is a subrecipient and not a contractor. The transactions related to this contract were not identified as subrecipient in the SEFA (see Finding Reference Number 2023-058). We audited three (3) vouchers of this subrecipient, in each one, this Entity claimed reimbursement for utilities, supplies, and materials. When we observed documentation in the file, we noted that the entity administers other Federal awards; and no evidence was observed in the voucher that proper distribution of administrative costs is made among all Federal awards. In addition, the contract required a certification indicating absence of duplication of services provided, and it was not included in the invoice or supporting documentation.
(b)
In the other four (4) vouchers evaluated related to payments to contractors, reimbursement claimed by the contractors included the purchase of laptops and digital screens. No evidence was provided that indicated who is responsible for this equipment, where it is located, and how it is safeguarded. These suppliers were contracted to provide training and workshops for participants of TANF. In the invoices evaluated we noted that ADSEF is paying for all costs of the entity, including supplies, maintenance of vehicles, mileage for some personnel, telephone charges, internet, and other utilities. In the final draft of the SEFA submitted for audit procedures, ADSEF reported the amount of $2,411,184, which included all transactions related to preventive services.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This is a systemic deficiency. Total transactions related to prevention services were one-hundred seven (107), amounting to $2,411,184. ADSEF does not have internal guidance and procedures establishing how transactions with sub-recipients will be handled and how they are accounted for. Furthermore, there are no internal controls documenting the evaluation of the operational costs of suppliers contracted to provide a service, and their operational expenses must be covered by them and not claimed directly from the program.
STATEMENT OF CAUSE ADSEF does not have a work plan and internal control guidance that clearly defines permissible activities and describes the activities that will be carried out to meet program requirements through the contracting of suppliers and sub-recipients.
POSSIBLE ASSERTED EFFECT ADSEF may be incurring non-allowable costs by reimbursing expenses not properly stipulated in the allowable cost regulations for program administration. Furthermore, the expenses incurred by the sub-recipient are not identified in the database in a manner that allows them to be identified for the preparation of the SEFA.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-033 (See Finding Reference Number 2023-005)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G990229 (TANF – COVID-19) (Federal Award Year: 2021)
2022G996117; 2023996117 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
In addition, 45 CFR 260.31 (b)(1), defines what non-recurrent, short-term (NRST) benefits are. In relation to Pandemic Emergency Assistance Fund (PEAF), the regulation establishes that: “NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.”
STATEMENT OF CONDITION As part of our audit procedures over transactions related to emissions of benefits for the TANF program, we selected five (5) transactions, from a population of fifty-three (53) emissions made during the fiscal year. We noted the following deficiencies:
i.
An emission of benefits for $16,236,447.24 related to PEAF funding was made. We request evidence of an established manual or guide that defines or identifies the need that would be addressed with the issuance of these funds, and the subsequent monitoring of the usage.
ii.
An emission of benefits for $3,633,800 was made related to a bonus. The documentation for this issuance includes an authorization letter establishing a benefit of $800 per child between the ages of 5 and 17 years and 11 months, serving a population of 4,492 participants, for a total of $3,593,600. Later, another authorization letter added $37,000 but did not specify the number of children included in this amendment. The sum of both authorizations is $3,630,600; however, the amount reflected in PRIFAS is $3,633,800. According to the EBT document related to this issuance, the amount issued was $3,596,800 and indicates that the number of participants benefited was 4,974, giving an average benefit of $723.12. In this EBT document, beneficiaries are distributed by region; however, there are 5 beneficiaries who are not assigned to a region, for a total of $4,000.
iii.
An emission of $1,988,000 was made related to an incentive for some beneficiaries. In accordance with an authorization letter, the benefit included $3,500 per participants who worked or participated in an activity leading to employment for 3 months or more. In accordance with the State Plan, active recipients may receive a 6-months period Work Incentive Bonus payment. Per the authorization letter the benefit of $3,500 was issued to 522 participants, for a total of $1,827,000; another authorization letter increased $3,500 in funds. This amount does not agree with the PRIFAS amount of $1,988,000.
ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect costs claims. The TANF program reported four (4) transactions related to indirect costs, and for the Nutrition Assistance for Puerto Rico five (5) transactions were reported. We requested evidence of two (2) transactions for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. There are no processes to reconcile PRIFAS information with emissions reported in EBT, nor to claim indirect costs.
STATEMENT OF CAUSE ADSEF does not have a process for validating EBT issuances with PRIFAS, and this reconciliation is not performed periodically to detect any errors or missing information when accounting for transactions.
POSSIBLE ASSERTED EFFECT The PRIFAS accounting system is not reconciled with EBT reports. This process is not stipulated as part of the internal controls required to ensure that the records used to prepare the financial statement, SEFA, and Federal reports are reconciled, and any discrepancies are identified. In addition, indirect costs calculation may include unallowable costs and not be detected timely.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.
FINDING REFERENCE NUMBER 2023-033 (See Finding Reference Number 2023-005)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G990229 (TANF – COVID-19) (Federal Award Year: 2021)
2022G996117; 2023996117 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
In addition, 45 CFR 260.31 (b)(1), defines what non-recurrent, short-term (NRST) benefits are. In relation to Pandemic Emergency Assistance Fund (PEAF), the regulation establishes that: “NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.”
STATEMENT OF CONDITION As part of our audit procedures over transactions related to emissions of benefits for the TANF program, we selected five (5) transactions, from a population of fifty-three (53) emissions made during the fiscal year. We noted the following deficiencies:
i.
An emission of benefits for $16,236,447.24 related to PEAF funding was made. We request evidence of an established manual or guide that defines or identifies the need that would be addressed with the issuance of these funds, and the subsequent monitoring of the usage.
ii.
An emission of benefits for $3,633,800 was made related to a bonus. The documentation for this issuance includes an authorization letter establishing a benefit of $800 per child between the ages of 5 and 17 years and 11 months, serving a population of 4,492 participants, for a total of $3,593,600. Later, another authorization letter added $37,000 but did not specify the number of children included in this amendment. The sum of both authorizations is $3,630,600; however, the amount reflected in PRIFAS is $3,633,800. According to the EBT document related to this issuance, the amount issued was $3,596,800 and indicates that the number of participants benefited was 4,974, giving an average benefit of $723.12. In this EBT document, beneficiaries are distributed by region; however, there are 5 beneficiaries who are not assigned to a region, for a total of $4,000.
iii.
An emission of $1,988,000 was made related to an incentive for some beneficiaries. In accordance with an authorization letter, the benefit included $3,500 per participants who worked or participated in an activity leading to employment for 3 months or more. In accordance with the State Plan, active recipients may receive a 6-months period Work Incentive Bonus payment. Per the authorization letter the benefit of $3,500 was issued to 522 participants, for a total of $1,827,000; another authorization letter increased $3,500 in funds. This amount does not agree with the PRIFAS amount of $1,988,000.
ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect costs claims. The TANF program reported four (4) transactions related to indirect costs, and for the Nutrition Assistance for Puerto Rico five (5) transactions were reported. We requested evidence of two (2) transactions for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. There are no processes to reconcile PRIFAS information with emissions reported in EBT, nor to claim indirect costs.
STATEMENT OF CAUSE ADSEF does not have a process for validating EBT issuances with PRIFAS, and this reconciliation is not performed periodically to detect any errors or missing information when accounting for transactions.
POSSIBLE ASSERTED EFFECT The PRIFAS accounting system is not reconciled with EBT reports. This process is not stipulated as part of the internal controls required to ensure that the records used to prepare the financial statement, SEFA, and Federal reports are reconciled, and any discrepancies are identified. In addition, indirect costs calculation may include unallowable costs and not be detected timely.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023)
2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures.
STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance.
POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023)
2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures.
STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance.
POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023)
2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures.
STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance.
POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-035 (See Finding Reference Number 2023-007)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.302, requires recipient's and subrecipient's financial management system must provide for the following: (3) maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation; (4) effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303; and (6) written procedures to implement the requirements of § 200.305.
2 CFR 200.305, Federal Payments, establishes that: (a) payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”; (b) for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment.
STATEMENT OF CONDITION As part of our understanding of internal controls and compliance regarding cash management, we obtained a procedures manual. We found the following deficiencies:
1.
The effective date is April 2024.
2.
In the section describing the LIHEAP process, the US Department of Agriculture is mentioned instead of the US Department of Health and Human Services.
3.
It does not identify the personnel responsible for the processes to establish segregation of duties.
4.
In our interviews it was noted that only one person is in charge of all drawdowns, and no proper supervision or review of the documentation is performed.
In addition, a detail of the requests related to the program was obtained; however, this request information does not reconcile with the revenue recognized in PRIFAS. The following deficiencies were identified:
1.
The document includes amounts identified as LIHEAP, which belong to another Federal program, the Low-Income Household Water Assistance Program (ALN 93.499), in the amount of $4,590,528.
2.
The amount of $306,483.12 is presented twice and is only recognized in PRIFAS once.
3.
PRIFAS includes revenue of $3,900,000 related to the COVID-19 portion of funds, which is not included in the breakdown.
From a population of fifty-seven (57) revenue transactions, six (6) transactions were selected to ensure that the correct amounts were requested from the Federal program and that the documents indicated in the manual were included with each petition. The following deficiencies were observed:
1.
The documents included do not contain signatures from the personnel who perform each process.
2.
The documentation included in the manual does not match the documentation included in the documents submitted with each petition.
3.
In an emission of ARPA funding through LUMA, part of the documentation provided was document EMISM210, which stated that the authorized amount was $16,014,374. In a recap made in the document (not signed), the amount of $4,181 was adjusted in the petition, indicating that this amount was rejected by LUMA. In a letter from LUMA, they certified that the total cases reported were 327,499 for a total amount of $16,010,193. A detail of participants was provided, and the total was 327,498, although the benefits were $16,010,193.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF does not have a procedures manual that clearly establishes a segregation of duties, demonstrating compliance with the required internal control components.
POSSIBLE ASSERTED EFFECT This is a systematic deficiency.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal controls process that demonstrates compliance with cash management requirements and appropriate segregation of duties.
FINDING REFERENCE NUMBER 2023-035 (See Finding Reference Number 2023-007)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.302, requires recipient's and subrecipient's financial management system must provide for the following: (3) maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation; (4) effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303; and (6) written procedures to implement the requirements of § 200.305.
2 CFR 200.305, Federal Payments, establishes that: (a) payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”; (b) for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment.
STATEMENT OF CONDITION As part of our understanding of internal controls and compliance regarding cash management, we obtained a procedures manual. We found the following deficiencies:
1.
The effective date is April 2024.
2.
In the section describing the LIHEAP process, the US Department of Agriculture is mentioned instead of the US Department of Health and Human Services.
3.
It does not identify the personnel responsible for the processes to establish segregation of duties.
4.
In our interviews it was noted that only one person is in charge of all drawdowns, and no proper supervision or review of the documentation is performed.
In addition, a detail of the requests related to the program was obtained; however, this request information does not reconcile with the revenue recognized in PRIFAS. The following deficiencies were identified:
1.
The document includes amounts identified as LIHEAP, which belong to another Federal program, the Low-Income Household Water Assistance Program (ALN 93.499), in the amount of $4,590,528.
2.
The amount of $306,483.12 is presented twice and is only recognized in PRIFAS once.
3.
PRIFAS includes revenue of $3,900,000 related to the COVID-19 portion of funds, which is not included in the breakdown.
From a population of fifty-seven (57) revenue transactions, six (6) transactions were selected to ensure that the correct amounts were requested from the Federal program and that the documents indicated in the manual were included with each petition. The following deficiencies were observed:
1.
The documents included do not contain signatures from the personnel who perform each process.
2.
The documentation included in the manual does not match the documentation included in the documents submitted with each petition.
3.
In an emission of ARPA funding through LUMA, part of the documentation provided was document EMISM210, which stated that the authorized amount was $16,014,374. In a recap made in the document (not signed), the amount of $4,181 was adjusted in the petition, indicating that this amount was rejected by LUMA. In a letter from LUMA, they certified that the total cases reported were 327,499 for a total amount of $16,010,193. A detail of participants was provided, and the total was 327,498, although the benefits were $16,010,193.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF does not have a procedures manual that clearly establishes a segregation of duties, demonstrating compliance with the required internal control components.
POSSIBLE ASSERTED EFFECT This is a systematic deficiency.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal controls process that demonstrates compliance with cash management requirements and appropriate segregation of duties.
FINDING REFERENCE NUMBER 2023-036 (See Finding Reference Number 2023-008)
FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, authorization release form, citizenship alien status, social security, income and resources, self-employment expenses, post-secondary student status, 5-7 years old evidence studying or home schooling, care minors/dependents with disabilities, disability status, medical expenses, age and homelessness.
In Regulation to Establish Eligibility Standards for the Nutrition Assistance for Puerto Rico (8684) from ADSEF, Article 27 (A) establishes that: School Requirement established that the person responsible for the service unit, their spouse, or authorized representative must provide evidence that the children between the ages of five (5) and seventeen (17) who are part of the service unit are enrolled in school.
In Article 45 establish that: Income deductions, Part C, Special deductions, Line number 4 established that a deduction of one hundred dollars ($100.00) will be applied to the income for each student who is part of the service unit and is enrolled full-time in a university or post-secondary educational institution. In the Manual of Procedures, Chapter 2, Part A, Line number 2 established that the student deduction is granted to any individual up to the age of 59.
In Article 60 establish that: Recertification Process, Part C established that a new certification period shall not be assigned unless an interview is conducted, the information provided is verified, and the eligibility of the service unit is determined.
In Article 74 establish that: Establishment of the Claim and Collection Procedures, Part F established in cases where the claim arises from benefits being used after the date of death of the sole beneficiary, collection efforts may be directed toward the beneficiary’s estate, authorized representative, or the individual who accessed the benefits.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Eight (8) authorization release form without date.
•
Nine (9) new participant files did not include supervisor approval of the eligibility determination.
•
Four (4) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
One (1) file showed an untimely eligibility determination based on the recertification date.
•
One (1) file was missing documentation verifying family composition and evidence of schooling for dependent minors.
•
One (1) student income deduction was incorrectly applied to a participant who did not meet the age and full-time student criteria.
•
One (1) participant died on August 1, 2022. Death was confirmed on January 27, 2023, and benefits were not terminated until February 17, 2023. The participant had no authorized representative, and recovery of funds is not feasible, as it is unknown who accessed the benefits posthumously.
•
In one case, the amount of income reported in the budget detail was not documented and was based on estimates derived from Social Security income, Medicare deductions, and Cost of Living (COL) adjustments, rather than verified income records.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-01.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications and participant terminations upon death notification. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-038 (See Finding Reference Number 2023-010)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.558) COVID-19 – TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2021G990229 (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, citizen status, social security, income and resources, self-employment expenses, children school attendance, cooperation with the Individual Responsibility Plan and cooperation in the establishment of paternity or in obtaining child support.
In Regulation 8684 to Establish Eligibility Standards for the Temporary Assistance for Needy Families from ADFAN, Chapter IV, Article 1 and 2, establishes that the certification period will be up to a maximum of six (6) months.
In Chapter III, Article 4 Section 4.24 establish the participant will receive the benefit for a maximum period of sixty (60) months in total.
In Chapter VIII, Article 2, Section 2.3, part B, it establishes that any eligible core member who intentionally violates the rules and receives benefits to which they are not entitled will be subject to a claim. In these cases, a collection invoice will be sent.
In Chapter III, Article 3, Section 3.3, part 3, it establishes that the evaluation for determining the incapacity of applications or cases will be the responsibility of the ADSEF Central Level with the information available and will recommend the appropriate action.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Thirty three (33) new participant files did not include supervisor approval of the eligibility determination.
•
Thirteen (13) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
Nine (9) files showed an untimely eligibility determination based on the recertification date.
•
Several documents were missing from the files:
•
Twenty-seven (27) files did not include child support evidence (see Finding Reference Number 2023-027).
•
Twenty-six (26) files without evidence of continued absence and lack of support.
•
Eleven (11) files without evidence of schooling for dependent minors.
•
Nine (9) files did not include signed Individual Responsibility Plan.
•
Two (2) participants that have incorrectly applied exemptions were given excessive benefits and there is no evidence of recapture of the benefit provided.
