Audit 403356

Requirement: Financial Reporting System Type of Finding: Material Weakness in Internal Control Criteria The Organization must maintain a financial reporting system that provides for the preparation of financial statements in accordance with accounting principles generally accepted in the United State of America on Effect of Condition The Organization 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 in a timely manner. Identification of a Repeat Finding This is a repeat finding from the immediate previous year’s audit (Finding No. 2023-001). Recommendation Management should improve the monthly analysis of the accounting closing process to assure that all transactions are recognized in the financial statements in accordance with GAAP and reconcile with the accounting records. Views of Responsible Officials Management of the Organization agrees with this finding. For details of the actions to be taken, refer to the Corrective Action Plan (CAP) section in this report. Responsible Person José Carrasquillo Delgado Finance Director a timely basis. Condition We found that internal controls are not in place to ensure that all required journal entries to prepare the financial statements are posted on time. During the audit procedures, we identified differences between the subsidiaries records and trial balances, resulting in eighteen (18) adjusting entries to confirm the financial statements to GAAP. Some of the significant adjustments were as follows: • To correct accounts receivable by $120,903. • To recognize deferred revenues by $201,229. • To correct revenues by $107,933. • To recognize vacation leave accrual by $168,977. The total amount of these adjustments was $1,360,170 and the net effect on the net income was a decrease of $254. Cause of Condition Management did not perform a proper accounting closing analysis to assure that all transactions and adjusting entries are recognized in the financial statements.

Name of Federal Agency U.S. Department of Housing and Urban Development Pass-through the Puerto Rico Housing Finance Authority Type of Finding: Significant Deficiency Federal Program Community Development Block Grant - Disaster Recovery Assistance Listing Number 14.228 Category Compliance/Internal Control Compliance Requirement Reporting Criteria Uniform Guidance, Part 200.512 (1) established the audit, the data collection form, and the reporting package must be submitted within thirty (30) calendar days after the auditee receives the auditor's report(s) or nine months after the end of the audit period (whichever is earlier). The cognizant agency for audit or oversight agency for audit (in the absence of a cognizant agency for audit) may authorize an extension when the nine-month timeframe would place an undue burden on the auditee. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day. Condition The Data Collection Form and Single Audit reporting package were not submitted within nine (9) months after the end of the audit period. Cause and Effect Information to complete the financial statements audit procedures was not available within the required period. Data collection form and single audit report were not submitted in a timely manner as required by the Uniform Guidance. Questioned Cost None Identification of a Repeat Finding This is a repeat finding from the immediate previous year’s audit (Finding No. 2023-003).-32- Recommendation Data collection form and single audit package shall be submitted within the required due dates. Views of Responsible Officials Management of the Organization agrees with this finding. For details of the actions to be taken, refer to the Corrective Action Plan (CAP) section in this report. Responsible Person José Carrasquillo Delgado Finance Dire

Name of Federal Agency U.S. Department of Housing and Urban Development Pass-through the Puerto Rico Housing Finance Authority Federal Program Community Development Block Grant - Disaster Recovery Assistance Listing Number 14.228 Category Significant Deficiency and Noncompliance Compliance Requirement Reporting Criteria 2 CFR Part 200.329 (c)(i) established that the non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually normore frequent than quarterly except in unusual circumstances, for example where more frequent reportingis necessary for the effective monitoring of the Federal award or could significantly affect programoutcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due nolater 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. Alternatively, the Federal awarding agency or passthrough entity may require annual reports before the anniversary dates of multiple year Federal awards. As per agreement with the Organization Part IV (b) established that the Authority shall submit regular monthly progress reports to the Puerto Rico Department of Housing (PRDOH), on the form and with the content to be specified and required by the PRDOH. The PRDOH will later notify the Authority in writing the guidelines and requirements applicable to the submittal of the monthly progress reports, and such notification shall be deemed incorporated by reference to this Agreement. As defined by PRDOH, the submission of progress reports must occur within five (5) days after the end of each month. Condition During our procedures performed to determine compliance with reporting requirements, we noted that the progress reports were not submitted on time to Puerto Rico Department of Housing (PRDOH). Cause and Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. In addition, it prevents the grantor from monitoring the performance of the program and could be interpreted as a failure to achieve program objectives. Questioned Cost None Recommendation The Organization shall ensure effective supervision over its reporting processes to guarantee the timely preparation and submission of progress reports. It is advised that the Organization prioritize providing comprehensive training to personnel responsible for preparing, reviewing, and approving performance reports. This training should focus on equipping them with the necessary skills and knowledge to include all relevant data elements and adhere to deadlines consistently. Views of Responsible Officials Management of the Organization agrees with this finding. For details of the actions to be taken, refer to the Corrective Action Plan (CAP) section in this report. Responsible Person José Carrasquillo Delgado Finance Director