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 own
funds.
In addition, the state's 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, (b) The financial management system of each non-
Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards
received and expended and the Federal programs under which they were received.
(2) Accurate, current, and complete disclosure of the financial results of each Federal award or
program in accordance with the reporting requirements set forth in §§200.327 Financial reporting
and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately
the source and application of funds for federally funded activities. These records must contain
information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets,
expenditures, income, and interest and be supported by source documentation. (4) Effective control
over, and accountability for, all funds, property, and other assets, and (5) Comparison of
expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto
Rico Government Accounting Law, as amended, states that the accounting system of the
instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide
complete and clear information related to their financial results of operations.
Condition
The Department has a weakened financial reporting system, brought on by several deficiencies
related to the accounting and financial reporting practices of the Department. The deficiencies noted
as part of our procedures are summarized as follows:
• The Department's procedure manuals contain outdated procedures which do not necessarily
reflect the current tasks and operations of the Department.
• The Department does not prepare monthly closings on a recurring and periodic basis.
• The Single Audit Report has not been submitted in a timely manner and audit procedures
are significantly delayed due to a lack of reconciliations and monthly closing procedures.
• Multiple transactions are recognized retroactively several months after occurring, as a result
of the significant delays brought forth by a weak financial reporting system.
• The Department does not have adequate procedures to reconcile, in a timely manner,
financial transactions recorded in the accounting system of the Puerto Rico Treasury
Department with the accounting records maintained by the Department.
Effect
Deficiencies in the financial reporting and accounting practices of the Department may result in the
following:
• Financial Reports which are required as part of compliance with federal programs may be
prepared with inaccurate or incomplete financial information and may not be submitted in a
timely and compliant manner.
• Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants,
among other potential sanctions.
• Inconsistency between the financial information registered in the Department with financial
transactions recognized in the records of the Puerto Rico Treasury Department.
• Difficulties in accurately assessing program performance and monitoring of expenses in line
with budgeted amounts to actual amounts expended as part of program activities.
Inefficiencies and additional effort incurred by employee's part as a result of outdated or
inaccurate procedure manuals. This also results in confusion as to the proper procedures to
follow and the relevant approval and revision tasks to be performed.
• Non-compliance with federal program requirements brought forth as a result of financial
information which is inaccurate.
Cause
The Department has not implemented a uniform internal accounting process that allows all the
Department's administrations (5) to consolidate accounting information for both fiscal and program
periods and reconcile with financial information with the Treasury Department.
In addition, the Department lacks uniform internal accounting software and applications between
the administrations of the Department, which precludes them from timely and accurate consolidation
of financial information.
Recommendation
The Department needs to implement a formal monthly closing of its accounting records and
financial reporting with the purpose of ensuring accurate and timely financial information.
Monthly closing procedures would be carried out most efficiently by developing a logical order for
closing procedures and assigning responsibility for completing the procedures to specific personnel.
As the Department is composed of various administrations, a task force should be assigned to
develop procedures which detail the data-gathering information process to accumulate financial data
of the administrations in a consistent manner. In addition, financial information should be
consolidated at the Department level in order to reconcile with the financial records of the Treasury
Department.
Procedures should include, at a minimum, the following: the month-end period, a list of monthly
closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial
records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after
month end, etc.)
It is recommended that the closing and reconciliation procedures be documented in a checklist that
indicates the responsible individual who will perform each procedure and when completion of each
procedure is due. Following are recommendations regarding the required closing procedures and
suggestions to improve the financial reporting system:
• Determine that all transactions have been recorded and posted. Transactions should be
reviewed for completeness by scanning accounts to determine any unusual balances or
fluctuations from expectations.
• Reconcile general ledger accounts to underlying records and compareireconcile this
information with the records of the Puerto Rico Treasury Department. Any differences
observed during this process should be followed up in a timely manner in order to clarify
and clear any reconciling items between the two sets of financial records.
• Accumulate pertinent information necessary for the preparation of federal reports (financial
and performance reports). In addition, a proper flowchart of procedures and revisions should
be prepared to ensure that federal reports are filed and certified within established deadlines.
• Perform a budgetary analysis by comparing expected amounts of expenditure with actual
results. This will provide a more accurate measure of performance for federal programs and
the overall efficiency in the use of funds of the Department. This will enhance the monitoring
of program performance to ensure compliance with federal regulations and State Plan
objectives.
