Section II – Financial Statements Findings
Finding No. 2023-001
Material Weakness on Internal Controls over Financial Reporting Requirements
Inaccurate and Incomplete Accounting Records
Criteria
20 CFR 200.510 requires auditees to prepare financial statements that reflect its financial position, results of
operations and changes in net assets for the fiscal year audited. Also, the accounting system established should be
designed to reflect or provide complete and clear information related to the agency's financial results of operations.
It should also provide accurate reports that act as a basis for the preparation and support of the budget needs and
for the control and proper monitoring of the budget.
29 CFR, Part 97, Subpart C, Section 97.20 "Standards for financial management systems", establishes the
following: (a) A State must expand and account for grant funds in accordance with State laws and procedures for
expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its
sub-grantees and cost-type contractors, must be sufficient to (1) Permit preparation of reports required by this part
and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to
establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes;
(b) The financial management systems of other grantees and sub-grantees must meet the following standards: (1)
Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted
activities must be made in accordance with the financial reporting requirements of the grant or sub-grant; (2)
Accounting records.
Statement of Condition
The entity has no established policies and procedures to ensure that financial statements are prepared with accurate
and reliable information on a timely basis. No adequate and timely recording procedures are performed in the
general ledger accounts. The accounting records were not properly closed, and significant adjustments were made
to the general ledger accounts. The financial information is not reviewed, analyzed and reconciled on a monthly
basis by management.
Management provided an incomplete and inaccurate trial balance resulting in several audit adjustments. The
significant audit adjustments were as follows;
1. Understatement of deferred revenue in the amount of $2.5 million.
2. Adjustment of inventory by $875 thousand.
3. Liability to an agency not recognized in the amount of $220 thousand.
4. Overstatement of accounts receivable by $481 thousand.
24
Section II – Financial Statements Findings (Continued)
We can conclude that these situations represent a systemic material weakness in the accounting records that
increase the risks that errors may occur and not be detected in a timely manner. The adjustments were made to the
audited financial statements presented on this report.
Cause of Condition
Management did not perform an accounting closing analysis to assure that all transactions and adjusting entries are
recognized in the financial statements. Lack of adequate accounting procedures for reconciliation and analysis of
the financial transactions recorded during the year.
Effect of Condition
The entity may not be able to detect errors or irregularities on a timely basis. Financial statements may not present
its financial position and results for operations.
Recommendation
The Organization should establish policies and procedures to perform monthly preparation of its financial
statements with complete and accurate information. The adjustments and analysis of accounts should be improved
to obtain financial statements on time for the decision-making process. Management should analyze the balances
and transactions periodically throughout the year to accelerate the accounts analysis and effectively monitor and
perform the year-end closing process.
Management Response
Management concurs with the findings. The closing process will be improved to perform detailed reviews of the
closing process and to obtain reliable and complete general ledger.
Responsible Officials
Mr. Marcos Rivera
CEO
Section II – Financial Statements Findings (Continued)
Finding No. 2023-002
Type of Finding: Material Weakness on Internal Controls over Financial Reporting Requirements
Deficiencies in Physical Inventory and Documentation for TEFAP
Criteria
In accordance with federal program specific requirements, accurate and complete records must be maintained with
respect to the receipt, distribution/use, and inventory of USDA Foods, including end products processed from
USDA Foods in TEFAP. Failure to maintain records required by 7 CFR section 250.19 is considered prima facie
evidence of improper distribution or loss of USDA Foods, and the agency processor or entity is liable for the value
of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Failure to maintain records
required by 7 CFR section 250.19 is considered prima facie evidence of improper distribution or loss of USDA
Foods, and the agency processor or entity is liable for the value of the food or replacement of the food in kind (7
CFR sections 250.16 and 250.19(a)).
Statement of Condition
During the audit process, we found that physical inventory was not presented for our review, and we were unable
to obtain alternate supporting documentation to perform audit procedures or to perform analytical procedures or
ascertain the validity of the required annual physical inventory. This causes inventory presented in financial
statement date were not audited. Also, management did not present evidence of the uses/distribution of USDA
Foods.
Cause of Condition
Management did not comply with the physical inventory at year end or maintained supporting documents for those
procedures to validate the amount presented for inventory its financial statements.