•
One (1) case in which the participant received the benefit for ninety-nine months when the maximum number of months to receive the benefit is sixty months.
•
One (1) Category C case (disability) in which the benefit was granted to the family and they did not send the authorization to the Medical Social Board, who are responsible for determining eligibility in these cases.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. In addition. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-02.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-038 (See Finding Reference Number 2023-010)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.558) COVID-19 – TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2021G990229 (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, citizen status, social security, income and resources, self-employment expenses, children school attendance, cooperation with the Individual Responsibility Plan and cooperation in the establishment of paternity or in obtaining child support.
In Regulation 8684 to Establish Eligibility Standards for the Temporary Assistance for Needy Families from ADFAN, Chapter IV, Article 1 and 2, establishes that the certification period will be up to a maximum of six (6) months.
In Chapter III, Article 4 Section 4.24 establish the participant will receive the benefit for a maximum period of sixty (60) months in total.
In Chapter VIII, Article 2, Section 2.3, part B, it establishes that any eligible core member who intentionally violates the rules and receives benefits to which they are not entitled will be subject to a claim. In these cases, a collection invoice will be sent.
In Chapter III, Article 3, Section 3.3, part 3, it establishes that the evaluation for determining the incapacity of applications or cases will be the responsibility of the ADSEF Central Level with the information available and will recommend the appropriate action.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Thirty three (33) new participant files did not include supervisor approval of the eligibility determination.
•
Thirteen (13) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
Nine (9) files showed an untimely eligibility determination based on the recertification date.
•
Several documents were missing from the files:
•
Twenty-seven (27) files did not include child support evidence (see Finding Reference Number 2023-027).
•
Twenty-six (26) files without evidence of continued absence and lack of support.
•
Eleven (11) files without evidence of schooling for dependent minors.
•
Nine (9) files did not include signed Individual Responsibility Plan.
•
Two (2) participants that have incorrectly applied exemptions were given excessive benefits and there is no evidence of recapture of the benefit provided.
•
One (1) case in which the participant received the benefit for ninety-nine months when the maximum number of months to receive the benefit is sixty months.
•
One (1) Category C case (disability) in which the benefit was granted to the family and they did not send the authorization to the Medical Social Board, who are responsible for determining eligibility in these cases.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. In addition. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-02.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-039 (See Finding Reference Number 2023-011)
FEDERAL PROGRAM (ALN – 93.560) PAYMENT TO TERRITORIES – ADULTS
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, citizen status, social security, income and resources, self-employment expenses.
In Regulation 8684 to Establish Eligibility Standards for the Payments to Territories – Adults from ADFAN, Chapter III, Article 3, Section 3.5, establishes that the eligibility period is determined by the Central Level Medical Social Board.
In Chapter VIII, Article 2, Section 2.3, part B, it establishes that any eligible core member who intentionally violates the rules and receives benefits to which they are not entitled will be subject to a claim. In these cases, a collection invoice will be sent.
In Chapter III, Article 3, Section 3.3, part 3, it establishes that the evaluation for determining the incapacity of applications or cases will be the responsibility of the ADSEF Central Level with the information available and will recommend the appropriate action.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Seven (7) cases lacked the documents requested for their initial appointment (photo ID, evidence of residency and evidence of citizenship).
•
Thirty-three (33) new participant files did not include supervisor approval of the eligibility determination.
•
Four (4) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
Fifty-three (53) files showed an untimely eligibility determination based on the recertification date.
•
Six (6) files of Category D case in which the benefit was granted and they did not send the authorization to the Medical Social Board, who are responsible for determining eligibility in these cases.
•
One (1) participant died on March 2022. Death reported in April 2022, they issued the payment the day after his death. The benefit was spent, and there was no recovery process.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-040 (See Finding Reference Number 2023-012)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY // REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 27,038 who were eligible for the crisis subsidy program. Of the sample of participants, only eight (8) files were submitted to us for evaluation. This represents a scope limitation.
In relation to the requirement of Performance Reporting and Special reporting, we requested the applicable reports submitted during the fiscal year 2022-2023, the reports submitted for our review were applicable for the fiscal year 2023-2024. This represents a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with these compliance requirements.
STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing. In addition, ADSEF does not have adequate controls and safeguards over the reports submitted to the Federal government.
POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with the eligibility and reporting requirements because the information in the files and applicable reports was not available for review.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time. In addition, improve its system for filing reports submitted to the Federal government.
FINDING REFERENCE NUMBER 2023-040 (See Finding Reference Number 2023-012)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY // REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 27,038 who were eligible for the crisis subsidy program. Of the sample of participants, only eight (8) files were submitted to us for evaluation. This represents a scope limitation.
In relation to the requirement of Performance Reporting and Special reporting, we requested the applicable reports submitted during the fiscal year 2022-2023, the reports submitted for our review were applicable for the fiscal year 2023-2024. This represents a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with these compliance requirements.
STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing. In addition, ADSEF does not have adequate controls and safeguards over the reports submitted to the Federal government.
POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with the eligibility and reporting requirements because the information in the files and applicable reports was not available for review.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time. In addition, improve its system for filing reports submitted to the Federal government.
FINDING REFERENCE NUMBER 2023-041 (See Finding Reference Number 2023-013)
FEDERAL PROGRAM (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2101PRFPSS (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 45 CFR section 1357.32(d) establishes that funds used to provide services in FY 1994 and in subsequent years will be federally reimbursed at 75 percent of allowable expenditures. (This is the same Federal financial participation rate as Title IV-B, Subpart 1.) Federal funds, however, will not exceed the amount of the State's allotment.
(1)
The State's contribution may be in cash, donated funds, and non-public third party in-kind contributions.
(2)
Except as provided by Federal statute, other Federal funds may not be used to meet the matching requirement.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with matching requirements, we selected the Grant Award 2101PRFPSS, which closed during the audit period from July 1, 2022, to June 30, 2023. ADFAN reported matching expenditures of $876,556.68. However, based on our review of the supporting database, actual matching expenditures amounted to only $808,043.75. This indicates that the required 25% match was not met. Additionally, according to the internal controls interviews and the information provided, the employees are not up to date with the program's Federal regulations. In the interview, they indicated that the percentage they used was 70% and 30% because they had always calculated it that way; they had not consulted the NOA, which indicates it is 75% and 25%.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Written internal control procedures should include proper training and that the notice of awards be discussed with the personnel in charge of working with all requirements, and monitoring compliance. ADFAN did not comply with the required matching for the 2101PRFPSS in the amount of $68,514.93.
STATEMENT OF CAUSE ADFAN does not have written internal controls procedures to ensure expenditure is monitored and aligned with the required matching percentage specified in the grant award.
POSSIBLE ASSERTED EFFECT ADFAN may be subject to a reduction in Federal funding if it fails to comply with program requirements.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN establish written internal control procedures and implement them, to monitor the expenditure of allocated funds to ensure compliance with the required matching contribution.
FINDING REFERENCE NUMBER 2023-042 (See Finding Reference Number 2023-014)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2022G996117 (Federal Award Year: 2022)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with the Compliance Supplement every fiscal year, a state must maintain an amount of “qualified state expenditures” (as defined in 42 USC 609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the state’s historic state expenditures.
In addition, it states that the applicable percentage for each fiscal year is 80 percent of the amount of non-Federal funds the state spent in FY 1994 on AFDC or 75 percent if the state meets the TANF work participation rate requirements (42 USC 607(a)) for the fiscal year. This is termed “basic MOE”, and the requirement is based on the Federal fiscal year. Any MOE expenditures above this required amount are referred to as “excess MOE”. In accordance with the regulation, the amount of MOE required for Puerto Rico is $21,185,453.
STATEMENT OF CONDITION As part of our internal controls and compliance procedures for compliance with the MOE requirement, we requested the Grant Award report for 2022, covering the period from October 1, 2021, to September 30, 2022, to verify compliance with the MOE.
The report covering this period reflects an MOE of $17,686,285, a deficiency of $3,499,168. Additionally, the reported expense amounts could not be validated against the PRIFAS database, except for line 5(a) for Basic Assistance, reported in column B.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is systematic. Puerto Rico government agencies fail to demonstrate that they maintain constant communication and follow up on information requests to ensure that all required documentation is available to complete reports.
Additionally, procedures and internal controls manuals should provide for and ensure the segregation of duties and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare the financial statement and SEFA. ADSEF's failure to support reported amounts with verifiable documentation and the absence of independent review increase the risk of inaccurate or misstated financial data being reported to the Federal awarding agency.
STATEMENT OF CAUSE According to discussions with ADSEF personnel, since 2018, another agency of the Government of Puerto Rico, the Health Insurance Administration (ASES, by its Spanish Acronym), has not provided information to comply with the spending levels of other state programs.
In addition, during our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
POSSIBLE ASSERTED EFFECT ADSEF is not in compliance with reporting state program expenditure levels, as required by program regulations.
Additionally, ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported. Puerto Rico government agencies must maintain constant communication and follow-up on information requests to ensure that all required documentation is available to complete reports
FINDING REFERENCE NUMBER 2023-043 (See Finding Reference Number 2023-015)
FEDERAL PROGRAM (ALN – 93.558) COVID-19 – TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2021G9990229 (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In relation to the Pandemic Emergency Assistance Fund, States, tribes and territories (grantees) may use funds to provide certain non-recurrent, short term (NRST) benefits (described in section A. 3. a. 2.). Additionally, they may use funds for administrative costs (up to a 15-percent cap for states and territories and up to the negotiated cap for tribes). All grantees must use funds to supplement, and not supplant, other Federal, state, tribal, territorial, or local funds.
In addition, for the purposes of PEAF, NRST benefits mean cash payments or other benefits that meet the regulatory definition (45 CFR 260.31(b)(1)) but are limited to those that fall into the specific expenditure reporting category mentioned in the legislation (line 15 of the ACF-196R (PDF), the state financial reporting form for the TANF program). In other words, for this fund, NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.
2 CFR section 200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures on internal controls and compliance related to the Level of Effort – Supplement not Supplant requirement, ADSEF staff were asked to indicate how the amount of the benefit to be granted was determined, the identified need for granting the benefit, and how the use of these benefits would be monitored. This information was not provided; in interviews, they indicated that the benefit was granted to provide an additional benefit and without restrictions. Additionally, a list of participants who benefited from this assistance was requested but was not provided. This represents a scope limitation.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is systematic. ADSEF does not maintain an internal control structure that allows for the communication of additional funds or modifications to the terms and conditions of grant awards to those responsible for program administration, so that they can adequately document the processes for granting benefits under each program.
STATEMENT OF CAUSE ADSEF did not maintain an adequate internal controls process that documented the justification for issuing the benefit with these funds, validated that this issuance of benefits was to supplement and not supplant the aid provided by regular TANF funds, created and distributed staff guidance on supplement-not-supplant, and maintained evidence of a final reconciliation of expenses incurred with these funds with the PRIFAS accounting system used for the preparation of the financial statement and SEFA.
POSSIBLE ASSERTED EFFECT ADSEF was unable to provide evidence of internal controls created and documented regarding how these funds were processed, the criteria used, the needs identified, and the personnel responsible for each process executed with these funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written adequate internal controls process that documented the justification for issuing the benefit with these funds, validated that this issuance of benefits was to supplement and not supplant the aid provided by other Federal funds, created and distributed staff guidance on supplement-not-supplant, and maintained evidence of a final reconciliation of expenses incurred with these funds with the PRIFAS accounting system used for the preparation of the financial statement and SEFA.
FINDING REFERENCE NUMBER 2023-044 (See Finding Reference Number 2023-016)
FEDERAL PROGRAM (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2101PRFPSS (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 45 CFR section 1357.32(d) establishes that the program contains assurances that not more than 10 percent of expenditures under the plan for any fiscal year with respect to which the State is eligible for payment under section 629d of this title for the fiscal year shall be for administrative costs, and that the remaining expenditures shall be for programs of family preservation services, community-based family support services, family reunification services, and adoption promotion and support services, with significant portions of such expenditures for each such program. According to the Compliance Supplement, the portion established for expenses by category is 20%.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with earmarking requirements, we selected the Grant Award 2101PRFPSS, which closed within our audit period from July 1, 2022, to June 30, 2023, to assess the allocation and use of funds across the required program categories. Based on our evaluation of the documentation provided by ADFAN, we found that expenditures in each of the following categories: family preservation services, community-based family support services, time-limited family reunification services, and adoption promotion and support services did not meet the 20% minimum allocation. Additionally, we noted that administrative expenditures related to caseworker payroll exceeded the 10% cap.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. ADFAN does not have written internal control and compliance procedures that clearly identify the process to monitor this requirement and the person responsible.
STATEMENT OF CAUSE ADFAN lacks adequate internal controls to effectively monitor whether expenditures within each category align with allocated funding and comply with applicable program requirements.
POSSIBLE ASSERTED EFFECT ADFAN’s failure to adhere to program requirements may adversely impact its ability to receive full Federal funding under the program.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADFAN establish written internal control procedures that provide for the monitoring of the expenditure of allocated funds of each category, and the person responsible for executing this process in order to comply with the corresponding earmarking requirement.
FINDING REFERENCE NUMBER 2023-045 (See Finding Reference Number 2023-017)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 45 CFR sections 264.1(c) and (e)) and 42 USC 608(a)(7)(C)(ii) establishes that the average monthly number of families that include an adult or minor child head of household, or the spouse of the head of household, who has received assistance under any state program funded by Federal TANF funds for more than 60 countable months (whether or not consecutive) may not exceed 20 percent of the average monthly number of all families to which the state provided assistance during the fiscal year or the immediately preceding fiscal year (but not both), as the state may elect. To make this determination for a fiscal year, the average monthly number of families with a head of household or spouse of a head of household who received assistance for more than 60 months would be divided by the average monthly number of families that received assistance in that fiscal year, or, if the state chooses, in the previous fiscal year.
STATEMENT OF CONDITION As part of our understanding and testing of internal controls and compliance, we requested evidence of how compliance with this requirement is monitored. In the interviews conducted, we were told that no participant could receive program assistance for more than 60 months. However, in our participant eligibility test, out of a sample of one hundred (100) beneficiaries, we found that one (1) participant had received TANF benefits for a total of 99 months. Additionally, we were not provided with any procedures manual that they have implemented that demonstrate compliance with this requirement. We requested a list of participants that could be generated by the Case Management and Information System (SAIC, by its Spanish Acronym), but this information was not provided. This represents a scope limitation.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. ADSEF could not provide clear evidence of how it monitors compliance with this requirement.
STATEMENT OF CAUSE ADSEF does not have an internal control structure that provides compliance with the earmarking requirement, related to the maximum benefit period.
POSSIBLE ASSERTED EFFECT ADSEF has not established an adequate internal control procedure that provides an adequate structure for documenting compliance with this requirement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADSEF management establish written procedures that clearly identify how compliance with this requirement will be monitored.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-049 (See Finding Reference Number 2023-020)
FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
211PR476V1003/4 – ARPA (Federal Award Years: March 11, 2021 through September 30, 2025)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that (a) each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In section (b), the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
written procedures to implement the requirements of § 200.305 and
(7)
written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected two reports that closed during our fiscal year audit. With respect with the Grant Award 221PR426S7003 and 221PR426S7004 we noted the following deficiency:
•
The auditee was unable to provide supporting documentation for the administrative expenditures that reconcile the figures reported with the PRIFAS accounting system.
•
In addition, for all the Federal awards mentioned above, based on internal control interviews, we found that there is no designated individual responsible for independently reviewing the reports prior to submission to ensure accuracy and consistency with source data.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-051 (See Finding Reference Number 2023-021)
FEDERAL PROGRAM (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450.)
(b)
The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
…
(6)
Written procedures to implement the requirements of § 200.305 and
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for LIHEAP program, we selected two reports submitted during our fiscal year. We noted that the administrative expenditures do not reconcile with the accounting information from PRIFAS. In addition, for the amount of encumbrances of $11,032,784.51, the amount of $9,943,769.52 was not supported by a detail.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF– 425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement.
FINDING REFERENCE NUMBER 2023-052
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 45 CFR, Subtitle B, Chapter II, Part 265.7, states that:
(a)
Each State's quarterly reports [the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), the SSP-MOE Data Report, and the Work Outcomes of TANF Exciters Report] must be complete and accurate and filed by the due date.