• Proper storage and backup of Department data files as part of the closing procedure. All files
should be properly backed up before monthly closing is determined to be complete.
• Differences observed during the reconciliation and closing procedure need to be discussed
with the management personnel responsible for providing oversight over each respective
area of the financial reporting cycle. Any adjustments necessary as a result of these
procedures should be posted in a timely manner and before the closing is completed.
Internal control manuals should be evaluated to ensure that they provide a clear and
descriptive flowchart which details personnel involved, flow of information, estimated time
frames for deliverables, and other control procedures relevant to the Department's
operations. The Department should also evaluate its existing manuals to determine if they
are updated and accurately reflect the procedures the Department currently carries out and
ensure that these are in compliance with federal requirements. Updated written procedures
and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted
efforts, enhancing the efficiency of the operations of the Department.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan.
Criteria:
The Department is required to identify in its annual plan the population eligible for NAP benefits.
In testing the propriety of eligibility determinations and disbursements for NAP benefits, the auditor
shall apply the eligibility criteria established by the Department and identified in the annual plan (7
CFR section 285.3(b)(2)).
7 CFR Part 285 Section 3 Plan of Operation, states (b) The plan of operation shall include the
following information: (2) A description of the needy persons residing in the Commonwealth of
Puerto Rico and an assessment of the food and nutrition needs of these persons. The description and
assessment shall demonstrate that the Nutrition Assistance Program is directed toward the neediest
persons in the Commonwealth of Puerto Rico.
Condition:
We noted several files for participants of the referenced federal award were not complete to evaluate
properly and conclude participant/beneficiary was eligible, as required by the Department
procedures and federal law. As a result, we could not conclude participants reviewed were eligible
to receive benefits as required by the federal award.
Perspective — We selected a sample of forty (40) participant files as part of compliance testing
regarding eligibility, auditors noted several cases in which the following documentation was not
present in participants' files as follows:
• (6) Valid ID
• (7) Evidence of Residency
The ID verification of participants is the control established by the administration in its state plan to
confirm the existence of the participants receiving benefits.
Evidence of residency is a control placed by the administration in its state plan to confirm
participants' physical addresses to prevent participants from receiving benefits from two distinct
locations (states) or multiple participants receiving benefits from the same address without being
considered as a familiar unit.
Effect:
The Department may be qualifying participants who do not meet the eligibility requirements
established by federal regulations. This may ultimately result in sanctions, reduced funding, having
to return monies to the federal agency, or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion over the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. All documents established by the Department to evaluate and conclude participants
are eligible, need to be obtained and evidenced in the participant's file.
The Department should also properly communicate eligibility verification procedures to employees
and provide a clear outline as to the tasks, responsibilities, and supervision and approval tasks for
each employee within the eligibility verification process.
In case, any document established for verification of eligibility is temporarily waived due to specific
reasons (natural disasters, pandemic, etc.) the Department should formally communicate the
provisions of the temporary waiver, obtain approval of the federal awarding agency, and formal
communication should be included in the participant's file.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's Corrective Action Plan.
Criteria
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards, Part 200.512, Report Submission, (a) General, (I) states that the audit must be completed,
and the data collection form and reporting package must be submitted within the earlier of 30
calendar days after receipt of the auditors' report(s), or nine months after the end of the audit period.
Condition
The Department did not comply with the required due date for the submission of the Single Audit
Report Package as a result of systematic issues which have led to delays in the receipt and processing
of information required as part of the Single Audit.
Effect
The Department will be considered delinquent in the submission of the Single Audit Report Package
and if it does not respond to follow-up procedures from federal agencies, may face sanctions such
as:
• Draw-Down Restrictions
• Reimbursable Draw Down
• Withholding a Percentage of Federal Funds
• Suspension of Federal Funds
• Termination of Grant
Cause
During March 2020, the government of Puerto Rico declared a general lockdown as a result of the
COVID-19 Pandemic which had a significant impact in governmental agencies and businesses
across Puerto Rico, delaying operations on an island-wide scale. This resulted in significant delays
in the completion of the Single audits for the past fiscal periods which in turn has resulted in
complications regarding filing within required deadlines. In addition, the Department experienced
a high rate of turnover in personnel, in addition to the observations regarding reconciliation of
financial information as mentioned in audit finding 2021-01 and 2021-02, which resulted in
additional efforts to properly organize information, therefor causing significant delays in the flow
of information and completion of the 2021 audit.