Effect of Condition
The overall effect is that complete and accurate financial information is not available to support a significant
amount of its financial statements.
Recommendation
Management should ensure that the physical inventory is taken at the year end, compare and reconcile such amount
to the financial statements, make the corresponding adjustments and corrections to present complete and accurate
information of its financial statements. Also, supporting documentation for the uses/distribution of inventory
should be maintained.
26
Section II – Financial Statements Findings (Continued)
Management Response
Management concurs with the findings. We will establish procedures to take and document a physical annual
inventory and to maintain support for inventory distributions.
Responsible Officials
Mr. Marcos Rivera
CEO
Section III - Major Federal Award Program Findings and Questioned Costs
Finding No. 2023-003
Federal Agency: United States Department of Agriculture
Federal Program Title and ALN: All Federal Programs
Compliance Requirement: Reporting (Single Audit Report)
Type of Finding: Significant Deficiency (SD) and Instance of Noncompliance (NC)
Criteria
The Uniform Guidance 2 CFR Section 200.512(a) requires the audit to be completed, and the reporting package
and data collection form be submitted to the Federal Audit Clearinghouse (“FAC”) within the earlier of 30-day
after the receipt of the auditor’s reports or nine months after the end of the audit period.
Statement of Condition
The Data Collection Form and the Reporting Package for the year ended December 31, 2023, was not timely
submitted to the federal government. The Data Collection Form and the Reporting Package must be submitted by
the auditee within the earlier of 30-day after the receipt of the auditor’s reports or nine (9) months after the end of
the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. No
extension from the cognizant or oversight agency was noted.
Cause of Condition
The Organization has not been able to provide the necessary information for the preparation of the single audit
report on a timely basis in order to complete its reporting requirement for the fiscal year ended on December 31,
2023.
Effect of Condition
The Organization is not complying with the reporting requirements set forth by federal regulations, which could
affect the future of its federal grants.
Recommendation
The Organization should adopt policies and procedures to ensure that the annual audit is performed and submitted
in a timely manner.
28
Section III - Major Federal Award Program Findings and Questioned Costs (Continued)
Management Response
Management concurs with the findings. External auditors were contracted to update the financial statements for
2023, 2024 and 2025 is in process to prepare the single audit report in a timely manner.
Responsible Officials
Mr. Marcos Rivera
CEO
Finding No. 2023-004
Federal Agency: United States Department of Agriculture
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness in Internal Control (MW). Instance of Noncompliance (NC)
Criteria
Refer to finding 2023-002
Statement of Condition
Physical Inventory for TEFAP (The Emergency Food Administration Program)
As discussed in Finding 2023-002, the Organization has several deficiencies regarding internal control about
inventory of foods, lack of perform physical inventory as required by federal program and alternate procedures
were not applied to validate the inventory at year end. Also, records are not in place to document or support the
distribution of foods, as required by the federal program. We were unable to determine question costs due the fact
that we were unable to test the transactions for distribution of foods for its compliance.
Cause of Condition
Refer to finding 2023-02
Effect of Condition
Refer to finding 2023-02
Recommendation
Refer to finding 2023-002
Questioned Costs
Undetermined questioned costs.
Management Response
Management concurs with the findings. The closing process will be improved; physical inventory will be taking
and improvements for documentation will be made.
Responsible official
Mr. Marcos Rivera CEO
Finding No. 2023-005
Federal Agency: United States Department of Agriculture
Compliance Requirement: Allowable Cost
Type of Finding: Material Weakness in Internal Control (MW). Instance of Noncompliance (NC)
Unallowable Costs
Criteria
Article 7 CFR 251.8(e)(1) establishes the Allowable administrative costs. State agencies and eligible recipient
agencies may use funds made available under this part to pay the direct expenses associated with the distribution of
USDA Foods and foods secured from other sources to the extent that the foods are ultimately distributed by
eligible recipient agencies which have entered into agreements in accordance with § 251.2. Direct expenses include
the following, regardless of whether they are charged to TEFAP as direct or indirect costs:
i. The intrastate and interstate transport, storing, handling, repackaging, processing, and distribution of
foods (including donated wild game); except that for interstate expenditures to be allowable, the foods
must have been specifically earmarked for the particular State or eligible recipient agency which incurs
the cost;
ii. Costs associated with determinations of eligibility, verification, and documentation;
iii. Costs of providing information to persons receiving USDA Foods concerning the appropriate storage
and preparation of such foods;
iv. Costs involved in publishing announcements of times and locations of distribution; and
v. Costs of recordkeeping, auditing, and other administrative procedures required for program
participation.