(b)
For a disaggregated data report, “a complete and accurate report” means that:
(1)
The reported data accurately reflects information available to the State in case records, financial records, and automated data systems, and includes correction of the quarterly data by the end of the fiscal year reporting period;
(2)
The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3)
The State reports data for all required elements (i.e., no data is missing);
(4)
(i)
The State provides data on all families; or
(ii)
If the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and
(5)
Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates.
(c)
For an aggregated data report, “a complete and accurate report” means that:
(1)
The reported data accurately reflects information available to the State in case records, financial records, and automated data systems;
(2)
The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3)
The State reports data on all applicable elements; and
(4)
Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts).
In addition, 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.
In section (b) the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our procedures for understanding internal controls for the preparation of ACF-199 reports, we request a procedures manual on how these reports are processed and the personnel responsible for each process. ADSEF did not provide us with a manual describing the data collection process, how the information provided by the regions is validated, and the individuals responsible for submitting the reports.
To evaluate compliance with the reported data, the quarter ending June 2023 was selected. From this period, forty (40) participants were selected. ADSEF was required to provide us with the corresponding participant worksheet appendix and the physical file to corroborate the information included in the report. ADSEF provided us with evidence of the hand-completed forms; however, we were not provided with the physical files to validate the information included in each document. This represents a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. After sample selection, ADSEF did not demonstrate a control structure that would allow the files to be located within a reasonable period of time.
STATEMENT OF CAUSE ADSEF does not maintain an internal control structure for participant files that allows each file to be located within a reasonable period of time.
Additionally, they do not have internal control procedure manuals that allow for the validation of the process they carry out and the individuals responsible for compiling, validating, and submitting this report.
POSSIBLE ASSERTED EFFECT ADSEF may be including data in this report that has not been corroborated with the participants' physical records.
The lack of a uniform process for archiving participant records prevented them from providing us with evidence of the requested records.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish internal control procedures manuals that clearly outline the processes to be followed for data collection, recording, and reporting. Additionally, standardize the way documents related to participant files are filed.
FINDING REFERENCE NUMBER 2023-053 (See Finding Reference Number 2023-022)
FEDERAL PROGRAM (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2211PRSOSR (Federal Award Year: 2022)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 42 U.S. Code §1397e and the requirements of the Post-Expenditure Report (OMB #0970-0234), states and territories must submit an annual Post-Expenditure Report to the Office of Community Services no later than six months following the end of the fiscal year. The report must include, among other elements, clearly defined eligibility criteria for program beneficiaries and an accurate accounting of expenditures, including the amount of Temporary Assistance for Needy Families (TANF) funds transferred to the Social Services Block Grant (SSBG).
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION During our review of the submitted Post-Expenditure Report and supporting documentation, we identified the following deficiencies:
(1)
The eligibility criteria for beneficiaries were not established or documented within the report and,
(2)
The reported amounts of TANF funds transferred to SSBG do not reconcile with the data provided in the PRDF’s internal database. Although the report specifies that expenditure should be based on current balances rather than budgeted amounts, the transfer in question was based on the approved budget.
(3)
In the database used to prepare the financial statement and SEFA, the expense related to the transfer of funds from TANF to SSBG reflected an expense of $136,958.70. This database includes credits that eliminate the program expense in the expense account identified as E9050. Subsequently, the ADFAN Finance Director included other transactions in the database that adjusted the expense, reflecting a total balance of $6,798,836.38 (see Finding 2023-016).
(4)
In addition, internal control interviews revealed that there is no designated individual responsible for reviewing the information entered to the report by the preparer, increasing the risk of reporting errors.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training and segregation of duties when reporting (preparer and reviewer not being the same person).
STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered in the Post-Expenditure Report.
POSSIBLE ASSERTED EFFECT Failure to meet the reporting requirements may lead to noncompliance with Federal regulations, reduced transparency and accountability in the use of Federal funds, and potential implications for future funding or audit findings.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADFAN to establish and document eligibility criteria in accordance with Federal reporting requirements. Reconcile TANF transfers with internal records to ensure accurate reporting and ensure that all expenditures reported are based on actual balances rather than budgeted projections. ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with federal reporting requirements.
FINDING REFERENCE NUMBER 2023-054 (See Finding Reference Number 2023-023)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS (Federal Award Years: 2021 through 2022)
2211PRSOSR (Federal Award Years: 2021 through 2022)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization.
The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(6)
written procedures to implement the requirements of § 200.305 and
(7)
written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period.
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grants Awards 2101PRFPSS and 2111PRSOSR, which closes in the audit period from July 2022 to June 2023, to validate the recorded amounts.
Upon evaluating the report for the Grant Award 2101PRFPSS, we found the following deficiencies:
(1)
The total Federal expenditure reported on line (e) does not match the database provided by the PRDF.
(2)
The matching expenditure on line (j) does not match the database provided by the PRDF, and
(3)
The report was not submitted within the established deadline, and an extension was granted to settle and report the funds until March 31, 2023, and they submitted on August 10, 2023.
For both Grants Awards we found the following deficiencies:
(4)
The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis.
(5)
During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA.
STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the statement of condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements.
POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN ensures the SF– 425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.
FINDING REFERENCE NUMBER 2023-054 (See Finding Reference Number 2023-023)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS (Federal Award Years: 2021 through 2022)
2211PRSOSR (Federal Award Years: 2021 through 2022)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization.
The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(6)
written procedures to implement the requirements of § 200.305 and
(7)
written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period.
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grants Awards 2101PRFPSS and 2111PRSOSR, which closes in the audit period from July 2022 to June 2023, to validate the recorded amounts.
Upon evaluating the report for the Grant Award 2101PRFPSS, we found the following deficiencies:
(1)
The total Federal expenditure reported on line (e) does not match the database provided by the PRDF.
(2)
The matching expenditure on line (j) does not match the database provided by the PRDF, and
(3)
The report was not submitted within the established deadline, and an extension was granted to settle and report the funds until March 31, 2023, and they submitted on August 10, 2023.
For both Grants Awards we found the following deficiencies:
(4)
The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis.
(5)
During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA.
STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the statement of condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements.
POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN ensures the SF– 425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.
FINDING REFERENCE NUMBER 2023-055 (See Finding Reference Number 2023-024)
FEDERAL PROGRAM (ALN – 96.001) SOCIAL SECURITY–DISABILITY INSURANCE
U.S. SOCIAL SECURITY ADMINISTRATION
AWARD NUMBERS 1804RQD100; 1904RQD100; 2004RQD100; 2104RQD100; 2204RQD100; 2304RQD100 (Federal Award Years: 2018 through 2023)
ADMINISTRATION OFFICE OF THE SECRETARIAT
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA According to the Program Operations Manual (POMS) DI 39506.203-Updating and Reconciling Unliquidated Obligations published by the Social Security Administration (SSA), legitimate unliquidated obligations must be backed up by records or papers that explain the nature of the obligations and provide evidence for the amounts reported. It is also crucial that the agency's reported unliquidated obligations reflect any modifications or cancellations of Consultative Examinations (CE) and Medical Evidence of Record (MER) authorizations. State authorities should check CE authorizations to see if the unliquidated obligation is an authorization that is still in existence and evaluate unliquidated obligations at least once a month to cancel those that are no longer valid.
POMS 39506.210 Preparations Instructions for Form SSA-4513 instructs the State Agency to check the appropriate box in the report to indicate the attachment of Form-871.
Uniform Guidance at 2 CFR §200.302 Financial Management Section (a) establish the administrative requirements for the program, which include the requirement that state and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
STATEMENT OF CONDITION The State Agency Report of Obligations for SSA Disability Programs, Form Report SSA-4513, was incomplete and inaccurate. During the audit procedures the following deficiencies were noted by us:
i.
It was not specified in the Puerto Rico Disability Determination Services (PR-DDS) Accounting Department's Form SSA-4513 for September 2022 and June 2023 if Form SSA-871, State Agency Schedule for Equipment Purchases for SSA Disability Programs, had to be included with Form SSA-4513 for FYs 2023, 2022, 2021, 2020, 2019, and 2018. Whether this was necessary or not is unknown.
ii.
Information about unliquidated obligations for FYs 2023, 2022, 2021, 2020, 2019, and 2018 were absent from September 2022 Form SSA-4513.
iii.
Information regarding Unliquidated Obligations for each of the specified reporting periods was absent from June 2023 Form SSA-4513.
1)
FY 2023's unliquidated obligations are not detailed. In its Form SSA-4513, the PR-DDS included unliquidated commitments, which accounted for 20% of the overall obligation balances.
2)
The reported balances of unliquidated commitments for FY 2022 are not supported by any information. In its Form SSA-4513, the PR-DDS included unliquidated commitments, which accounted for 8% of the overall obligation balances.
3)
Reported balances of unliquidated debts for FYs 2021, 2020, and 2019 are not supported by any information.
iv.
There were discrepancies between the accounting system and the total amount of disbursements on Form SSA-4513 for June 2023, and no observations were submitted in the report remarks section.
1) $237,231 discrepancy in FY 2022
2) $40,907 discrepancy in FY 2021
3) $8,800 discrepancy in FY 2020
4) $33,458 discrepancy in FY 2019
5) $49,179 discrepancy in FY 2018
v.
The PR-DDS paid back $112,443 to the Puerto Rico Treasury Department in fiscal year 2023 to offset FY 2018 expenses that were not fully utilized in prior years. Because an expense is reported at the time a request is registered by the PR-DDS Accounting Department Special Payer, this resulted in an overstatement in the Schedule of Expenditures of Federal Awards and in the quarterly reports.
vi.
The PR-DDS Accounting Department received a request refund of $1,242,212 from the SSA for fiscal years 2019, 2020, and 2021 during March 2023 SSA-4513. Because there was not enough evidence in the March report to warrant an increase in obligations, the request was based on excess withdrawals exceeding total commitments recorded in FORM SSA-4513 for March 2023. In fiscal year 2023, $397,740 was repaid by the PR-DDS Accounting Department.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. Information needed to effectively generate financial reports should be available through the financial management system.
STATEMENT OF CAUSE Internal controls is not in place in the PR-DDS Accounting Department to ensure that vendor payments are processed on schedule. Furthermore, as mandated by DI 39506.203, the PR-DDS Accounting Department has not put monitoring measures in place to routinely assess unliquidated commitments. Furthermore, the PR-DDS Accounting Department lacks internal procedures for recording discrepancies between financial reporting and accounting systems.
POSSIBLE ASSERTED EFFECT The PR-DDS raises the possibility of incurred costs without the option to obtain reimbursement from the Federal grant if appropriate procedures are not in place to pay suppliers on time and liquidate obligations on time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the Accounting Department of PR-DDS establish procedures to make sure Form SSA-4513 is properly examined, recorded, and compliant with POMS DI 39506.203.
To cancel commitments that are no longer valid, we advise the PR-DDS Accounting Department to check unliquidated obligations at least once a month. For FYs 2020 and 2021, we advise the PR-DDS to ascertain the number of disbursements, restrict the reimbursement to that sum prior to deducting money, and repay SSA for any overdrafts that remain. Furthermore, we recommend a formal reconciliation between the quarterly reports and the accounting system-documented disbursements, with an explanation of any discrepancies included in remarks of the Form SSA-4513.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
…
(6)
Written procedures to implement the requirements of § 200.305 and
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies:
i.
Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number.
ii.
The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request.
iii.
In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred.
iv.
In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
…
(6)
Written procedures to implement the requirements of § 200.305 and
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies:
i.
Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number.
ii.
The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request.
iii.
In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred.
iv.
In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
FINDING REFERENCE NUMBER 2023-057 (See Finding Reference Number 2023-026)
FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
211PR476V1003/4 – ARPA (Federal Award Years: March 11, 2021 through September 30, 2025)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – EBT RECONCILIATION
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with Compliance Supplement and the State Plan, the EBT services provider makes payments to authorized retailers, network, third party providers, and financial institutions on behalf of the Government of Puerto Rico for benefits accessed and distributed to recipients daily. The EBT services provider is reimbursed as authorized by the Popular Bank of Puerto Rico (PBPR). Payments are recorded and compared to the Daily Activity File and Daily Payments Summary File prepared by the EBT services provider for the Department of the Family. EBT system reports provide these and other standardized computer reports as well as ad hoc access to EBT system data to perform the following key reconciliation:
1
Benefits authorized = benefits posted.
2
Benefits accessed by recipients (net EBT account debits/credits) = benefit amount transactions approved by the EBT services provider.
3
Net EBT account debits/credits = amount paid to merchants and financial institutions, “+/-” authorized adjustments.
4
Amount paid to merchants and financial institutions = funds requested by the EBT services provider, “+/-” authorized adjustments.
2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit of compliance with the EBT reconciliation requirements for the fiscal year ended June 30, 2023, we identified the following deficiencies:
•
ADSEF was unable to provide updated written reconciliation procedures or manuals.
•
No evidence was provided to show that EBT benefits were reconciled or matched to Federal drawdowns (SF-425 or PMS).
•
When asked about the assessment of SOC reports or vendor reviews, staff were unaware that such reports were required. The report was requested to EBT processor when we asked for it.
Additionally, written procedure manuals were requested; however, management indicated that no such manuals were in place at the time. A procedure manual was subsequently created for January 2025, but it lacks clarity regarding specific employee roles and responsibilities. After multiple interviews, we were able to identify the area in charge of the reconciliation process, they provided with a manual from 2012, which was not updated with the data currently used.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, the evidence provided to support the EBT reconciliation consisted solely of the receipt of the FIN-052 report and the manual entry of its data into Excel spreadsheets, and the SOC report from EBT provider. After multiple attempts to gain a comprehensive understanding of the reconciliation process, we were able to identify the people involved in the reconciliation process and the documents used. They finally provided with a written manual procedure, but was from 2012, which does not comply with Uniform Guidance requirements and documentation actually used.
STATEMENT OF CAUSE ADSEF deficiencies stem from the absence of formal updated written reconciliation procedures, inadequate internal controls over EBT operations, lack of staff training, and unclear assignment of responsibilities related to reconciliation and oversight.
POSSIBLE ASSERTED EFFECT ADSEF lack of updated written reconciliation process increases the risk of undetected errors or irregularities in EBT transactions, potential misstatements in Federal financial reports, and unaccounted variances between Federal funding and benefit disbursements. It also limits the agency’s ability to monitor program performance and meet audit and compliance obligations.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF develop and implement updated formal, written reconciliation procedures, clearly outlining roles, responsibilities, and the frequency of reconciliations. Additionally, we advise providing staff with comprehensive training on reconciliation protocols and internal control requirements to ensure consistency and compliance.
FINDING REFERENCE NUMBER 2023-058 (See Finding Reference Number 2023-027)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – INCOME ELIGIBILITY AND VERIFICATION SYSTEM
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Each state shall participate in the Income Eligibility and Verification System (IEVS) required by Section 1137 of the Social Security Act as amended. Under the State Plan the state is required to coordinate data exchanges with other federally assisted benefit programs, request and use income and benefit information when making eligibility determinations and adhere to standardized formats and procedures in exchanging information with other programs and agencies. Specifically, the state is required to request and obtain information as follows (42 USC 1320b-7; 45 CFR section 205.55):
a.
Wage information from the state Wage Information Collection Agency (SWICA) should be obtained for all applicants at the first opportunity following receipt of the application, and for all recipients on a quarterly basis.
b.
Unemployment Compensation (UC) information should be obtained for all applicants at the first opportunity, and in each of the first three months in which the individual receives aid. This information should also be obtained in each of the first three months following any recipient-reported loss of employment. If an individual is found to be receiving UC, the information should be requested until benefits are exhausted.
c.
All available information from the Social Security Administration (SSA) for all applicants at the first opportunity.
In addition, in accordance with the State Plan, other internal controls applied by TANF staff to identify employment status and earnings of individuals are the: State Wage Information Collection Agency (SWICA) and the Beneficiary and Earnings Data Exchange (BENDEX). Through our Office of Information System, TANF caseload is cross checked with their database to identify participants that may be working. These systems create a list of participants which is reviewed by the eligibility determination technician.