Recommendation
The Department must designate work teams amongst all relevant administrations which serve as
liaisons with auditors and be responsible for the delivery of information and documentation to
ensure compliance with due dates. The Department should maintain a clear line of communication
throughout its administrations and follow up accordingly to maintain a continuous flow of
information during audit procedures. In addition, the Department should request periodic follow-up
meetings with auditors to address any audit issues encountered which may affect meeting
established deadlines.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan
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 own
funds.
In addition, the state's 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, (b) The financial management system of each non-
Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards
received and expended and the Federal programs under which they were received.
(2) Accurate, current, and complete disclosure of the financial results of each Federal award or
program in accordance with the reporting requirements set forth in §§200.327 Financial reporting
and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately
the source and application of funds for federally funded activities. These records must contain
information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets,
expenditures, income, and interest and be supported by source documentation. (4) Effective control
over, and accountability for, all funds, property, and other assets, and (5) Comparison of
expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto
Rico Government Accounting Law, as amended, states that the accounting system of the
instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide
complete and clear information related to their financial results of operations.
Condition
The Department has a weakened financial reporting system, brought on by several deficiencies
related to the accounting and financial reporting practices of the Department. The deficiencies noted
as part of our procedures are summarized as follows:
• The Department's procedure manuals contain outdated procedures which do not necessarily
reflect the current tasks and operations of the Department.
• The Department does not prepare monthly closings on a recurring and periodic basis.
• The Single Audit Report has not been submitted in a timely manner and audit procedures
are significantly delayed due to a lack of reconciliations and monthly closing procedures.
• Multiple transactions are recognized retroactively several months after occurring, as a result
of the significant delays brought forth by a weak financial reporting system.
• The Department does not have adequate procedures to reconcile, in a timely manner,
financial transactions recorded in the accounting system of the Puerto Rico Treasury
Department with the accounting records maintained by the Department.
Effect
Deficiencies in the financial reporting and accounting practices of the Department may result in the
following:
• Financial Reports which are required as part of compliance with federal programs may be
prepared with inaccurate or incomplete financial information and may not be submitted in a
timely and compliant manner.
• Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants,
among other potential sanctions.
• Inconsistency between the financial information registered in the Department with financial
transactions recognized in the records of the Puerto Rico Treasury Department.
• Difficulties in accurately assessing program performance and monitoring of expenses in line
with budgeted amounts to actual amounts expended as part of program activities.
Inefficiencies and additional effort incurred by employee's part as a result of outdated or
inaccurate procedure manuals. This also results in confusion as to the proper procedures to
follow and the relevant approval and revision tasks to be performed.
• Non-compliance with federal program requirements brought forth as a result of financial
information which is inaccurate.
Cause
The Department has not implemented a uniform internal accounting process that allows all the
Department's administrations (5) to consolidate accounting information for both fiscal and program
periods and reconcile with financial information with the Treasury Department.
In addition, the Department lacks uniform internal accounting software and applications between
the administrations of the Department, which precludes them from timely and accurate consolidation
of financial information.
Recommendation
The Department needs to implement a formal monthly closing of its accounting records and
financial reporting with the purpose of ensuring accurate and timely financial information.
Monthly closing procedures would be carried out most efficiently by developing a logical order for
closing procedures and assigning responsibility for completing the procedures to specific personnel.
As the Department is composed of various administrations, a task force should be assigned to
develop procedures which detail the data-gathering information process to accumulate financial data
of the administrations in a consistent manner. In addition, financial information should be
consolidated at the Department level in order to reconcile with the financial records of the Treasury
Department.
Procedures should include, at a minimum, the following: the month-end period, a list of monthly
closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial
records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after
month end, etc.)
It is recommended that the closing and reconciliation procedures be documented in a checklist that
indicates the responsible individual who will perform each procedure and when completion of each
procedure is due. Following are recommendations regarding the required closing procedures and
suggestions to improve the financial reporting system:
• Determine that all transactions have been recorded and posted. Transactions should be
reviewed for completeness by scanning accounts to determine any unusual balances or
fluctuations from expectations.
• Reconcile general ledger accounts to underlying records and compareireconcile this
information with the records of the Puerto Rico Treasury Department. Any differences
observed during this process should be followed up in a timely manner in order to clarify
and clear any reconciling items between the two sets of financial records.
• Accumulate pertinent information necessary for the preparation of federal reports (financial
and performance reports). In addition, a proper flowchart of procedures and revisions should
be prepared to ensure that federal reports are filed and certified within established deadlines.