Statement of Condition
The entity used federal program funds from The Emergency Food Assistance Program (TEFAP) to acquire items
that are not considered allowable administrative costs under 7 CFR § 251.8(e)(1). Specifically, printing machine, a
food truck, and a tractor were purchased using TEFAP funds. These expenditures were identified as unallowable
costs in a monitoring procedure by ADSEF (Administración de Desarrollo Socioeconómico de la Familia). As a
result, the entity has entered into a repayment agreement with ADSEF to reimburse the disallowed amount. The
unallowable costs amount to $219,875.
Cause of Condition
Internal monitoring procedures are not established to assure that all disbursements are made in accordance with
programs requirements.
Section III - Major Federal Award Program Findings and Questioned Costs (Continued)
Effect of Condition
The Organization incurred a financial liability resulting from the improper use of TEFAP funds, as determined by
ADSEF. The Organization was required to reimburse the disallowed amount and has reflected the obligation in its
financial statements. This situation also represents noncompliance with federal program requirements and
increases the risk of future funding restrictions.
Recommendation
The Organization should strengthen its internal review procedures and ensure that all expenditures charged to
federal programs are reviewed for allowability based on applicable regulations. Personnel responsible for
procurement and program management should receive training on TEFAP guidelines, and purchases of capital
assets should be pre-approved and funded through allowable sources only.
Questioned Costs
$219,875
Management Response
Management acknowledges the finding and has entered into a formal repayment agreement with ADSEF to
reimburse the disallowed amount through monthly payments of $5,000. The Organization is in the process of
updating its procurement and expenditure approval procedures and will implement training for staff involved in
managing federally funded programs.
Responsible official
Mr. Marcos Rivera
CEO
Section II – Financial Statements Findings
Finding No. 2023-001
Material Weakness on Internal Controls over Financial Reporting Requirements
Inaccurate and Incomplete Accounting Records
Criteria
20 CFR 200.510 requires auditees to prepare financial statements that reflect its financial position, results of
operations and changes in net assets for the fiscal year audited. Also, the accounting system established should be
designed to reflect or provide complete and clear information related to the agency's financial results of operations.
It should also provide accurate reports that act as a basis for the preparation and support of the budget needs and
for the control and proper monitoring of the budget.
29 CFR, Part 97, Subpart C, Section 97.20 "Standards for financial management systems", establishes the
following: (a) A State must expand and account for grant funds in accordance with State laws and procedures for
expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its
sub-grantees and cost-type contractors, must be sufficient to (1) Permit preparation of reports required by this part
and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to
establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes;
(b) The financial management systems of other grantees and sub-grantees must meet the following standards: (1)
Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted
activities must be made in accordance with the financial reporting requirements of the grant or sub-grant; (2)
Accounting records.
Statement of Condition
The entity has no established policies and procedures to ensure that financial statements are prepared with accurate
and reliable information on a timely basis. No adequate and timely recording procedures are performed in the
general ledger accounts. The accounting records were not properly closed, and significant adjustments were made
to the general ledger accounts. The financial information is not reviewed, analyzed and reconciled on a monthly
basis by management.
Management provided an incomplete and inaccurate trial balance resulting in several audit adjustments. The
significant audit adjustments were as follows;
1. Understatement of deferred revenue in the amount of $2.5 million.
2. Adjustment of inventory by $875 thousand.
3. Liability to an agency not recognized in the amount of $220 thousand.
4. Overstatement of accounts receivable by $481 thousand.
24
Section II – Financial Statements Findings (Continued)
We can conclude that these situations represent a systemic material weakness in the accounting records that
increase the risks that errors may occur and not be detected in a timely manner. The adjustments were made to the
audited financial statements presented on this report.
Cause of Condition
Management did not perform an accounting closing analysis to assure that all transactions and adjusting entries are
recognized in the financial statements. Lack of adequate accounting procedures for reconciliation and analysis of
the financial transactions recorded during the year.