STATEMENT OF CONDITION During our process of understanding internal controls regarding compliance with this requirement, in the interviews conducted with the regions and local authorities, only one of the five regions visited indicated that they received the SWICA and BENDEX lists monthly. However, ADSEF headquarters indicated that they did not have a memorandum of understanding with the relevant state agencies for the 2022-2023 fiscal year.
In the other regions, we were told that the income reported by participants was validated only with a sworn statement.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systematic deficiency. According to interviews conducted with technicians in different regions, we identified a lack of uniformity in the income validation processes and a lack of awareness of what the current regulations establish.
STATEMENT OF CAUSE ADSEF does not have a memorandum of understanding that allows access to participants' income validation. Additionally, the PRDF's processes manual dates back to 2008, which is not consistent with the reality of the information and processes carried out at the local level.
POSSIBLE ASSERTED EFFECT ADSEF does not have sufficient mechanisms to validate the entry of participants requesting the benefit, and does not allow compliance with this requirement.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-03.
RECOMMENDATIONS We recommend that management coordinate the signing of the memorandum of understanding with the relevant agencies. Additionally, establish processes and training aligned with the procedures and documentation currently in use.
FINDING REFERENCE NUMBER 2023-059 (See Finding Reference Number 2023-028)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – CHILD SUPPORT NON-COOPERATION
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 45 CFR sections 264.30 and 264.31 establishes that (a):
(1)
The State agency must refer all appropriate individuals in the family of a child, for whom paternity has not been established or for whom a child support order needs to be established, modified or enforced, to the child support enforcement agency (i.e., the IV-D agency).
(2)
Referred individuals must cooperate in establishing paternity and in establishing, modifying, or enforcing a support order with respect to the child.
(b)
If the IV-D agency determines that an individual is not cooperating, and the individual does not qualify for a good cause or other exception established by the State agency responsible for making good cause determinations in accordance with section 454(29) of the Act or for a good cause domestic violence waiver granted in accordance with § 260.52 of this chapter, then the IV-D agency must notify the IV-A agency promptly.
(c)
The IV-A agency must then take appropriate action by:
(1)
Deducting from the assistance that would otherwise be provided to the family of the individual an amount equal to not less than 25 percent of the amount of such assistance; or
(2)
Denying the family any assistance under the program.
STATEMENT OF CONDITION As part of our understanding of internal controls and compliance related to this requirement, we requested a list from the Case Management and Information System (SAIC) that would identify participants who did not meet this requirement. From a population of six (6) participants, two (2) were selected to validate compliance with this requirement. We were only provided with one of the two requested files. The submitted file complied with the three-month sanction, and the case was subsequently closed for failure to cooperate with the Administration for Child Support Enforcement (ASUME, by its Spanish Acronym).
Additionally, according to our eligibility testing, we were unable to identify child support evidence in twenty-seven (27) files (see Finding Reference Number 2023-058).
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is systematic. ADSEF lacks an adequate process for archiving files and the information each file should contain.
STATEMENT OF CAUSE ADSEF does not have an adequate archiving process that allows for the identification of files in a reasonable timeframe.
Additionally, there is no formal training or archive process for all regions and local authorities for the personnel involved in determining eligibility and the required evidence that should be kept for the audit process.
POSSIBLE ASSERTED EFFECT ADSEF was unable to provide the requested information for auditing within a reasonable timeframe. Furthermore, the lack of a uniform archiving process prevents the information contained in the files from being properly identified and reviewed.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an adequate internal controls process that provides for the archiving of information in participant files and the identification of files within a reasonable timeframe.
FINDING REFERENCE NUMBER 2023-060
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – PENALTY FOR REFUSAL TO WORK / LACK OF CHILD CARE FOR SINGLE CUSTODIAL PARENT OF CHILD UNDER AGE SIX / PENALTY FOR FAILURE TO COMPLY WITH WORK VERIFICATION PLAN
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general.
STATEMENT OF CONDITION As part of our audit procedures for special tests and provisions, we selected twenty-five (25) participants from a population of 475 who had been penalized for failing to meet the work requirement or complying with the work verification plan. Of the sample of participants, only ten (10) files were submitted to us for evaluation.
Related to the Lack of Child Care requirement for single Custodial Parent of Child Under Age Six, from a population of seven (7) participants identified with this requirement, we requested three (3) files for evaluation, however, we were only given one (1) file. This is a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with this compliance requirement.
STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing.
POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with these Special Tests and Provisions because the information in the files was not available for review.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time.
FINDING REFERENCE NUMBER 2023-061
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2022G996117; 2023996117 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SUBRECIPIENT MONITORING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 2 CFR 200.332, a pass-through entity must:
(a)
Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds.
(b)
Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes:
(1)
Federal award identification.
(i)
Subrecipient's name (must match the name associated with its unique entity identifier);
(ii)
Subrecipient's unique entity identifier;
(iii)
Federal Award Identification Number (FAIN);
(iv)
Federal Award Date;
(v)
Subaward Period of Performance Start and End Date;
(vi)
Subaward Budget Period Start and End Date;
(vii)
Amount of Federal Funds Obligated in the subaward;
(viii)
Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation;
(ix)
Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;
(x)
Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA);
(xi)
Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity;
(xii)
Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement;
(xiii)
Identification of whether the Federal award is for research and development; and
(xiv)
Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414).
(2)
All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award;
(3)
Any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency;
…
(5)
A requirement that the subrecipient permit the pass-through entity and auditors to access the subrecipient's records and financial statements for the pass-through entity to fulfill its monitoring requirements; and
(6)
Appropriate terms and conditions concerning the closeout of the subaward.
(c)
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1)
The subrecipient's prior experience with the same or similar subawards;
(2)
The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3)
Whether the subrecipient has new personnel or new or substantially changed systems; and
(4)
The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
(d)
If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions.
(e)
Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must:
(1)
Review financial and performance reports.
(2)
Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation.
(3)
Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521.
(4)
Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward.
(f)
Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals:
(1)
Providing subrecipients with training and technical assistance on program-related matters;
(2)
Performing site visits to review the subrecipient's program operations; and
(3)
Arranging for agreed-upon-procedures engagements as described in § 200.425.
(g)
Verify that a subrecipient is audited as required by subpart F of this part.
(h)
Consider whether the results of a subrecipient's audit, site visits, or other monitoring necessitate adjustments to the pass-through entity's records.
(i)
Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 and in program regulations.
STATEMENT OF CONDITION As part of our understanding of the program, program staff were interviewed regarding the existence of subrecipients. None of the staff interviewed identified any transactions involving subrecipients. However, in our testing of internal controls and compliance with the allowable costs/cost principles requirement, transactions were selected to assess compliance with this requirement. Upon receiving documentation from a contractor, we realized that the transactions with this supplier were in the capacity of a subrecipient.
In addition, the SEFA submitted by the PRDF does not identify any transaction under a subrecipient related to this program. In the final draft of the SEFA submitted for audit procedures, ADSEF reported the amount of $2,411,184, which included all transactions related to preventive services. We examined four (4) vouchers related to these services; the contract, proposal and invoices do not indicate information related to subrecipients.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. The staff in charge of administering TANF funds were unaware of the factors required to properly identify subrecipient transactions.
The total expenditure reflected in the database related to subrecipient activities totaled $686,052.17 for the audited fiscal year.
After providing the requirements for a subrecipient, staff were interviewed again to verify whether other providers met the subrecipient requirements, but no other entities were identified. From our testing, we identified no other subrecipients.
Although, in the final draft of the SEFA submitted for audit procedures, all expenditures related to preventive services were included as pass-through expenditures.
STATEMENT OF CAUSE The staff in charge of administering the program were unaware of the factors that determine whether a contractor is a subrecipient or a contractor.
ADSEF has not established an adequate procedures manual that demonstrates compliance with all requirements for subrecipient activities.
POSSIBLE ASSERTED EFFECT ADSEF does not have internal controls related to the identification, management, and reporting of subrecipient activities. This situation prevents compliance with all compliance requirements related to subrecipient monitoring.
This situation prevented the proper presentation of Federal expenditures incurred under this program in the SEFA or other financial reports required by Federal agencies.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS The PRDF must provide training to ADSEF personnel on the requirements and regulations related to subrecipient monitoring. We recommend that management establish internal controls and compliance measures that allow for the identification, reporting, and monitoring of subrecipient activities.
FINDING REFERENCE NUMBER 2023-029 (See Finding Reference Number 2023-001)
FEDERAL PROGRAM (ALN – 10.542) PANDEMIC EBT FOOD BENEFITS (P-EBT)
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 221PR456S9032; 2301PR456S9032 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our internal control procedures for the financial management system, allowable activities and reporting requirements, we found the following deficiencies:
•
Of ten (10) expenditure accounting transactions, three (3) were selected for documentation review. It was found that a transaction posted in August 2022 for $193,642,697.32 included $54,195,406.92, corresponding to benefit payrolls for May 2022, which had previously been claimed in June 2022. They subsequently adjusted the expenditure reported for this amount.
•
All expenditure transactions are coded under the ID number PANDEMICEBT-B22; although, in the SF-778 report for the quarter ended June 30, 2023, for the grant award period for 2023, expenditures in the amount of $29,606,939 were reported as incurred. This data does not agree with the accounting information of PRIFAS.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systematic deficiency. After conducting several interviews, we were able to identify the staff responsible for validating the benefit payrolls. This person told us these benefit payrolls were processed via email, which indicated that the information submitted was preliminary. However, the finance staff proceeded with the adjustment in the accounting system. We conducted interviews to determine if anything had been modified in the benefit payroll processing process. To prevent this situation from happening again, they told us it wasn't necessary because it hasn't happened again.
Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency.
STATEMENT OF CAUSE ADSEF has not established an adequate control procedure to identify duplicate claims before they are filed and recorded.
During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF-425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT The failure to have an internal control procedure that identifies standard documentation or forms, personnel responsible for validating the information included, and controls payroll and benefit expenses and other previously claimed expenses allowed for the recognition and claim of an expense incurred twice. ADSEF is not ensuring that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statements.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an adequate internal controls process that identifies documentation, personnel responsible, authorizations, and validations that can prevent this situation from recurring. In addition, we recommend management to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002)
FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date.
QUESTIONED COSTS $208,823.33.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment.
STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation.
POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002)
FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date.
QUESTIONED COSTS $208,823.33.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment.
STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation.
POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002)
FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date.
QUESTIONED COSTS $208,823.33.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment.
STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation.
POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-031 (See Finding Reference Number 2023-003)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 Subpart E §200.403, Factor affecting allowability of costs, establishes that:
“Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards:
(a)
Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.
(b)
Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.
(c)
Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the recipient or subrecipient.
(d)
Be accorded consistent treatment. For example, a cost must not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
(e)
Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian Tribes only, as otherwise provided for in this part.
(f)
Not be included as a cost or used to meet cost sharing requirements of any other federally-financed program in either the current or a prior period. See § 200.306(b).
(g)
Be adequately documented. See §§ 200.300 through 200.309.”
STATEMENT OF CONDITION As part of our audit procedures over allowable costs requirements for TANF program, we selected seven (7) voucher payments related to activities of prevention. We found the following deficiencies:
(a)
When we obtained the vouchers related to payments of a contractor, we also requested the contract and the proposal, we noted that the Entity is a subrecipient and not a contractor. The transactions related to this contract were not identified as subrecipient in the SEFA (see Finding Reference Number 2023-058). We audited three (3) vouchers of this subrecipient, in each one, this Entity claimed reimbursement for utilities, supplies, and materials. When we observed documentation in the file, we noted that the entity administers other Federal awards; and no evidence was observed in the voucher that proper distribution of administrative costs is made among all Federal awards. In addition, the contract required a certification indicating absence of duplication of services provided, and it was not included in the invoice or supporting documentation.
(b)
In the other four (4) vouchers evaluated related to payments to contractors, reimbursement claimed by the contractors included the purchase of laptops and digital screens. No evidence was provided that indicated who is responsible for this equipment, where it is located, and how it is safeguarded. These suppliers were contracted to provide training and workshops for participants of TANF. In the invoices evaluated we noted that ADSEF is paying for all costs of the entity, including supplies, maintenance of vehicles, mileage for some personnel, telephone charges, internet, and other utilities. In the final draft of the SEFA submitted for audit procedures, ADSEF reported the amount of $2,411,184, which included all transactions related to preventive services.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This is a systemic deficiency. Total transactions related to prevention services were one-hundred seven (107), amounting to $2,411,184. ADSEF does not have internal guidance and procedures establishing how transactions with sub-recipients will be handled and how they are accounted for. Furthermore, there are no internal controls documenting the evaluation of the operational costs of suppliers contracted to provide a service, and their operational expenses must be covered by them and not claimed directly from the program.
STATEMENT OF CAUSE ADSEF does not have a work plan and internal control guidance that clearly defines permissible activities and describes the activities that will be carried out to meet program requirements through the contracting of suppliers and sub-recipients.
POSSIBLE ASSERTED EFFECT ADSEF may be incurring non-allowable costs by reimbursing expenses not properly stipulated in the allowable cost regulations for program administration. Furthermore, the expenses incurred by the sub-recipient are not identified in the database in a manner that allows them to be identified for the preparation of the SEFA.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
(ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process:
i.
There is no written procedure that outlines the process for applying this formula for distributing administrative expenses.
ii.
There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire.
iii.
Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program.
STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs.
POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-033 (See Finding Reference Number 2023-005)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G990229 (TANF – COVID-19) (Federal Award Year: 2021)
2022G996117; 2023996117 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
In addition, 45 CFR 260.31 (b)(1), defines what non-recurrent, short-term (NRST) benefits are. In relation to Pandemic Emergency Assistance Fund (PEAF), the regulation establishes that: “NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.”
STATEMENT OF CONDITION As part of our audit procedures over transactions related to emissions of benefits for the TANF program, we selected five (5) transactions, from a population of fifty-three (53) emissions made during the fiscal year. We noted the following deficiencies:
i.
An emission of benefits for $16,236,447.24 related to PEAF funding was made. We request evidence of an established manual or guide that defines or identifies the need that would be addressed with the issuance of these funds, and the subsequent monitoring of the usage.
ii.
An emission of benefits for $3,633,800 was made related to a bonus. The documentation for this issuance includes an authorization letter establishing a benefit of $800 per child between the ages of 5 and 17 years and 11 months, serving a population of 4,492 participants, for a total of $3,593,600. Later, another authorization letter added $37,000 but did not specify the number of children included in this amendment. The sum of both authorizations is $3,630,600; however, the amount reflected in PRIFAS is $3,633,800. According to the EBT document related to this issuance, the amount issued was $3,596,800 and indicates that the number of participants benefited was 4,974, giving an average benefit of $723.12. In this EBT document, beneficiaries are distributed by region; however, there are 5 beneficiaries who are not assigned to a region, for a total of $4,000.
iii.
An emission of $1,988,000 was made related to an incentive for some beneficiaries. In accordance with an authorization letter, the benefit included $3,500 per participants who worked or participated in an activity leading to employment for 3 months or more. In accordance with the State Plan, active recipients may receive a 6-months period Work Incentive Bonus payment. Per the authorization letter the benefit of $3,500 was issued to 522 participants, for a total of $1,827,000; another authorization letter increased $3,500 in funds. This amount does not agree with the PRIFAS amount of $1,988,000.
ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect costs claims. The TANF program reported four (4) transactions related to indirect costs, and for the Nutrition Assistance for Puerto Rico five (5) transactions were reported. We requested evidence of two (2) transactions for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. There are no processes to reconcile PRIFAS information with emissions reported in EBT, nor to claim indirect costs.
STATEMENT OF CAUSE ADSEF does not have a process for validating EBT issuances with PRIFAS, and this reconciliation is not performed periodically to detect any errors or missing information when accounting for transactions.
POSSIBLE ASSERTED EFFECT The PRIFAS accounting system is not reconciled with EBT reports. This process is not stipulated as part of the internal controls required to ensure that the records used to prepare the financial statement, SEFA, and Federal reports are reconciled, and any discrepancies are identified. In addition, indirect costs calculation may include unallowable costs and not be detected timely.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.
FINDING REFERENCE NUMBER 2023-033 (See Finding Reference Number 2023-005)
FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
(ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
2021G990229 (TANF – COVID-19) (Federal Award Year: 2021)
2022G996117; 2023996117 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
In addition, 45 CFR 260.31 (b)(1), defines what non-recurrent, short-term (NRST) benefits are. In relation to Pandemic Emergency Assistance Fund (PEAF), the regulation establishes that: “NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.”