• Perform a budgetary analysis by comparing expected amounts of expenditure with actual
results. This will provide a more accurate measure of performance for federal programs and
the overall efficiency in the use of funds of the Department. This will enhance the monitoring
of program performance to ensure compliance with federal regulations and State Plan
objectives.
• Proper storage and backup of Department data files as part of the closing procedure. All files
should be properly backed up before monthly closing is determined to be complete.
• Differences observed during the reconciliation and closing procedure need to be discussed
with the management personnel responsible for providing oversight over each respective
area of the financial reporting cycle. Any adjustments necessary as a result of these
procedures should be posted in a timely manner and before the closing is completed.
Internal control manuals should be evaluated to ensure that they provide a clear and
descriptive flowchart which details personnel involved, flow of information, estimated time
frames for deliverables, and other control procedures relevant to the Department's
operations. The Department should also evaluate its existing manuals to determine if they
are updated and accurately reflect the procedures the Department currently carries out and
ensure that these are in compliance with federal requirements. Updated written procedures
and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted
efforts, enhancing the efficiency of the operations of the Department.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan.
Criteria
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards, Part 200.512, Report Submission, (a) General, (I) states that the audit must be completed,
and the data collection form and reporting package must be submitted within the earlier of 30
calendar days after receipt of the auditors' report(s), or nine months after the end of the audit period.
Condition
The Department did not comply with the required due date for the submission of the Single Audit
Report Package as a result of systematic issues which have led to delays in the receipt and processing
of information required as part of the Single Audit.
Effect
The Department will be considered delinquent in the submission of the Single Audit Report Package
and if it does not respond to follow-up procedures from federal agencies, may face sanctions such
as:
• Draw-Down Restrictions
• Reimbursable Draw Down
• Withholding a Percentage of Federal Funds
• Suspension of Federal Funds
• Termination of Grant
Cause
During March 2020, the government of Puerto Rico declared a general lockdown as a result of the
COVID-19 Pandemic which had a significant impact in governmental agencies and businesses
across Puerto Rico, delaying operations on an island-wide scale. This resulted in significant delays
in the completion of the Single audits for the past fiscal periods which in turn has resulted in
complications regarding filing within required deadlines. In addition, the Department experienced
a high rate of turnover in personnel, in addition to the observations regarding reconciliation of
financial information as mentioned in audit finding 2021-01 and 2021-02, which resulted in
additional efforts to properly organize information, therefor causing significant delays in the flow
of information and completion of the 2021 audit.
Recommendation
The Department must designate work teams amongst all relevant administrations which serve as
liaisons with auditors and be responsible for the delivery of information and documentation to
ensure compliance with due dates. The Department should maintain a clear line of communication
throughout its administrations and follow up accordingly to maintain a continuous flow of
information during audit procedures. In addition, the Department should request periodic follow-up
meetings with auditors to address any audit issues encountered which may affect meeting
established deadlines.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan
Criteria:
Eligibility- Individual
Material Weakness and Noncompliance
The Department as an eligible State has submitted to the Secretary of the U.S. Treasury a State Plan
that outlines the way the State intends to conduct the TANF program as requested by 42 U.S.C. Part
602 Section (a)(1)(A)(i). The State Plan shall set forth objective criteria for the delivery of benefits
and the determination of eligibility and for fair and equitable treatment, including an explanation of
how the State will provide opportunities for recipients who have been adversely affected to be heard
in a State administrative or appeal process as required by 42 U.S.C. Part 602 Section (a) (1) (B) (iii).
The Temporary Assistance for Needy Families Program State Plan of Operation for fiscal years
2018 through 2020 of the Government of Puerto Rico (the State Plan), Chapter IV-Application
Process, establishes financial and non-financial eligibility requirements for applications and
redeterminations; the assistance unit that will be considered for benefits and services; supportive
evidence of eligibility requirements; and other eligibility factors and criteria
Condition:
We noted several files for participants of the referenced federal award were not complete to evaluate
properly and conclude participant/beneficiary was eligible, as required by the Department
procedures and federal law. As a result, we could not conclude participants reviewed were eligible
to receive benefits as required by the federal award.
Perspective - We selected a sample of fifteen (15) participant files as part of compliance testing
regarding eligibility, auditors noted several cases in which the following documentation was not
present in participants' files as follows:
• (4) Verification of Valid ID.
• (7) Income Verification Form for audited period.