Effect of Condition
The entity may not be able to detect errors or irregularities on a timely basis. Financial statements may not present
its financial position and results for operations.
Recommendation
The Organization should establish policies and procedures to perform monthly preparation of its financial
statements with complete and accurate information. The adjustments and analysis of accounts should be improved
to obtain financial statements on time for the decision-making process. Management should analyze the balances
and transactions periodically throughout the year to accelerate the accounts analysis and effectively monitor and
perform the year-end closing process.
Management Response
Management concurs with the findings. The closing process will be improved to perform detailed reviews of the
closing process and to obtain reliable and complete general ledger.
Responsible Officials
Mr. Marcos Rivera
CEO
Section II – Financial Statements Findings (Continued)
Finding No. 2023-002
Type of Finding: Material Weakness on Internal Controls over Financial Reporting Requirements
Deficiencies in Physical Inventory and Documentation for TEFAP
Criteria
In accordance with federal program specific requirements, accurate and complete records must be maintained with
respect to the receipt, distribution/use, and inventory of USDA Foods, including end products processed from
USDA Foods in TEFAP. Failure to maintain records required by 7 CFR section 250.19 is considered prima facie
evidence of improper distribution or loss of USDA Foods, and the agency processor or entity is liable for the value
of the food or replacement of the food in kind (7 CFR sections 250.16 and 250.19(a)). Failure to maintain records
required by 7 CFR section 250.19 is considered prima facie evidence of improper distribution or loss of USDA
Foods, and the agency processor or entity is liable for the value of the food or replacement of the food in kind (7
CFR sections 250.16 and 250.19(a)).
Statement of Condition
During the audit process, we found that physical inventory was not presented for our review, and we were unable
to obtain alternate supporting documentation to perform audit procedures or to perform analytical procedures or
ascertain the validity of the required annual physical inventory. This causes inventory presented in financial
statement date were not audited. Also, management did not present evidence of the uses/distribution of USDA
Foods.
Cause of Condition
Management did not comply with the physical inventory at year end or maintained supporting documents for those
procedures to validate the amount presented for inventory its financial statements.
Effect of Condition
The overall effect is that complete and accurate financial information is not available to support a significant
amount of its financial statements.
Recommendation
Management should ensure that the physical inventory is taken at the year end, compare and reconcile such amount
to the financial statements, make the corresponding adjustments and corrections to present complete and accurate
information of its financial statements. Also, supporting documentation for the uses/distribution of inventory
should be maintained.
26
Section II – Financial Statements Findings (Continued)
Management Response
Management concurs with the findings. We will establish procedures to take and document a physical annual
inventory and to maintain support for inventory distributions.
Responsible Officials
Mr. Marcos Rivera
CEO
Section III - Major Federal Award Program Findings and Questioned Costs
Finding No. 2023-003
Federal Agency: United States Department of Agriculture
Federal Program Title and ALN: All Federal Programs
Compliance Requirement: Reporting (Single Audit Report)
Type of Finding: Significant Deficiency (SD) and Instance of Noncompliance (NC)
Criteria
The Uniform Guidance 2 CFR Section 200.512(a) requires the audit to be completed, and the reporting package
and data collection form be submitted to the Federal Audit Clearinghouse (“FAC”) within the earlier of 30-day
after the receipt of the auditor’s reports or nine months after the end of the audit period.
Statement of Condition
The Data Collection Form and the Reporting Package for the year ended December 31, 2023, was not timely
submitted to the federal government. The Data Collection Form and the Reporting Package must be submitted by
the auditee within the earlier of 30-day after the receipt of the auditor’s reports or nine (9) months after the end of
the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit. No
extension from the cognizant or oversight agency was noted.
Cause of Condition
The Organization has not been able to provide the necessary information for the preparation of the single audit
report on a timely basis in order to complete its reporting requirement for the fiscal year ended on December 31,
2023.
Effect of Condition
The Organization is not complying with the reporting requirements set forth by federal regulations, which could
affect the future of its federal grants.
Recommendation
The Organization should adopt policies and procedures to ensure that the annual audit is performed and submitted
in a timely manner.