STATEMENT OF CONDITION As part of our audit procedures over transactions related to emissions of benefits for the TANF program, we selected five (5) transactions, from a population of fifty-three (53) emissions made during the fiscal year. We noted the following deficiencies:
i.
An emission of benefits for $16,236,447.24 related to PEAF funding was made. We request evidence of an established manual or guide that defines or identifies the need that would be addressed with the issuance of these funds, and the subsequent monitoring of the usage.
ii.
An emission of benefits for $3,633,800 was made related to a bonus. The documentation for this issuance includes an authorization letter establishing a benefit of $800 per child between the ages of 5 and 17 years and 11 months, serving a population of 4,492 participants, for a total of $3,593,600. Later, another authorization letter added $37,000 but did not specify the number of children included in this amendment. The sum of both authorizations is $3,630,600; however, the amount reflected in PRIFAS is $3,633,800. According to the EBT document related to this issuance, the amount issued was $3,596,800 and indicates that the number of participants benefited was 4,974, giving an average benefit of $723.12. In this EBT document, beneficiaries are distributed by region; however, there are 5 beneficiaries who are not assigned to a region, for a total of $4,000.
iii.
An emission of $1,988,000 was made related to an incentive for some beneficiaries. In accordance with an authorization letter, the benefit included $3,500 per participants who worked or participated in an activity leading to employment for 3 months or more. In accordance with the State Plan, active recipients may receive a 6-months period Work Incentive Bonus payment. Per the authorization letter the benefit of $3,500 was issued to 522 participants, for a total of $1,827,000; another authorization letter increased $3,500 in funds. This amount does not agree with the PRIFAS amount of $1,988,000.
ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect costs claims. The TANF program reported four (4) transactions related to indirect costs, and for the Nutrition Assistance for Puerto Rico five (5) transactions were reported. We requested evidence of two (2) transactions for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. There are no processes to reconcile PRIFAS information with emissions reported in EBT, nor to claim indirect costs.
STATEMENT OF CAUSE ADSEF does not have a process for validating EBT issuances with PRIFAS, and this reconciliation is not performed periodically to detect any errors or missing information when accounting for transactions.
POSSIBLE ASSERTED EFFECT The PRIFAS accounting system is not reconciled with EBT reports. This process is not stipulated as part of the internal controls required to ensure that the records used to prepare the financial statement, SEFA, and Federal reports are reconciled, and any discrepancies are identified. In addition, indirect costs calculation may include unallowable costs and not be detected timely.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023)
2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures.
STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance.
POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023)
2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures.
STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance.
POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023)
2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450).
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.”
STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures.
STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance.
POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-035 (See Finding Reference Number 2023-007)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.302, requires recipient's and subrecipient's financial management system must provide for the following: (3) maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation; (4) effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303; and (6) written procedures to implement the requirements of § 200.305.
2 CFR 200.305, Federal Payments, establishes that: (a) payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”; (b) for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment.
STATEMENT OF CONDITION As part of our understanding of internal controls and compliance regarding cash management, we obtained a procedures manual. We found the following deficiencies:
1.
The effective date is April 2024.
2.
In the section describing the LIHEAP process, the US Department of Agriculture is mentioned instead of the US Department of Health and Human Services.
3.
It does not identify the personnel responsible for the processes to establish segregation of duties.
4.
In our interviews it was noted that only one person is in charge of all drawdowns, and no proper supervision or review of the documentation is performed.
In addition, a detail of the requests related to the program was obtained; however, this request information does not reconcile with the revenue recognized in PRIFAS. The following deficiencies were identified:
1.
The document includes amounts identified as LIHEAP, which belong to another Federal program, the Low-Income Household Water Assistance Program (ALN 93.499), in the amount of $4,590,528.
2.
The amount of $306,483.12 is presented twice and is only recognized in PRIFAS once.
3.
PRIFAS includes revenue of $3,900,000 related to the COVID-19 portion of funds, which is not included in the breakdown.
From a population of fifty-seven (57) revenue transactions, six (6) transactions were selected to ensure that the correct amounts were requested from the Federal program and that the documents indicated in the manual were included with each petition. The following deficiencies were observed:
1.
The documents included do not contain signatures from the personnel who perform each process.
2.
The documentation included in the manual does not match the documentation included in the documents submitted with each petition.
3.
In an emission of ARPA funding through LUMA, part of the documentation provided was document EMISM210, which stated that the authorized amount was $16,014,374. In a recap made in the document (not signed), the amount of $4,181 was adjusted in the petition, indicating that this amount was rejected by LUMA. In a letter from LUMA, they certified that the total cases reported were 327,499 for a total amount of $16,010,193. A detail of participants was provided, and the total was 327,498, although the benefits were $16,010,193.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF does not have a procedures manual that clearly establishes a segregation of duties, demonstrating compliance with the required internal control components.
POSSIBLE ASSERTED EFFECT This is a systematic deficiency.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal controls process that demonstrates compliance with cash management requirements and appropriate segregation of duties.
FINDING REFERENCE NUMBER 2023-035 (See Finding Reference Number 2023-007)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.302, requires recipient's and subrecipient's financial management system must provide for the following: (3) maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation; (4) effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303; and (6) written procedures to implement the requirements of § 200.305.
2 CFR 200.305, Federal Payments, establishes that: (a) payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”; (b) for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment.
STATEMENT OF CONDITION As part of our understanding of internal controls and compliance regarding cash management, we obtained a procedures manual. We found the following deficiencies:
1.
The effective date is April 2024.
2.
In the section describing the LIHEAP process, the US Department of Agriculture is mentioned instead of the US Department of Health and Human Services.
3.
It does not identify the personnel responsible for the processes to establish segregation of duties.
4.
In our interviews it was noted that only one person is in charge of all drawdowns, and no proper supervision or review of the documentation is performed.
In addition, a detail of the requests related to the program was obtained; however, this request information does not reconcile with the revenue recognized in PRIFAS. The following deficiencies were identified:
1.
The document includes amounts identified as LIHEAP, which belong to another Federal program, the Low-Income Household Water Assistance Program (ALN 93.499), in the amount of $4,590,528.
2.
The amount of $306,483.12 is presented twice and is only recognized in PRIFAS once.
3.
PRIFAS includes revenue of $3,900,000 related to the COVID-19 portion of funds, which is not included in the breakdown.
From a population of fifty-seven (57) revenue transactions, six (6) transactions were selected to ensure that the correct amounts were requested from the Federal program and that the documents indicated in the manual were included with each petition. The following deficiencies were observed:
1.
The documents included do not contain signatures from the personnel who perform each process.
2.
The documentation included in the manual does not match the documentation included in the documents submitted with each petition.
3.
In an emission of ARPA funding through LUMA, part of the documentation provided was document EMISM210, which stated that the authorized amount was $16,014,374. In a recap made in the document (not signed), the amount of $4,181 was adjusted in the petition, indicating that this amount was rejected by LUMA. In a letter from LUMA, they certified that the total cases reported were 327,499 for a total amount of $16,010,193. A detail of participants was provided, and the total was 327,498, although the benefits were $16,010,193.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF does not have a procedures manual that clearly establishes a segregation of duties, demonstrating compliance with the required internal control components.
POSSIBLE ASSERTED EFFECT This is a systematic deficiency.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal controls process that demonstrates compliance with cash management requirements and appropriate segregation of duties.
FINDING REFERENCE NUMBER 2023-036 (See Finding Reference Number 2023-008)
FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, authorization release form, citizenship alien status, social security, income and resources, self-employment expenses, post-secondary student status, 5-7 years old evidence studying or home schooling, care minors/dependents with disabilities, disability status, medical expenses, age and homelessness.
In Regulation to Establish Eligibility Standards for the Nutrition Assistance for Puerto Rico (8684) from ADSEF, Article 27 (A) establishes that: School Requirement established that the person responsible for the service unit, their spouse, or authorized representative must provide evidence that the children between the ages of five (5) and seventeen (17) who are part of the service unit are enrolled in school.
In Article 45 establish that: Income deductions, Part C, Special deductions, Line number 4 established that a deduction of one hundred dollars ($100.00) will be applied to the income for each student who is part of the service unit and is enrolled full-time in a university or post-secondary educational institution. In the Manual of Procedures, Chapter 2, Part A, Line number 2 established that the student deduction is granted to any individual up to the age of 59.
In Article 60 establish that: Recertification Process, Part C established that a new certification period shall not be assigned unless an interview is conducted, the information provided is verified, and the eligibility of the service unit is determined.
In Article 74 establish that: Establishment of the Claim and Collection Procedures, Part F established in cases where the claim arises from benefits being used after the date of death of the sole beneficiary, collection efforts may be directed toward the beneficiary’s estate, authorized representative, or the individual who accessed the benefits.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Eight (8) authorization release form without date.
•
Nine (9) new participant files did not include supervisor approval of the eligibility determination.
•
Four (4) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
One (1) file showed an untimely eligibility determination based on the recertification date.
•
One (1) file was missing documentation verifying family composition and evidence of schooling for dependent minors.
•
One (1) student income deduction was incorrectly applied to a participant who did not meet the age and full-time student criteria.
•
One (1) participant died on August 1, 2022. Death was confirmed on January 27, 2023, and benefits were not terminated until February 17, 2023. The participant had no authorized representative, and recovery of funds is not feasible, as it is unknown who accessed the benefits posthumously.
•
In one case, the amount of income reported in the budget detail was not documented and was based on estimates derived from Social Security income, Medicare deductions, and Cost of Living (COL) adjustments, rather than verified income records.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS None.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-01.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications and participant terminations upon death notification. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-037 (See Finding Reference Number 2023-009)
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Reference according to 2 CFR PART 200, APPENDIX XI (E) (1) (a), for state Lead Agencies and territory Lead Agencies, and for those tribal Lead Agencies with Grant Year 2016 allocations of at least $250,000, children must be under age 13 (or up to age 19, if incapable of self-care or under court supervision), who reside with a family whose income does not exceed 85 percent of state/territorial/tribal median income for a family of the same size, and reside with a parent (or parents) who is working or attending a job-training or education program; or are in need of, or are receiving, protective services. Lead Agencies may choose to provide services during periods of job search. Tribal Lead Agencies may elect to use state or tribal median income (42 USC 9858n(4); 45 CFR sections 98.20(a) and 98.81(b)). Tribal Lead Agencies also have the option for categorical eligibility (considering any Indian child within the service area eligible for services) if the tribe’s median income is below 85 percent of the state median income, provided that services go to those with the highest need.
State, territory, and tribal Lead Agencies may use supplemental funds appropriated by the CARES Act (Pub. L. No. 116-136), the CRRSA Act (Pub. L. No. 116-260), and the ARP Act (Pub. L. No. 117-2) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the coronavirus, without regard to the income eligibility requirements. The Lead Agency may define which workers are considered essential in accordance with any relevant state, territorial, and tribal laws or policies.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 11,139 who were eligible for the Child Care Program.
In one (1) instance, we found that ACUDEN incorrectly issued an eligibility approval to a participant. They granted eligibility for CARES Act funds by classifying the applicant as a first responder when her employment occupation is Hair Stylist based on her employment evidence.
QUESTIONED COSTS $7,416
PERSPECTIVE INFORMATION During the participant eligibility determination, the applicant submitted as employment evidence the individual Income Tax Return, but the application for CARES funding services does not detail the applicant's profession. Additionally, the employment activity evaluation also failed to detail the applicant's profession or field of work. ACUDEN provided us with a communication detailing the sectors classified as first responders, but Hair Stylist was not included. The sample was statistically valid.
In addition. The dollar amount approved as a benefit for this participant was $824 during the period of September 17, 2022, through July 31, 2023, according to the Certificate of Eligibility. Considering that the fiscal year 2023 ending date is 06/30/2023, then the period applicable will be from 10-31-2022 through 06-30-2023 and this represent nine (9) months of services paid to the service provider amounting of $7,416 (9 months X $824). In addition, as stated in the payments detail provided, the month of July 2023 was also paid. Then, considering that the total participant’s population was 11,139 and the sample selected was forty (40) participants, this only one (1) mistake found represents 2.5% of the sample of forty (40) participants (1 divided by 40 (1/40) = 2.5%). For misstatement extrapolation purpose to the population, this would represent an estimate of a potential misstatement of 279 cases [2.5% by 11,139 participants (2.5% x 11,139) = 278.47].
STATEMENT OF CAUSE ACUDEN lacks supervisory review, insufficient controls over eligibility verification of these funds.
POSSIBLE ASSERTED EFFECT An improper eligibility determination increases the risk of noncompliance and may result in improper use of funds. In addition, potential recipients of CARES Act funds may also be affected.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend to ACUDEN to strengthen internal controls to ensure complete and accurate eligibility determination considering all the participant information at all eligibility determination stages of the process.
FINDING REFERENCE NUMBER 2023-038 (See Finding Reference Number 2023-010)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.558) COVID-19 – TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2021G990229 (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, citizen status, social security, income and resources, self-employment expenses, children school attendance, cooperation with the Individual Responsibility Plan and cooperation in the establishment of paternity or in obtaining child support.
In Regulation 8684 to Establish Eligibility Standards for the Temporary Assistance for Needy Families from ADFAN, Chapter IV, Article 1 and 2, establishes that the certification period will be up to a maximum of six (6) months.
In Chapter III, Article 4 Section 4.24 establish the participant will receive the benefit for a maximum period of sixty (60) months in total.
In Chapter VIII, Article 2, Section 2.3, part B, it establishes that any eligible core member who intentionally violates the rules and receives benefits to which they are not entitled will be subject to a claim. In these cases, a collection invoice will be sent.
In Chapter III, Article 3, Section 3.3, part 3, it establishes that the evaluation for determining the incapacity of applications or cases will be the responsibility of the ADSEF Central Level with the information available and will recommend the appropriate action.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Thirty three (33) new participant files did not include supervisor approval of the eligibility determination.
•
Thirteen (13) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
Nine (9) files showed an untimely eligibility determination based on the recertification date.
•
Several documents were missing from the files:
•
Twenty-seven (27) files did not include child support evidence (see Finding Reference Number 2023-027).
•
Twenty-six (26) files without evidence of continued absence and lack of support.
•
Eleven (11) files without evidence of schooling for dependent minors.
•
Nine (9) files did not include signed Individual Responsibility Plan.
•
Two (2) participants that have incorrectly applied exemptions were given excessive benefits and there is no evidence of recapture of the benefit provided.
•
One (1) case in which the participant received the benefit for ninety-nine months when the maximum number of months to receive the benefit is sixty months.
•
One (1) Category C case (disability) in which the benefit was granted to the family and they did not send the authorization to the Medical Social Board, who are responsible for determining eligibility in these cases.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. In addition. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-02.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-038 (See Finding Reference Number 2023-010)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.558) COVID-19 – TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2021G990229 (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, citizen status, social security, income and resources, self-employment expenses, children school attendance, cooperation with the Individual Responsibility Plan and cooperation in the establishment of paternity or in obtaining child support.
In Regulation 8684 to Establish Eligibility Standards for the Temporary Assistance for Needy Families from ADFAN, Chapter IV, Article 1 and 2, establishes that the certification period will be up to a maximum of six (6) months.
In Chapter III, Article 4 Section 4.24 establish the participant will receive the benefit for a maximum period of sixty (60) months in total.
In Chapter VIII, Article 2, Section 2.3, part B, it establishes that any eligible core member who intentionally violates the rules and receives benefits to which they are not entitled will be subject to a claim. In these cases, a collection invoice will be sent.
In Chapter III, Article 3, Section 3.3, part 3, it establishes that the evaluation for determining the incapacity of applications or cases will be the responsibility of the ADSEF Central Level with the information available and will recommend the appropriate action.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Thirty three (33) new participant files did not include supervisor approval of the eligibility determination.
•
Thirteen (13) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
Nine (9) files showed an untimely eligibility determination based on the recertification date.
•
Several documents were missing from the files:
•
Twenty-seven (27) files did not include child support evidence (see Finding Reference Number 2023-027).
•
Twenty-six (26) files without evidence of continued absence and lack of support.