• (2) Information Verification Form.
• (1) Participant file was not available for our review.
The valid identification is an eligibility control established in the program's state plan to prove the
existence of participants.
The Income Verification Form is a document completed by the TSAF (evaluators) to determine if
the applicant's net income, for a given period, does not exceed the Maximum Monthly Income for
compliance with the 150°0 poverty threshold.
Information Verification Forms must be completed during initial and re-evaluation processes to track
any change on the participants' attributes (whether income or Non income attributes).
Effect:
The Department may be qualifying participants who do not meet the eligibility requirements
established by federal regulations. This may ultimately result in sanctions, reduced funding, having
to return monies to the federal agency, or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion regarding the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. All documents established by the Department to evaluate and conclude participants
are eligible, need to be obtained and evidenced in the participant's file.
The Department should also properly communicate eligibility verification procedures to employees
and provide a clear outline as to the tasks, responsibilities, and supervision and approval tasks for
each employee within the eligibility verification process.
In case, any document established for verification of eligibility is temporarily waived due to specific
reasons (natural disasters, pandemic, etc.) the Department should formally communicate the
provisions of the temporary waiver, obtain approval of the federal awarding agency, and formal
communication should be included in the participant's file.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's corrective action plan
Criteria
Any family that includes an adult or minor child head of household or a spouse of the head of
household who has received assistance under any state program funded by federal TANF funds for
60 months (whether or not consecutive) is ineligible for additionally federally funded TANF
assistance. However, the state may extend assistance to a family on the basis of hardship, as defined
by the state, or if a family member has been battered or subjected to extreme cruelty. (42 USC
608(a)(7); 45 CFR sections 264.1(a), (b), and (c))
The TANF State Plan Section V Special Provisions, Point 2 states: Puerto Rico's eligibility and
payment standards will be utilized for families who arrive from another state or territory, rather than
using the latter's standards. Periods of cash assistance received under the TANF Program in another
state or territory will count towards TANF participant's lifetime limit of consecutive or nonconsecutive
60 months of assistance.
Condition
We noted the Department concluded a participant was eligible to be a beneficiary of the federal
award when it did not comply with the requirement established for eligibility. The participant
received benefits during a period that exceeded 60 months.
Perspective We selected a sample of fifteen (15) participant files as part of compliance testing
regarding the eligibility requirement. Auditors observed one (1) instance in which a participant
continued to receive program benefits after exceeding the 60-month period established for Category
C (head of household) participants without approval or justification. The Participant exceeded the
maximum participation period by a total of six (6) months.
Effect:
As a result, the Department has disbursed federal program benefits to ineligible participants. This
may ultimately result in sanctions, reduced funding, having to return monies to the federal agency,
or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion over the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. Emphasis and efforts should be directed towards minimizing the time elapsed
between the evaluation of eligibility technicians and corresponding supervisors to properly detect
any potential errors before disbursement of funds occurs. The Department should also properly
communicate eligibility verification procedures to employees and provide a clear outline as to the
tasks, responsibilities, and supervision and approval tasks for each employee within the eligibility
verification process.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's Corrective Action Plan
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.
The Department's Local Office Procedure Manual (the "Manual"), establishes the following
procedures for the exchange of information of persons receiving Social Security Benefits
(BENDEX): (a) The BENDEX list is issued monthly to the Director of each Region. (b) The
Regional Director sends it to the corresponding local office. (c) The list is assigned and delivered to
the technicians to crosscheck the information of the list with the participants' file. (d) The technicians
will make a note on the Daily Contact Form (ADSEF-106G) including the finding, date of
crosscheck, and name. In the BENDEX list the technicians must write their initials and the date on
which the evaluation was made.
Condition:
We noted several files for participants of the referenced federal award were not complete to evaluate
properly and conclude participant/beneficiary was eligible, as required by the Department
procedures and federal law. As a result, we could not conclude participants reviewed were eligible
to receive benefits as required by the federal award.
Perspective - We selected a sample of 15 participant files as part of compliance testing regarding
eligibility, auditors noted several cases in which the following documentation was not present in
participants' files as follows:
• (4) Period of Participation Form. (Cat. C)
• (3) Verification of eligible age of all minors within familiar unit. (Cat. C)
• (1) Child Support Agreement for non-custodial parents. (Cat. C)
• (2) Verification of Valid ID. (Cat. A & D)
• (2) Medical Cert cation From Specialist Form (TANF-34). (Cat. D)
• (7) Benefit Determination Worksheet for audited period. (All Cat.)