28
Section III - Major Federal Award Program Findings and Questioned Costs (Continued)
Management Response
Management concurs with the findings. External auditors were contracted to update the financial statements for
2023, 2024 and 2025 is in process to prepare the single audit report in a timely manner.
Responsible Officials
Mr. Marcos Rivera
CEO
Finding No. 2023-004
Federal Agency: United States Department of Agriculture
Compliance Requirement: Special Tests and Provisions
Type of Finding: Material Weakness in Internal Control (MW). Instance of Noncompliance (NC)
Criteria
Refer to finding 2023-002
Statement of Condition
Physical Inventory for TEFAP (The Emergency Food Administration Program)
As discussed in Finding 2023-002, the Organization has several deficiencies regarding internal control about
inventory of foods, lack of perform physical inventory as required by federal program and alternate procedures
were not applied to validate the inventory at year end. Also, records are not in place to document or support the
distribution of foods, as required by the federal program. We were unable to determine question costs due the fact
that we were unable to test the transactions for distribution of foods for its compliance.
Cause of Condition
Refer to finding 2023-02
Effect of Condition
Refer to finding 2023-02
Recommendation
Refer to finding 2023-002
Questioned Costs
Undetermined questioned costs.
Management Response
Management concurs with the findings. The closing process will be improved; physical inventory will be taking
and improvements for documentation will be made.
Responsible official
Mr. Marcos Rivera CEO
Finding No. 2023-005
Federal Agency: United States Department of Agriculture
Compliance Requirement: Allowable Cost
Type of Finding: Material Weakness in Internal Control (MW). Instance of Noncompliance (NC)
Unallowable Costs
Criteria
Article 7 CFR 251.8(e)(1) establishes the Allowable administrative costs. State agencies and eligible recipient
agencies may use funds made available under this part to pay the direct expenses associated with the distribution of
USDA Foods and foods secured from other sources to the extent that the foods are ultimately distributed by
eligible recipient agencies which have entered into agreements in accordance with § 251.2. Direct expenses include
the following, regardless of whether they are charged to TEFAP as direct or indirect costs:
i. The intrastate and interstate transport, storing, handling, repackaging, processing, and distribution of
foods (including donated wild game); except that for interstate expenditures to be allowable, the foods
must have been specifically earmarked for the particular State or eligible recipient agency which incurs
the cost;
ii. Costs associated with determinations of eligibility, verification, and documentation;
iii. Costs of providing information to persons receiving USDA Foods concerning the appropriate storage
and preparation of such foods;
iv. Costs involved in publishing announcements of times and locations of distribution; and
v. Costs of recordkeeping, auditing, and other administrative procedures required for program
participation.
Statement of Condition
The entity used federal program funds from The Emergency Food Assistance Program (TEFAP) to acquire items
that are not considered allowable administrative costs under 7 CFR § 251.8(e)(1). Specifically, printing machine, a
food truck, and a tractor were purchased using TEFAP funds. These expenditures were identified as unallowable
costs in a monitoring procedure by ADSEF (Administración de Desarrollo Socioeconómico de la Familia). As a
result, the entity has entered into a repayment agreement with ADSEF to reimburse the disallowed amount. The
unallowable costs amount to $219,875.
Cause of Condition
Internal monitoring procedures are not established to assure that all disbursements are made in accordance with
programs requirements.
Section III - Major Federal Award Program Findings and Questioned Costs (Continued)
Effect of Condition
The Organization incurred a financial liability resulting from the improper use of TEFAP funds, as determined by
ADSEF. The Organization was required to reimburse the disallowed amount and has reflected the obligation in its
financial statements. This situation also represents noncompliance with federal program requirements and
increases the risk of future funding restrictions.
Recommendation
The Organization should strengthen its internal review procedures and ensure that all expenditures charged to
federal programs are reviewed for allowability based on applicable regulations. Personnel responsible for
procurement and program management should receive training on TEFAP guidelines, and purchases of capital
assets should be pre-approved and funded through allowable sources only.
Questioned Costs
$219,875
Management Response
Management acknowledges the finding and has entered into a formal repayment agreement with ADSEF to
reimburse the disallowed amount through monthly payments of $5,000. The Organization is in the process of
updating its procurement and expenditure approval procedures and will implement training for staff involved in
managing federally funded programs.
Responsible official
Mr. Marcos Rivera
CEO