•
Eleven (11) files without evidence of schooling for dependent minors.
•
Nine (9) files did not include signed Individual Responsibility Plan.
•
Two (2) participants that have incorrectly applied exemptions were given excessive benefits and there is no evidence of recapture of the benefit provided.
•
One (1) case in which the participant received the benefit for ninety-nine months when the maximum number of months to receive the benefit is sixty months.
•
One (1) Category C case (disability) in which the benefit was granted to the family and they did not send the authorization to the Medical Social Board, who are responsible for determining eligibility in these cases.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. In addition. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-02.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-039 (See Finding Reference Number 2023-011)
FEDERAL PROGRAM (ALN – 93.560) PAYMENT TO TERRITORIES – ADULTS
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In accordance with the State Plan the following is the list of documents required for the regular verification process: photo Id, residency, citizen status, social security, income and resources, self-employment expenses.
In Regulation 8684 to Establish Eligibility Standards for the Payments to Territories – Adults from ADFAN, Chapter III, Article 3, Section 3.5, establishes that the eligibility period is determined by the Central Level Medical Social Board.
In Chapter VIII, Article 2, Section 2.3, part B, it establishes that any eligible core member who intentionally violates the rules and receives benefits to which they are not entitled will be subject to a claim. In these cases, a collection invoice will be sent.
In Chapter III, Article 3, Section 3.3, part 3, it establishes that the evaluation for determining the incapacity of applications or cases will be the responsibility of the ADSEF Central Level with the information available and will recommend the appropriate action.
In addition, 2 CFR 200.303 (e) requires to take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the Federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for eligibility requirements, we selected a sample of one hundred (100) participants who were active during the fiscal year under audit. During our audit we noted the following deficiencies:
•
Seven (7) cases lacked the documents requested for their initial appointment (photo ID, evidence of residency and evidence of citizenship).
•
Thirty-three (33) new participant files did not include supervisor approval of the eligibility determination.
•
Four (4) files submitted were outside the scope of the audit period, and no information related to our audit period was provided.
•
Fifty-three (53) files showed an untimely eligibility determination based on the recertification date.
•
Six (6) files of Category D case in which the benefit was granted and they did not send the authorization to the Medical Social Board, who are responsible for determining eligibility in these cases.
•
One (1) participant died on March 2022. Death reported in April 2022, they issued the payment the day after his death. The benefit was spent, and there was no recovery process.
Further, the participants' social security number is used to assign the file number, and all physical files are identified with the social security number.
In addition, the files are not uniform, and the documentation from the Nutrition Assistance for Puerto Rico, Payment to Territories and TANF are archived without maintaining an order, legend or uniformity between the regions.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF lacks supervisory review, delays in updating participant information, and insufficient controls over eligibility verification, income documentation, and file maintenance. There are no formal trainings for all regions and locals for the personnel involved in eligibility determination and subsequent follow-up. In addition, ADSEF does not have proper instructions and control over how the information should be archived in the participants’ files.
POSSIBLE ASSERTED EFFECT Improper documentation and ineligible determinations increase the risk of noncompliance and may result in improper benefit payments. ADSEF is not properly safeguarding PPI of participants. In addition, the way information is being filed in the records does not allow for adequate monitoring of the documents and information necessary to comply with Federal regulations.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to strengthen internal controls to ensure complete and accurate eligibility documentation and improve timeliness of recertifications. ADSEF should establish a schedule for continuous training for personnel in charge of eligibility determinations. In addition, other identification numbers should be used for participants instead of the social security number.
FINDING REFERENCE NUMBER 2023-040 (See Finding Reference Number 2023-012)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY // REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 27,038 who were eligible for the crisis subsidy program. Of the sample of participants, only eight (8) files were submitted to us for evaluation. This represents a scope limitation.
In relation to the requirement of Performance Reporting and Special reporting, we requested the applicable reports submitted during the fiscal year 2022-2023, the reports submitted for our review were applicable for the fiscal year 2023-2024. This represents a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with these compliance requirements.
STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing. In addition, ADSEF does not have adequate controls and safeguards over the reports submitted to the Federal government.
POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with the eligibility and reporting requirements because the information in the files and applicable reports was not available for review.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time. In addition, improve its system for filing reports submitted to the Federal government.
FINDING REFERENCE NUMBER 2023-040 (See Finding Reference Number 2023-012)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT ELIGIBILITY // REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general.
STATEMENT OF CONDITION As part of our audit procedures for eligibility requirements, we selected forty (40) participants from a population of 27,038 who were eligible for the crisis subsidy program. Of the sample of participants, only eight (8) files were submitted to us for evaluation. This represents a scope limitation.
In relation to the requirement of Performance Reporting and Special reporting, we requested the applicable reports submitted during the fiscal year 2022-2023, the reports submitted for our review were applicable for the fiscal year 2023-2024. This represents a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with these compliance requirements.
STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing. In addition, ADSEF does not have adequate controls and safeguards over the reports submitted to the Federal government.
POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with the eligibility and reporting requirements because the information in the files and applicable reports was not available for review.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time. In addition, improve its system for filing reports submitted to the Federal government.
FINDING REFERENCE NUMBER 2023-041 (See Finding Reference Number 2023-013)
FEDERAL PROGRAM (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2101PRFPSS (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 45 CFR section 1357.32(d) establishes that funds used to provide services in FY 1994 and in subsequent years will be federally reimbursed at 75 percent of allowable expenditures. (This is the same Federal financial participation rate as Title IV-B, Subpart 1.) Federal funds, however, will not exceed the amount of the State's allotment.
(1)
The State's contribution may be in cash, donated funds, and non-public third party in-kind contributions.
(2)
Except as provided by Federal statute, other Federal funds may not be used to meet the matching requirement.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with matching requirements, we selected the Grant Award 2101PRFPSS, which closed during the audit period from July 1, 2022, to June 30, 2023. ADFAN reported matching expenditures of $876,556.68. However, based on our review of the supporting database, actual matching expenditures amounted to only $808,043.75. This indicates that the required 25% match was not met. Additionally, according to the internal controls interviews and the information provided, the employees are not up to date with the program's Federal regulations. In the interview, they indicated that the percentage they used was 70% and 30% because they had always calculated it that way; they had not consulted the NOA, which indicates it is 75% and 25%.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Written internal control procedures should include proper training and that the notice of awards be discussed with the personnel in charge of working with all requirements, and monitoring compliance. ADFAN did not comply with the required matching for the 2101PRFPSS in the amount of $68,514.93.
STATEMENT OF CAUSE ADFAN does not have written internal controls procedures to ensure expenditure is monitored and aligned with the required matching percentage specified in the grant award.
POSSIBLE ASSERTED EFFECT ADFAN may be subject to a reduction in Federal funding if it fails to comply with program requirements.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN establish written internal control procedures and implement them, to monitor the expenditure of allocated funds to ensure compliance with the required matching contribution.
FINDING REFERENCE NUMBER 2023-042 (See Finding Reference Number 2023-014)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2022G996117 (Federal Award Year: 2022)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with the Compliance Supplement every fiscal year, a state must maintain an amount of “qualified state expenditures” (as defined in 42 USC 609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the state’s historic state expenditures.
In addition, it states that the applicable percentage for each fiscal year is 80 percent of the amount of non-Federal funds the state spent in FY 1994 on AFDC or 75 percent if the state meets the TANF work participation rate requirements (42 USC 607(a)) for the fiscal year. This is termed “basic MOE”, and the requirement is based on the Federal fiscal year. Any MOE expenditures above this required amount are referred to as “excess MOE”. In accordance with the regulation, the amount of MOE required for Puerto Rico is $21,185,453.
STATEMENT OF CONDITION As part of our internal controls and compliance procedures for compliance with the MOE requirement, we requested the Grant Award report for 2022, covering the period from October 1, 2021, to September 30, 2022, to verify compliance with the MOE.
The report covering this period reflects an MOE of $17,686,285, a deficiency of $3,499,168. Additionally, the reported expense amounts could not be validated against the PRIFAS database, except for line 5(a) for Basic Assistance, reported in column B.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is systematic. Puerto Rico government agencies fail to demonstrate that they maintain constant communication and follow up on information requests to ensure that all required documentation is available to complete reports.
Additionally, procedures and internal controls manuals should provide for and ensure the segregation of duties and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare the financial statement and SEFA. ADSEF's failure to support reported amounts with verifiable documentation and the absence of independent review increase the risk of inaccurate or misstated financial data being reported to the Federal awarding agency.
STATEMENT OF CAUSE According to discussions with ADSEF personnel, since 2018, another agency of the Government of Puerto Rico, the Health Insurance Administration (ASES, by its Spanish Acronym), has not provided information to comply with the spending levels of other state programs.
In addition, during our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
POSSIBLE ASSERTED EFFECT ADSEF is not in compliance with reporting state program expenditure levels, as required by program regulations.
Additionally, ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported. Puerto Rico government agencies must maintain constant communication and follow-up on information requests to ensure that all required documentation is available to complete reports
FINDING REFERENCE NUMBER 2023-043 (See Finding Reference Number 2023-015)
FEDERAL PROGRAM (ALN – 93.558) COVID-19 – TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2021G9990229 (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In relation to the Pandemic Emergency Assistance Fund, States, tribes and territories (grantees) may use funds to provide certain non-recurrent, short term (NRST) benefits (described in section A. 3. a. 2.). Additionally, they may use funds for administrative costs (up to a 15-percent cap for states and territories and up to the negotiated cap for tribes). All grantees must use funds to supplement, and not supplant, other Federal, state, tribal, territorial, or local funds.
In addition, for the purposes of PEAF, NRST benefits mean cash payments or other benefits that meet the regulatory definition (45 CFR 260.31(b)(1)) but are limited to those that fall into the specific expenditure reporting category mentioned in the legislation (line 15 of the ACF-196R (PDF), the state financial reporting form for the TANF program). In other words, for this fund, NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.
2 CFR section 200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures on internal controls and compliance related to the Level of Effort – Supplement not Supplant requirement, ADSEF staff were asked to indicate how the amount of the benefit to be granted was determined, the identified need for granting the benefit, and how the use of these benefits would be monitored. This information was not provided; in interviews, they indicated that the benefit was granted to provide an additional benefit and without restrictions. Additionally, a list of participants who benefited from this assistance was requested but was not provided. This represents a scope limitation.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is systematic. ADSEF does not maintain an internal control structure that allows for the communication of additional funds or modifications to the terms and conditions of grant awards to those responsible for program administration, so that they can adequately document the processes for granting benefits under each program.
STATEMENT OF CAUSE ADSEF did not maintain an adequate internal controls process that documented the justification for issuing the benefit with these funds, validated that this issuance of benefits was to supplement and not supplant the aid provided by regular TANF funds, created and distributed staff guidance on supplement-not-supplant, and maintained evidence of a final reconciliation of expenses incurred with these funds with the PRIFAS accounting system used for the preparation of the financial statement and SEFA.
POSSIBLE ASSERTED EFFECT ADSEF was unable to provide evidence of internal controls created and documented regarding how these funds were processed, the criteria used, the needs identified, and the personnel responsible for each process executed with these funds.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written adequate internal controls process that documented the justification for issuing the benefit with these funds, validated that this issuance of benefits was to supplement and not supplant the aid provided by other Federal funds, created and distributed staff guidance on supplement-not-supplant, and maintained evidence of a final reconciliation of expenses incurred with these funds with the PRIFAS accounting system used for the preparation of the financial statement and SEFA.
FINDING REFERENCE NUMBER 2023-044 (See Finding Reference Number 2023-016)
FEDERAL PROGRAM (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2101PRFPSS (Federal Award Year: 2021)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 45 CFR section 1357.32(d) establishes that the program contains assurances that not more than 10 percent of expenditures under the plan for any fiscal year with respect to which the State is eligible for payment under section 629d of this title for the fiscal year shall be for administrative costs, and that the remaining expenditures shall be for programs of family preservation services, community-based family support services, family reunification services, and adoption promotion and support services, with significant portions of such expenditures for each such program. According to the Compliance Supplement, the portion established for expenses by category is 20%.
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with earmarking requirements, we selected the Grant Award 2101PRFPSS, which closed within our audit period from July 1, 2022, to June 30, 2023, to assess the allocation and use of funds across the required program categories. Based on our evaluation of the documentation provided by ADFAN, we found that expenditures in each of the following categories: family preservation services, community-based family support services, time-limited family reunification services, and adoption promotion and support services did not meet the 20% minimum allocation. Additionally, we noted that administrative expenditures related to caseworker payroll exceeded the 10% cap.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. ADFAN does not have written internal control and compliance procedures that clearly identify the process to monitor this requirement and the person responsible.
STATEMENT OF CAUSE ADFAN lacks adequate internal controls to effectively monitor whether expenditures within each category align with allocated funding and comply with applicable program requirements.
POSSIBLE ASSERTED EFFECT ADFAN’s failure to adhere to program requirements may adversely impact its ability to receive full Federal funding under the program.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADFAN establish written internal control procedures that provide for the monitoring of the expenditure of allocated funds of each category, and the person responsible for executing this process in order to comply with the corresponding earmarking requirement.
FINDING REFERENCE NUMBER 2023-045 (See Finding Reference Number 2023-017)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 45 CFR sections 264.1(c) and (e)) and 42 USC 608(a)(7)(C)(ii) establishes that the average monthly number of families that include an adult or minor child head of household, or the spouse of the head of household, who has received assistance under any state program funded by Federal TANF funds for more than 60 countable months (whether or not consecutive) may not exceed 20 percent of the average monthly number of all families to which the state provided assistance during the fiscal year or the immediately preceding fiscal year (but not both), as the state may elect. To make this determination for a fiscal year, the average monthly number of families with a head of household or spouse of a head of household who received assistance for more than 60 months would be divided by the average monthly number of families that received assistance in that fiscal year, or, if the state chooses, in the previous fiscal year.
STATEMENT OF CONDITION As part of our understanding and testing of internal controls and compliance, we requested evidence of how compliance with this requirement is monitored. In the interviews conducted, we were told that no participant could receive program assistance for more than 60 months. However, in our participant eligibility test, out of a sample of one hundred (100) beneficiaries, we found that one (1) participant had received TANF benefits for a total of 99 months. Additionally, we were not provided with any procedures manual that they have implemented that demonstrate compliance with this requirement. We requested a list of participants that could be generated by the Case Management and Information System (SAIC, by its Spanish Acronym), but this information was not provided. This represents a scope limitation.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. ADSEF could not provide clear evidence of how it monitors compliance with this requirement.
STATEMENT OF CAUSE ADSEF does not have an internal control structure that provides compliance with the earmarking requirement, related to the maximum benefit period.
POSSIBLE ASSERTED EFFECT ADSEF has not established an adequate internal control procedure that provides an adequate structure for documenting compliance with this requirement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADSEF management establish written procedures that clearly identify how compliance with this requirement will be monitored.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
(b)
The recipient's and subrecipient's financial management system must provide for the following:
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes.
(5)
Comparison of expenditures with budget amounts for each Federal award.
(6)
Written procedures to implement the requirements of § 200.305.
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed:
•
Transactions that weren't related to the fiscal year being reported were included in the initial financial data.
•
The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported.
•
Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process.
•
Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156.
PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017).
STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures.
POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-048
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBERS ALL MAJOR PROGRAMS
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR § 200.512 Report Submission, (a) (1) 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. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.
STATEMENT OF CONDITION The PRDF did not submit the Data Collection Form and Reporting Package to the Federal Audit Clearinghouse of fiscal year ending June 30, 2023 during the required period.
QUESTIONED COSTS None
PERSPECTIVE INFORMATION The PRDF was unable to provide a timely financial statement and the Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures.
STATEMENT OF CAUSE The PRDF did not have an effective accounting system and procedures to assure that the required financial statement and SEFA, and supporting documentation was made available for audit purposes within the required period established to comply with the Federal regulations.
POSSIBLE ASSERTED EFFECT The PRDF did not comply with the submission date required for the Data Collection Form and Reporting Package; this could affect the continuance and new approvals of Federal funds.
IDENTIFICATION AS A
REPEAT FINDING This is a repeat finding (Finding Number 2022-04).