• (1) Participant file was not available for our review.
The Participation Verification Form is a form completed by TSAF when reevaluating a case to
ascertain that a participant has not exceeded the 60-month period established by the program for
category C participants.
The Child Support Cooperation Agreement for non-custodial parents is an eligibility requirement
for all Category C participants as evidence of custodial parent's cooperation with the ASUME
administration in identifying the minor's father and establishing an alimony.
The Valid Identification is an eligibility control established in the program's state plan to prove the
existence of participants.
The Medical Certification From Specialist Form (TANF-34) is an eligibility requirement that must
be provided by applicants under category D to certify that they are incapable of compliance with
work, study, or training requirements due to their mental or physical health.
The Benefit Determination Worksheet is a form completed on an annual basis for the determination
and communication of the amount of benefits a participant is eligible to receive during an established
period.
Effect:
The Department may be qualifying participants that do not meet the eligibility requirements
established by federal regulations. This may ultimately result in sanctions, reduced funding, having
to return monies to the federal agency, or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion over the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. All documents established by the Department to evaluate and conclude participants
are eligible, need to be obtained and evidenced in the participant's file.
The Department should also properly communicate eligibility verification procedures to employees
and provide a clear outline as to the tasks, responsibilities, and supervision and approval tasks for
each employee within the eligibility verification process.
In case, any document established for verification of eligibility is temporarily waived due to specific
reasons (natural disasters, pandemic, etc.) the Department should formally communicate the
provisions of the temporary waiver, obtain approval from the federal awarding agency, and formal
communication should be included in the participant's fi le.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's Corrective Action Plan
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 own
funds.
In addition, the state's 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, (b) The financial management system of each non-
Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards
received and expended and the Federal programs under which they were received.
(2) Accurate, current, and complete disclosure of the financial results of each Federal award or
program in accordance with the reporting requirements set forth in §§200.327 Financial reporting
and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately
the source and application of funds for federally funded activities. These records must contain
information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets,
expenditures, income, and interest and be supported by source documentation. (4) Effective control
over, and accountability for, all funds, property, and other assets, and (5) Comparison of
expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto
Rico Government Accounting Law, as amended, states that the accounting system of the
instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide
complete and clear information related to their financial results of operations.
Condition
The Department has a weakened financial reporting system, brought on by several deficiencies
related to the accounting and financial reporting practices of the Department. The deficiencies noted
as part of our procedures are summarized as follows:
• The Department's procedure manuals contain outdated procedures which do not necessarily
reflect the current tasks and operations of the Department.
• The Department does not prepare monthly closings on a recurring and periodic basis.
• The Single Audit Report has not been submitted in a timely manner and audit procedures
are significantly delayed due to a lack of reconciliations and monthly closing procedures.
• Multiple transactions are recognized retroactively several months after occurring, as a result
of the significant delays brought forth by a weak financial reporting system.
• The Department does not have adequate procedures to reconcile, in a timely manner,
financial transactions recorded in the accounting system of the Puerto Rico Treasury
Department with the accounting records maintained by the Department.
Effect
Deficiencies in the financial reporting and accounting practices of the Department may result in the
following:
• Financial Reports which are required as part of compliance with federal programs may be
prepared with inaccurate or incomplete financial information and may not be submitted in a
timely and compliant manner.
• Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants,
among other potential sanctions.
• Inconsistency between the financial information registered in the Department with financial
transactions recognized in the records of the Puerto Rico Treasury Department.
• Difficulties in accurately assessing program performance and monitoring of expenses in line
with budgeted amounts to actual amounts expended as part of program activities.
Inefficiencies and additional effort incurred by employee's part as a result of outdated or
inaccurate procedure manuals. This also results in confusion as to the proper procedures to
follow and the relevant approval and revision tasks to be performed.
• Non-compliance with federal program requirements brought forth as a result of financial
information which is inaccurate.
Cause
The Department has not implemented a uniform internal accounting process that allows all the
Department's administrations (5) to consolidate accounting information for both fiscal and program
periods and reconcile with financial information with the Treasury Department.
In addition, the Department lacks uniform internal accounting software and applications between
the administrations of the Department, which precludes them from timely and accurate consolidation
of financial information.
Recommendation
The Department needs to implement a formal monthly closing of its accounting records and
financial reporting with the purpose of ensuring accurate and timely financial information.
