Audit 401254

Ref. No. Finding / Noncompliance Questioned Costs 2025-001 Deficiencies in Personnel File Documentation -0- State and Federal Funds: Federal Agencies: U.S. Department of Homeland Security U.S. Department of Transportation U.S. Department of Treasury U.S. Housing and Human Development Pass-through Agency: N/A Federal Program Title: All Federal Programs ALN Number: N/A Compliance Requirement: Documentation Type of Finding: Material Noncompliance Reporting and Material Weakness Responsible Official: Finance Director Condition: During the audit of personnel records funded by State and Federal grants, it was identified that significant portion of the sampled employee files were incomplete. Specifically, essential documentation-such as Medical History, Birth Certificate, Withholding Exemption Certificate, Oath and Possession, Drug Free Orientation and other required Governmental Certifications were missing from the physical and digital archives. Criteria: Under the Uniform Guidance (2 CFR § 200.303), the Department of Transportation and Public Works (DTOP) is required to establish and maintain effective internal controls over federal awards to provide reasonable assurance that the entity is managing the awards in compliance with federal statutes and regulations. Cause: This deficiency stems from the mass transfer of personnel under the "Ley de Movilidad" (Mobility Law). These employees were transferred with the internal control standards of their original agency (PREPA), which do not align with the documentation requirements of the central government for federally funded programs. Despite being reported in prior year audits, management has failed to standardize these records or implement an effective corrective action plan to integrate these files into DTOP’s internal control system.Effect (or Risk): The lack of standardized documentation prevents the agency from certifying that all employees paid with federal funds meet eligibility and compliance requirements. This recurrent deficiency exposes the Department to: • Questioned Costs: Potential disallowance of payroll expenditures and requirements to refund federal agencies. • Administrative Sanctions: Increased oversight or penalties from federal awarding agencies due to the failure to resolve prior audit findings. • Audit Risk Status: Risk of losing "low-risk auditee" status, leading to more extensive and frequent audits. Recommendation: We recommend that management: 1. Establish a special task force within the Human Resources Department to conduct a 100% internal audit of files for all personnel transferred from PREPA. 2. Set a formal deadline for these employees to complete and submit all required documentation under DTOP’s internal control policies. 3. Formalize a Corrective Action Plan (CAP) that includes specific milestones to ensure this prior year finding is fully resolved within the current fiscal year.