RECOMMENDATION We recommend the PRDF maintain adequate accounting records related to the non-Federal and Federal funds in order to properly prepare the financial statement and SEFA accurately, and in a timely manner. In addition, PRDF needs to implement adequate internal controls procedures in order to ensure that the supporting documentation is available in a timely manner.
FINDING REFERENCE NUMBER 2023-049 (See Finding Reference Number 2023-020)
FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
211PR476V1003/4 – ARPA (Federal Award Years: March 11, 2021 through September 30, 2025)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that (a) each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In section (b), the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
…
(6)
written procedures to implement the requirements of § 200.305 and
(7)
written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected two reports that closed during our fiscal year audit. With respect with the Grant Award 221PR426S7003 and 221PR426S7004 we noted the following deficiency:
•
The auditee was unable to provide supporting documentation for the administrative expenditures that reconcile the figures reported with the PRIFAS accounting system.
•
In addition, for all the Federal awards mentioned above, based on internal control interviews, we found that there is no designated individual responsible for independently reviewing the reports prior to submission to ensure accuracy and consistency with source data.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-050
FEDERAL PROGRAMS (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER
(ALN – 93.489; 93.575 AND 93.596) COVID-19 – CHILD CARE CLUSTER
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS G1801PRCCDF; G1901PRCCDD; G2001PRCCC3; G2001PRCCDD; G2001PRCCDX; G2101PRCCC5; G2101PRCCDD; G2101PRCCDD-SUB; G2101PRCCDT; G2201PRCCDD; G2201PRCCDD-SUB; G2201PRCCDT; G2301PRCCDD; G2301PRCCDT (Federal Award Years: 2018 through 2023)
G2101PRCDC6, G2101PRCSC6 (Federal Award Years: March 11, 2021 through September 30, 2026)
ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – SPECIAL REPORTS FOR FFATA
TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY
CRITERIA In accordance with 2 CFR Part 170, establishes that recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The non-Federal entity or Federal agency must report each obligating action to http://www.fsrs.gov. For subaward information, report no later than the end of the month following the month in which the obligation was made.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirements, we interviewed staff responsible for the Child Care Cluster Program, and we were told that they did not submit the required Federal Funding Accountability and Transparency Act (FFATA) reports during the 2022-2023 fiscal year.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION ACUDEN provided details of those awards or contracts with their amendments totalizing 1,165 items (between Subawards and their amendments) that could be subject to the FFATA requirements. However, although ACUDEN had available the data related to the Subawards and their amendments issued during the fiscal year 2022-2023, they did not perform the special reporting related to FFATA compliance requirement.
STATEMENT OF CAUSE ACUDEN staff were unaware of the requirements related to the FFATA applicable to the Child Care Cluster Program’s funds they manage.
POSSIBLE ASSERTED EFFECT ACUDEN is in non-compliance with the requirements to report through the FFATA Subaward Reporting System (FSRS) platform. This condition does not allow for the transparency that this report requires.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend management to provide training and technical assistance to the personnel they designate to monitor all the funds delegation contracts that meet the requirements to be reported on the FSRS portal, and to be able to keep track of when they had to be reported, the date in which they submitted the information to the portal, and all the elements required to be submitted on the platform.
FINDING REFERENCE NUMBER 2023-051 (See Finding Reference Number 2023-021)
FEDERAL PROGRAM (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that:
(a)
Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450.)
(b)
The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
…
(6)
Written procedures to implement the requirements of § 200.305 and
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for LIHEAP program, we selected two reports submitted during our fiscal year. We noted that the administrative expenditures do not reconcile with the accounting information from PRIFAS. In addition, for the amount of encumbrances of $11,032,784.51, the amount of $9,943,769.52 was not supported by a detail.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF– 425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement.
FINDING REFERENCE NUMBER 2023-052
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 45 CFR, Subtitle B, Chapter II, Part 265.7, states that:
(a)
Each State's quarterly reports [the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), the SSP-MOE Data Report, and the Work Outcomes of TANF Exciters Report] must be complete and accurate and filed by the due date.
(b)
For a disaggregated data report, “a complete and accurate report” means that:
(1)
The reported data accurately reflects information available to the State in case records, financial records, and automated data systems, and includes correction of the quarterly data by the end of the fiscal year reporting period;
(2)
The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3)
The State reports data for all required elements (i.e., no data is missing);
(4)
(i)
The State provides data on all families; or
(ii)
If the State opts to use sampling, the State reports data on all families selected in a sample that meets the specification and procedures in the TANF Sampling Manual (except for families listed in error); and
(5)
Where estimates are necessary (e.g., some types of assistance may require cost estimates), the State uses reasonable methods to develop these estimates.
(c)
For an aggregated data report, “a complete and accurate report” means that:
(1)
The reported data accurately reflects information available to the State in case records, financial records, and automated data systems;
(2)
The data are free from computational errors and are internally consistent (e.g., items that should add to totals do so);
(3)
The State reports data on all applicable elements; and
(4)
Monthly totals are unduplicated counts for all families (e.g., the number of families and the number of out-of-wedlock births are unduplicated counts).
In addition, 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.
In section (b) the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (6) written procedures to implement the requirements of § 200.305 and (7) written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our procedures for understanding internal controls for the preparation of ACF-199 reports, we request a procedures manual on how these reports are processed and the personnel responsible for each process. ADSEF did not provide us with a manual describing the data collection process, how the information provided by the regions is validated, and the individuals responsible for submitting the reports.
To evaluate compliance with the reported data, the quarter ending June 2023 was selected. From this period, forty (40) participants were selected. ADSEF was required to provide us with the corresponding participant worksheet appendix and the physical file to corroborate the information included in the report. ADSEF provided us with evidence of the hand-completed forms; however, we were not provided with the physical files to validate the information included in each document. This represents a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. After sample selection, ADSEF did not demonstrate a control structure that would allow the files to be located within a reasonable period of time.
STATEMENT OF CAUSE ADSEF does not maintain an internal control structure for participant files that allows each file to be located within a reasonable period of time.
Additionally, they do not have internal control procedure manuals that allow for the validation of the process they carry out and the individuals responsible for compiling, validating, and submitting this report.
POSSIBLE ASSERTED EFFECT ADSEF may be including data in this report that has not been corroborated with the participants' physical records.
The lack of a uniform process for archiving participant records prevented them from providing us with evidence of the requested records.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish internal control procedures manuals that clearly outline the processes to be followed for data collection, recording, and reporting. Additionally, standardize the way documents related to participant files are filed.
FINDING REFERENCE NUMBER 2023-053 (See Finding Reference Number 2023-022)
FEDERAL PROGRAM (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2211PRSOSR (Federal Award Year: 2022)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – PERFORMANCE
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 42 U.S. Code §1397e and the requirements of the Post-Expenditure Report (OMB #0970-0234), states and territories must submit an annual Post-Expenditure Report to the Office of Community Services no later than six months following the end of the fiscal year. The report must include, among other elements, clearly defined eligibility criteria for program beneficiaries and an accurate accounting of expenditures, including the amount of Temporary Assistance for Needy Families (TANF) funds transferred to the Social Services Block Grant (SSBG).
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION During our review of the submitted Post-Expenditure Report and supporting documentation, we identified the following deficiencies:
(1)
The eligibility criteria for beneficiaries were not established or documented within the report and,
(2)
The reported amounts of TANF funds transferred to SSBG do not reconcile with the data provided in the PRDF’s internal database. Although the report specifies that expenditure should be based on current balances rather than budgeted amounts, the transfer in question was based on the approved budget.
(3)
In the database used to prepare the financial statement and SEFA, the expense related to the transfer of funds from TANF to SSBG reflected an expense of $136,958.70. This database includes credits that eliminate the program expense in the expense account identified as E9050. Subsequently, the ADFAN Finance Director included other transactions in the database that adjusted the expense, reflecting a total balance of $6,798,836.38 (see Finding 2023-016).
(4)
In addition, internal control interviews revealed that there is no designated individual responsible for reviewing the information entered to the report by the preparer, increasing the risk of reporting errors.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training and segregation of duties when reporting (preparer and reviewer not being the same person).
STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered in the Post-Expenditure Report.
POSSIBLE ASSERTED EFFECT Failure to meet the reporting requirements may lead to noncompliance with Federal regulations, reduced transparency and accountability in the use of Federal funds, and potential implications for future funding or audit findings.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADFAN to establish and document eligibility criteria in accordance with Federal reporting requirements. Reconcile TANF transfers with internal records to ensure accurate reporting and ensure that all expenditures reported are based on actual balances rather than budgeted projections. ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with federal reporting requirements.
FINDING REFERENCE NUMBER 2023-054 (See Finding Reference Number 2023-023)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS (Federal Award Years: 2021 through 2022)
2211PRSOSR (Federal Award Years: 2021 through 2022)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization.
The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(6)
written procedures to implement the requirements of § 200.305 and
(7)
written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period.
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grants Awards 2101PRFPSS and 2111PRSOSR, which closes in the audit period from July 2022 to June 2023, to validate the recorded amounts.
Upon evaluating the report for the Grant Award 2101PRFPSS, we found the following deficiencies:
(1)
The total Federal expenditure reported on line (e) does not match the database provided by the PRDF.
(2)
The matching expenditure on line (j) does not match the database provided by the PRDF, and
(3)
The report was not submitted within the established deadline, and an extension was granted to settle and report the funds until March 31, 2023, and they submitted on August 10, 2023.
For both Grants Awards we found the following deficiencies:
(4)
The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis.
(5)
During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA.
STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the statement of condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements.
POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN ensures the SF– 425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.
FINDING REFERENCE NUMBER 2023-054 (See Finding Reference Number 2023-023)
FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES
(ALN – 93.667) SOCIAL SERVICES BLOCK GRANT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRFPSS (Federal Award Years: 2021 through 2022)
2211PRSOSR (Federal Award Years: 2021 through 2022)
ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR § 200.302 (a) establishes that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. In addition, the SF-425 Federal Financial Report requires the reporting of financial activities related to Federal awards. The accounting basis used for reporting expenditures (whether cash or accrual) must align with the accounting system employed by the recipient organization.
The 2 CFR § 200.302 (b), establish that the recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(6)
written procedures to implement the requirements of § 200.305 and
(7)
written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
The 2 CFR section 200.328(c) establishes that the recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period.
The 2 CFR §200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance for reporting requirements, we selected the Grants Awards 2101PRFPSS and 2111PRSOSR, which closes in the audit period from July 2022 to June 2023, to validate the recorded amounts.
Upon evaluating the report for the Grant Award 2101PRFPSS, we found the following deficiencies:
(1)
The total Federal expenditure reported on line (e) does not match the database provided by the PRDF.
(2)
The matching expenditure on line (j) does not match the database provided by the PRDF, and
(3)
The report was not submitted within the established deadline, and an extension was granted to settle and report the funds until March 31, 2023, and they submitted on August 10, 2023.
For both Grants Awards we found the following deficiencies:
(4)
The accounting basis should be Cash Basis instead of Accrual Basis, according to the accounting system used. Additionally, they provided a Procedures Manual for the Finance and Budget Divisions, approved in 2009 and delivered in Word format, which states that the accounting basis is “accrual”, even though their current system operates on a cash basis.
(5)
During the internal control’s interviews, we found that there is no designated person responsible for reviewing the information entered by the preparer.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem. Procedures and internal controls manuals should provide for and ensure the segregation of duties, training, and the reconciliation of financial information reported to Federal agencies against the accounting records used to prepare financial statement and SEFA.
STATEMENT OF CAUSE ADFAN does not have internal controls to effectively review the process and comply with the reporting requirements. The absence of effective internal controls at ADFAN to review processes and ensure compliance with reporting requirements can be attributed to inadequate organizational structure and insufficiently defined roles and responsibilities. There is no designated individual or team responsible for overseeing the accuracy and completeness of financial data entered reports. As mentioned above in the statement of condition, this responsibility falls under one person and does not have segregation of duties. This gap in accountability stems from a lack of internal review and insufficient oversight mechanisms, which restrains the organization's ability to ensure that reports are fully aligned with the required compliance standards. Additionally, there is a lack of training or resources dedicated to maintaining and monitoring compliance which contributes to the failure in reporting requirements.
POSSIBLE ASSERTED EFFECT ADFAN does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports for the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that ADFAN ensures the SF– 425 is completed using the appropriate accounting basis consistent with the organization’s financial system. Additionally, ADFAN should establish and implement internal control procedures that include formal review process to verify the accuracy and completeness of the reported information and designate responsible personnel for the review and approval of reports prior to submission to ensure compliance with Federal reporting requirements.
FINDING REFERENCE NUMBER 2023-055 (See Finding Reference Number 2023-024)
FEDERAL PROGRAM (ALN – 96.001) SOCIAL SECURITY–DISABILITY INSURANCE
U.S. SOCIAL SECURITY ADMINISTRATION
AWARD NUMBERS 1804RQD100; 1904RQD100; 2004RQD100; 2104RQD100; 2204RQD100; 2304RQD100 (Federal Award Years: 2018 through 2023)
ADMINISTRATION OFFICE OF THE SECRETARIAT
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA According to the Program Operations Manual (POMS) DI 39506.203-Updating and Reconciling Unliquidated Obligations published by the Social Security Administration (SSA), legitimate unliquidated obligations must be backed up by records or papers that explain the nature of the obligations and provide evidence for the amounts reported. It is also crucial that the agency's reported unliquidated obligations reflect any modifications or cancellations of Consultative Examinations (CE) and Medical Evidence of Record (MER) authorizations. State authorities should check CE authorizations to see if the unliquidated obligation is an authorization that is still in existence and evaluate unliquidated obligations at least once a month to cancel those that are no longer valid.
POMS 39506.210 Preparations Instructions for Form SSA-4513 instructs the State Agency to check the appropriate box in the report to indicate the attachment of Form-871.
Uniform Guidance at 2 CFR §200.302 Financial Management Section (a) establish the administrative requirements for the program, which include the requirement that state and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
STATEMENT OF CONDITION The State Agency Report of Obligations for SSA Disability Programs, Form Report SSA-4513, was incomplete and inaccurate. During the audit procedures the following deficiencies were noted by us:
i.
It was not specified in the Puerto Rico Disability Determination Services (PR-DDS) Accounting Department's Form SSA-4513 for September 2022 and June 2023 if Form SSA-871, State Agency Schedule for Equipment Purchases for SSA Disability Programs, had to be included with Form SSA-4513 for FYs 2023, 2022, 2021, 2020, 2019, and 2018. Whether this was necessary or not is unknown.
ii.
Information about unliquidated obligations for FYs 2023, 2022, 2021, 2020, 2019, and 2018 were absent from September 2022 Form SSA-4513.
iii.
Information regarding Unliquidated Obligations for each of the specified reporting periods was absent from June 2023 Form SSA-4513.
1)
FY 2023's unliquidated obligations are not detailed. In its Form SSA-4513, the PR-DDS included unliquidated commitments, which accounted for 20% of the overall obligation balances.
2)
The reported balances of unliquidated commitments for FY 2022 are not supported by any information. In its Form SSA-4513, the PR-DDS included unliquidated commitments, which accounted for 8% of the overall obligation balances.
3)
Reported balances of unliquidated debts for FYs 2021, 2020, and 2019 are not supported by any information.
iv.
There were discrepancies between the accounting system and the total amount of disbursements on Form SSA-4513 for June 2023, and no observations were submitted in the report remarks section.
1) $237,231 discrepancy in FY 2022
2) $40,907 discrepancy in FY 2021
3) $8,800 discrepancy in FY 2020
4) $33,458 discrepancy in FY 2019
5) $49,179 discrepancy in FY 2018
v.
The PR-DDS paid back $112,443 to the Puerto Rico Treasury Department in fiscal year 2023 to offset FY 2018 expenses that were not fully utilized in prior years. Because an expense is reported at the time a request is registered by the PR-DDS Accounting Department Special Payer, this resulted in an overstatement in the Schedule of Expenditures of Federal Awards and in the quarterly reports.
vi.
The PR-DDS Accounting Department received a request refund of $1,242,212 from the SSA for fiscal years 2019, 2020, and 2021 during March 2023 SSA-4513. Because there was not enough evidence in the March report to warrant an increase in obligations, the request was based on excess withdrawals exceeding total commitments recorded in FORM SSA-4513 for March 2023. In fiscal year 2023, $397,740 was repaid by the PR-DDS Accounting Department.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. Information needed to effectively generate financial reports should be available through the financial management system.