Monthly closing procedures would be carried out most efficiently by developing a logical order for
closing procedures and assigning responsibility for completing the procedures to specific personnel.
As the Department is composed of various administrations, a task force should be assigned to
develop procedures which detail the data-gathering information process to accumulate financial data
of the administrations in a consistent manner. In addition, financial information should be
consolidated at the Department level in order to reconcile with the financial records of the Treasury
Department.
Procedures should include, at a minimum, the following: the month-end period, a list of monthly
closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial
records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after
month end, etc.)
It is recommended that the closing and reconciliation procedures be documented in a checklist that
indicates the responsible individual who will perform each procedure and when completion of each
procedure is due. Following are recommendations regarding the required closing procedures and
suggestions to improve the financial reporting system:
• Determine that all transactions have been recorded and posted. Transactions should be
reviewed for completeness by scanning accounts to determine any unusual balances or
fluctuations from expectations.
• Reconcile general ledger accounts to underlying records and compareireconcile this
information with the records of the Puerto Rico Treasury Department. Any differences
observed during this process should be followed up in a timely manner in order to clarify
and clear any reconciling items between the two sets of financial records.
• Accumulate pertinent information necessary for the preparation of federal reports (financial
and performance reports). In addition, a proper flowchart of procedures and revisions should
be prepared to ensure that federal reports are filed and certified within established deadlines.
• Perform a budgetary analysis by comparing expected amounts of expenditure with actual
results. This will provide a more accurate measure of performance for federal programs and
the overall efficiency in the use of funds of the Department. This will enhance the monitoring
of program performance to ensure compliance with federal regulations and State Plan
objectives.
• Proper storage and backup of Department data files as part of the closing procedure. All files
should be properly backed up before monthly closing is determined to be complete.
• Differences observed during the reconciliation and closing procedure need to be discussed
with the management personnel responsible for providing oversight over each respective
area of the financial reporting cycle. Any adjustments necessary as a result of these
procedures should be posted in a timely manner and before the closing is completed.
Internal control manuals should be evaluated to ensure that they provide a clear and
descriptive flowchart which details personnel involved, flow of information, estimated time
frames for deliverables, and other control procedures relevant to the Department's
operations. The Department should also evaluate its existing manuals to determine if they
are updated and accurately reflect the procedures the Department currently carries out and
ensure that these are in compliance with federal requirements. Updated written procedures
and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted
efforts, enhancing the efficiency of the operations of the Department.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan.
Criteria:
The Department is required to identify in its annual plan the population eligible for NAP benefits.
In testing the propriety of eligibility determinations and disbursements for NAP benefits, the auditor
shall apply the eligibility criteria established by the Department and identified in the annual plan (7
CFR section 285.3(b)(2)).
7 CFR Part 285 Section 3 Plan of Operation, states (b) The plan of operation shall include the
following information: (2) A description of the needy persons residing in the Commonwealth of
Puerto Rico and an assessment of the food and nutrition needs of these persons. The description and
assessment shall demonstrate that the Nutrition Assistance Program is directed toward the neediest
persons in the Commonwealth of Puerto Rico.
Condition:
We noted several files for participants of the referenced federal award were not complete to evaluate
properly and conclude participant/beneficiary was eligible, as required by the Department
procedures and federal law. As a result, we could not conclude participants reviewed were eligible
to receive benefits as required by the federal award.
Perspective — We selected a sample of forty (40) participant files as part of compliance testing
regarding eligibility, auditors noted several cases in which the following documentation was not
present in participants' files as follows:
• (6) Valid ID
• (7) Evidence of Residency
The ID verification of participants is the control established by the administration in its state plan to
confirm the existence of the participants receiving benefits.
Evidence of residency is a control placed by the administration in its state plan to confirm
participants' physical addresses to prevent participants from receiving benefits from two distinct
locations (states) or multiple participants receiving benefits from the same address without being
considered as a familiar unit.
Effect:
The Department may be qualifying participants who do not meet the eligibility requirements
established by federal regulations. This may ultimately result in sanctions, reduced funding, having
to return monies to the federal agency, or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion over the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. All documents established by the Department to evaluate and conclude participants
are eligible, need to be obtained and evidenced in the participant's file.
The Department should also properly communicate eligibility verification procedures to employees
and provide a clear outline as to the tasks, responsibilities, and supervision and approval tasks for
each employee within the eligibility verification process.