STATEMENT OF CAUSE Internal controls is not in place in the PR-DDS Accounting Department to ensure that vendor payments are processed on schedule. Furthermore, as mandated by DI 39506.203, the PR-DDS Accounting Department has not put monitoring measures in place to routinely assess unliquidated commitments. Furthermore, the PR-DDS Accounting Department lacks internal procedures for recording discrepancies between financial reporting and accounting systems.
POSSIBLE ASSERTED EFFECT The PR-DDS raises the possibility of incurred costs without the option to obtain reimbursement from the Federal grant if appropriate procedures are not in place to pay suppliers on time and liquidate obligations on time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the Accounting Department of PR-DDS establish procedures to make sure Form SSA-4513 is properly examined, recorded, and compliant with POMS DI 39506.203.
To cancel commitments that are no longer valid, we advise the PR-DDS Accounting Department to check unliquidated obligations at least once a month. For FYs 2020 and 2021, we advise the PR-DDS to ascertain the number of disbursements, restrict the reimbursement to that sum prior to deducting money, and repay SSA for any overdrafts that remain. Furthermore, we recommend a formal reconciliation between the quarterly reports and the accounting system-documented disbursements, with an explanation of any discrepancies included in remarks of the Form SSA-4513.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
…
(6)
Written procedures to implement the requirements of § 200.305 and
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies:
i.
Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number.
ii.
The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request.
iii.
In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred.
iv.
In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
(ALN – 93.560) PAYMENT TO TERRITORIES – ADULT
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT REPORTING – FINANCIAL
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that:
“(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450.
(b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337):
(1)
Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity.
(2)
Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand.
(3)
Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation.
(4)
Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303.
…
(6)
Written procedures to implement the requirements of § 200.305 and
(7)
Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.
STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies:
i.
Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number.
ii.
The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request.
iii.
In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred.
iv.
In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000.
QUESTIONED COSTS Undetermined.
PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered.
ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency.
STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated.
ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual.
POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
FINDING REFERENCE NUMBER 2023-057 (See Finding Reference Number 2023-026)
FEDERAL PROGRAM (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO
U.S. DEPARTMENT OF AGRICULTURE
AWARD NUMBERS 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023)
211PR476V1003/4 – ARPA (Federal Award Years: March 11, 2021 through September 30, 2025)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – EBT RECONCILIATION
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with Compliance Supplement and the State Plan, the EBT services provider makes payments to authorized retailers, network, third party providers, and financial institutions on behalf of the Government of Puerto Rico for benefits accessed and distributed to recipients daily. The EBT services provider is reimbursed as authorized by the Popular Bank of Puerto Rico (PBPR). Payments are recorded and compared to the Daily Activity File and Daily Payments Summary File prepared by the EBT services provider for the Department of the Family. EBT system reports provide these and other standardized computer reports as well as ad hoc access to EBT system data to perform the following key reconciliation:
1
Benefits authorized = benefits posted.
2
Benefits accessed by recipients (net EBT account debits/credits) = benefit amount transactions approved by the EBT services provider.
3
Net EBT account debits/credits = amount paid to merchants and financial institutions, “+/-” authorized adjustments.
4
Amount paid to merchants and financial institutions = funds requested by the EBT services provider, “+/-” authorized adjustments.
2 CFR §200.303 (a) establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
STATEMENT OF CONDITION As part of our audit of compliance with the EBT reconciliation requirements for the fiscal year ended June 30, 2023, we identified the following deficiencies:
•
ADSEF was unable to provide updated written reconciliation procedures or manuals.
•
No evidence was provided to show that EBT benefits were reconciled or matched to Federal drawdowns (SF-425 or PMS).
•
When asked about the assessment of SOC reports or vendor reviews, staff were unaware that such reports were required. The report was requested to EBT processor when we asked for it.
Additionally, written procedure manuals were requested; however, management indicated that no such manuals were in place at the time. A procedure manual was subsequently created for January 2025, but it lacks clarity regarding specific employee roles and responsibilities. After multiple interviews, we were able to identify the area in charge of the reconciliation process, they provided with a manual from 2012, which was not updated with the data currently used.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, the evidence provided to support the EBT reconciliation consisted solely of the receipt of the FIN-052 report and the manual entry of its data into Excel spreadsheets, and the SOC report from EBT provider. After multiple attempts to gain a comprehensive understanding of the reconciliation process, we were able to identify the people involved in the reconciliation process and the documents used. They finally provided with a written manual procedure, but was from 2012, which does not comply with Uniform Guidance requirements and documentation actually used.
STATEMENT OF CAUSE ADSEF deficiencies stem from the absence of formal updated written reconciliation procedures, inadequate internal controls over EBT operations, lack of staff training, and unclear assignment of responsibilities related to reconciliation and oversight.
POSSIBLE ASSERTED EFFECT ADSEF lack of updated written reconciliation process increases the risk of undetected errors or irregularities in EBT transactions, potential misstatements in Federal financial reports, and unaccounted variances between Federal funding and benefit disbursements. It also limits the agency’s ability to monitor program performance and meet audit and compliance obligations.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF develop and implement updated formal, written reconciliation procedures, clearly outlining roles, responsibilities, and the frequency of reconciliations. Additionally, we advise providing staff with comprehensive training on reconciliation protocols and internal control requirements to ensure consistency and compliance.
FINDING REFERENCE NUMBER 2023-058 (See Finding Reference Number 2023-027)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – INCOME ELIGIBILITY AND VERIFICATION SYSTEM
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Each state shall participate in the Income Eligibility and Verification System (IEVS) required by Section 1137 of the Social Security Act as amended. Under the State Plan the state is required to coordinate data exchanges with other federally assisted benefit programs, request and use income and benefit information when making eligibility determinations and adhere to standardized formats and procedures in exchanging information with other programs and agencies. Specifically, the state is required to request and obtain information as follows (42 USC 1320b-7; 45 CFR section 205.55):
a.
Wage information from the state Wage Information Collection Agency (SWICA) should be obtained for all applicants at the first opportunity following receipt of the application, and for all recipients on a quarterly basis.
b.
Unemployment Compensation (UC) information should be obtained for all applicants at the first opportunity, and in each of the first three months in which the individual receives aid. This information should also be obtained in each of the first three months following any recipient-reported loss of employment. If an individual is found to be receiving UC, the information should be requested until benefits are exhausted.
c.
All available information from the Social Security Administration (SSA) for all applicants at the first opportunity.
In addition, in accordance with the State Plan, other internal controls applied by TANF staff to identify employment status and earnings of individuals are the: State Wage Information Collection Agency (SWICA) and the Beneficiary and Earnings Data Exchange (BENDEX). Through our Office of Information System, TANF caseload is cross checked with their database to identify participants that may be working. These systems create a list of participants which is reviewed by the eligibility determination technician.
STATEMENT OF CONDITION During our process of understanding internal controls regarding compliance with this requirement, in the interviews conducted with the regions and local authorities, only one of the five regions visited indicated that they received the SWICA and BENDEX lists monthly. However, ADSEF headquarters indicated that they did not have a memorandum of understanding with the relevant state agencies for the 2022-2023 fiscal year.
In the other regions, we were told that the income reported by participants was validated only with a sworn statement.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systematic deficiency. According to interviews conducted with technicians in different regions, we identified a lack of uniformity in the income validation processes and a lack of awareness of what the current regulations establish.
STATEMENT OF CAUSE ADSEF does not have a memorandum of understanding that allows access to participants' income validation. Additionally, the PRDF's processes manual dates back to 2008, which is not consistent with the reality of the information and processes carried out at the local level.
POSSIBLE ASSERTED EFFECT ADSEF does not have sufficient mechanisms to validate the entry of participants requesting the benefit, and does not allow compliance with this requirement.
IDENTIFICATION OF
REPEAT FINDING Similar missing documentation was reported in the prior year audit Finding Number 2022-03.
RECOMMENDATIONS We recommend that management coordinate the signing of the memorandum of understanding with the relevant agencies. Additionally, establish processes and training aligned with the procedures and documentation currently in use.
FINDING REFERENCE NUMBER 2023-059 (See Finding Reference Number 2023-028)
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – CHILD SUPPORT NON-COOPERATION
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 45 CFR sections 264.30 and 264.31 establishes that (a):
(1)
The State agency must refer all appropriate individuals in the family of a child, for whom paternity has not been established or for whom a child support order needs to be established, modified or enforced, to the child support enforcement agency (i.e., the IV-D agency).
(2)
Referred individuals must cooperate in establishing paternity and in establishing, modifying, or enforcing a support order with respect to the child.
(b)
If the IV-D agency determines that an individual is not cooperating, and the individual does not qualify for a good cause or other exception established by the State agency responsible for making good cause determinations in accordance with section 454(29) of the Act or for a good cause domestic violence waiver granted in accordance with § 260.52 of this chapter, then the IV-D agency must notify the IV-A agency promptly.
(c)
The IV-A agency must then take appropriate action by:
(1)
Deducting from the assistance that would otherwise be provided to the family of the individual an amount equal to not less than 25 percent of the amount of such assistance; or
(2)
Denying the family any assistance under the program.
STATEMENT OF CONDITION As part of our understanding of internal controls and compliance related to this requirement, we requested a list from the Case Management and Information System (SAIC) that would identify participants who did not meet this requirement. From a population of six (6) participants, two (2) were selected to validate compliance with this requirement. We were only provided with one of the two requested files. The submitted file complied with the three-month sanction, and the case was subsequently closed for failure to cooperate with the Administration for Child Support Enforcement (ASUME, by its Spanish Acronym).
Additionally, according to our eligibility testing, we were unable to identify child support evidence in twenty-seven (27) files (see Finding Reference Number 2023-058).
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is systematic. ADSEF lacks an adequate process for archiving files and the information each file should contain.
STATEMENT OF CAUSE ADSEF does not have an adequate archiving process that allows for the identification of files in a reasonable timeframe.
Additionally, there is no formal training or archive process for all regions and local authorities for the personnel involved in determining eligibility and the required evidence that should be kept for the audit process.
POSSIBLE ASSERTED EFFECT ADSEF was unable to provide the requested information for auditing within a reasonable timeframe. Furthermore, the lack of a uniform archiving process prevents the information contained in the files from being properly identified and reviewed.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an adequate internal controls process that provides for the archiving of information in participant files and the identification of files within a reasonable timeframe.
FINDING REFERENCE NUMBER 2023-060
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SPECIAL TESTS & PROVISIONS – PENALTY FOR REFUSAL TO WORK / LACK OF CHILD CARE FOR SINGLE CUSTODIAL PARENT OF CHILD UNDER AGE SIX / PENALTY FOR FAILURE TO COMPLY WITH WORK VERIFICATION PLAN
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR 200.334, Record retention requirements, establishes that: the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to financial records, supporting documentation, and statistical records. Further, in §200.337, Access to records, requires in (a) Records of recipients and subrecipients. The Federal agency or pass-through entity, Inspectors General, the Comptroller General of the United States, or any of their authorized representatives must have the right of access to any records of the recipient or subrecipient pertinent to the Federal award to perform audits, execute site visits, or for any other official use. This right also includes timely and reasonable access to the recipient's or subrecipient's personnel for the purpose of interviewing and discussion related to such documents or the Federal award in general.
STATEMENT OF CONDITION As part of our audit procedures for special tests and provisions, we selected twenty-five (25) participants from a population of 475 who had been penalized for failing to meet the work requirement or complying with the work verification plan. Of the sample of participants, only ten (10) files were submitted to us for evaluation.
Related to the Lack of Child Care requirement for single Custodial Parent of Child Under Age Six, from a population of seven (7) participants identified with this requirement, we requested three (3) files for evaluation, however, we were only given one (1) file. This is a scope limitation.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. ADSEF was unable to demonstrate compliance with this compliance requirement.
STATEMENT OF CAUSE ADSEF does not have an adequate process to identify participants' files within a reasonable timeframe for auditing.
POSSIBLE ASSERTED EFFECT We were unable to obtain evidence of compliance with these Special Tests and Provisions because the information in the files was not available for review.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish an appropriate mechanism to identify participants' files within a reasonable time.
FINDING REFERENCE NUMBER 2023-061
FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2022G996117; 2023996117 (Federal Award Years: 2022 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT SUBRECIPIENT MONITORING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with 2 CFR 200.332, a pass-through entity must:
(a)
Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds.
(b)
Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes:
(1)
Federal award identification.
(i)
Subrecipient's name (must match the name associated with its unique entity identifier);
(ii)
Subrecipient's unique entity identifier;
(iii)
Federal Award Identification Number (FAIN);
(iv)
Federal Award Date;
(v)
Subaward Period of Performance Start and End Date;
(vi)
Subaward Budget Period Start and End Date;
(vii)
Amount of Federal Funds Obligated in the subaward;
(viii)
Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation;
(ix)
Total Amount of the Federal Award committed to the subrecipient by the pass-through entity;
(x)
Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA);
(xi)
Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity;
(xii)
Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement;
(xiii)
Identification of whether the Federal award is for research and development; and
(xiv)
Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414).
(2)
All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award;
(3)
Any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency;
…
(5)
A requirement that the subrecipient permit the pass-through entity and auditors to access the subrecipient's records and financial statements for the pass-through entity to fulfill its monitoring requirements; and
(6)
Appropriate terms and conditions concerning the closeout of the subaward.
(c)
Evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient's risk, a pass-through entity should consider the following:
(1)
The subrecipient's prior experience with the same or similar subawards;
(2)
The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program;
(3)
Whether the subrecipient has new personnel or new or substantially changed systems; and
(4)
The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency).
(d)
If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions.
(e)
Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must:
(1)
Review financial and performance reports.
(2)
Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation.
(3)
Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521.
(4)
Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward.
(f)
Depending upon the pass-through entity's assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals:
(1)
Providing subrecipients with training and technical assistance on program-related matters;
(2)
Performing site visits to review the subrecipient's program operations; and
(3)
Arranging for agreed-upon-procedures engagements as described in § 200.425.
(g)
Verify that a subrecipient is audited as required by subpart F of this part.
(h)
Consider whether the results of a subrecipient's audit, site visits, or other monitoring necessitate adjustments to the pass-through entity's records.
(i)
Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 and in program regulations.
STATEMENT OF CONDITION As part of our understanding of the program, program staff were interviewed regarding the existence of subrecipients. None of the staff interviewed identified any transactions involving subrecipients. However, in our testing of internal controls and compliance with the allowable costs/cost principles requirement, transactions were selected to assess compliance with this requirement. Upon receiving documentation from a contractor, we realized that the transactions with this supplier were in the capacity of a subrecipient.
In addition, the SEFA submitted by the PRDF does not identify any transaction under a subrecipient related to this program. In the final draft of the SEFA submitted for audit procedures, ADSEF reported the amount of $2,411,184, which included all transactions related to preventive services. We examined four (4) vouchers related to these services; the contract, proposal and invoices do not indicate information related to subrecipients.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This is a systemic deficiency. The staff in charge of administering TANF funds were unaware of the factors required to properly identify subrecipient transactions.
The total expenditure reflected in the database related to subrecipient activities totaled $686,052.17 for the audited fiscal year.
After providing the requirements for a subrecipient, staff were interviewed again to verify whether other providers met the subrecipient requirements, but no other entities were identified. From our testing, we identified no other subrecipients.
Although, in the final draft of the SEFA submitted for audit procedures, all expenditures related to preventive services were included as pass-through expenditures.
STATEMENT OF CAUSE The staff in charge of administering the program were unaware of the factors that determine whether a contractor is a subrecipient or a contractor.
ADSEF has not established an adequate procedures manual that demonstrates compliance with all requirements for subrecipient activities.
POSSIBLE ASSERTED EFFECT ADSEF does not have internal controls related to the identification, management, and reporting of subrecipient activities. This situation prevents compliance with all compliance requirements related to subrecipient monitoring.
This situation prevented the proper presentation of Federal expenditures incurred under this program in the SEFA or other financial reports required by Federal agencies.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS The PRDF must provide training to ADSEF personnel on the requirements and regulations related to subrecipient monitoring. We recommend that management establish internal controls and compliance measures that allow for the identification, reporting, and monitoring of subrecipient activities.