In case, any document established for verification of eligibility is temporarily waived due to specific
reasons (natural disasters, pandemic, etc.) the Department should formally communicate the
provisions of the temporary waiver, obtain approval of the federal awarding agency, and formal
communication should be included in the participant's file.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's Corrective Action Plan.
Criteria
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards, Part 200.512, Report Submission, (a) General, (I) states that the audit must be completed,
and the data collection form and reporting package must be submitted within the earlier of 30
calendar days after receipt of the auditors' report(s), or nine months after the end of the audit period.
Condition
The Department did not comply with the required due date for the submission of the Single Audit
Report Package as a result of systematic issues which have led to delays in the receipt and processing
of information required as part of the Single Audit.
Effect
The Department will be considered delinquent in the submission of the Single Audit Report Package
and if it does not respond to follow-up procedures from federal agencies, may face sanctions such
as:
• Draw-Down Restrictions
• Reimbursable Draw Down
• Withholding a Percentage of Federal Funds
• Suspension of Federal Funds
• Termination of Grant
Cause
During March 2020, the government of Puerto Rico declared a general lockdown as a result of the
COVID-19 Pandemic which had a significant impact in governmental agencies and businesses
across Puerto Rico, delaying operations on an island-wide scale. This resulted in significant delays
in the completion of the Single audits for the past fiscal periods which in turn has resulted in
complications regarding filing within required deadlines. In addition, the Department experienced
a high rate of turnover in personnel, in addition to the observations regarding reconciliation of
financial information as mentioned in audit finding 2021-01 and 2021-02, which resulted in
additional efforts to properly organize information, therefor causing significant delays in the flow
of information and completion of the 2021 audit.
Recommendation
The Department must designate work teams amongst all relevant administrations which serve as
liaisons with auditors and be responsible for the delivery of information and documentation to
ensure compliance with due dates. The Department should maintain a clear line of communication
throughout its administrations and follow up accordingly to maintain a continuous flow of
information during audit procedures. In addition, the Department should request periodic follow-up
meetings with auditors to address any audit issues encountered which may affect meeting
established deadlines.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan
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 own
funds.
In addition, the state's 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, (b) The financial management system of each non-
Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards
received and expended and the Federal programs under which they were received.
(2) Accurate, current, and complete disclosure of the financial results of each Federal award or
program in accordance with the reporting requirements set forth in §§200.327 Financial reporting
and 200.328 Monitoring and reporting program performance. (3) Records that identifies adequately
the source and application of funds for federally funded activities. These records must contain
information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets,
expenditures, income, and interest and be supported by source documentation. (4) Effective control
over, and accountability for, all funds, property, and other assets, and (5) Comparison of
expenditures with budget amounts for each Federal award. Act Number 230 of July 23, 1974, Puerto
Rico Government Accounting Law, as amended, states that the accounting system of the
instrumentalities of the Commonwealth of Puerto Rico should be designed to reflect or provide
complete and clear information related to their financial results of operations.
Condition
The Department has a weakened financial reporting system, brought on by several deficiencies
related to the accounting and financial reporting practices of the Department. The deficiencies noted
as part of our procedures are summarized as follows:
• The Department's procedure manuals contain outdated procedures which do not necessarily
reflect the current tasks and operations of the Department.
• The Department does not prepare monthly closings on a recurring and periodic basis.
• The Single Audit Report has not been submitted in a timely manner and audit procedures
are significantly delayed due to a lack of reconciliations and monthly closing procedures.
• Multiple transactions are recognized retroactively several months after occurring, as a result
of the significant delays brought forth by a weak financial reporting system.
• The Department does not have adequate procedures to reconcile, in a timely manner,
financial transactions recorded in the accounting system of the Puerto Rico Treasury
Department with the accounting records maintained by the Department.
Effect
Deficiencies in the financial reporting and accounting practices of the Department may result in the
following:
• Financial Reports which are required as part of compliance with federal programs may be
prepared with inaccurate or incomplete financial information and may not be submitted in a
timely and compliant manner.
• Sanctions, reduced funding, return of monies to federal agencies, cancellation of grants,
among other potential sanctions.
• Inconsistency between the financial information registered in the Department with financial
transactions recognized in the records of the Puerto Rico Treasury Department.
• Difficulties in accurately assessing program performance and monitoring of expenses in line
with budgeted amounts to actual amounts expended as part of program activities.
Inefficiencies and additional effort incurred by employee's part as a result of outdated or
inaccurate procedure manuals. This also results in confusion as to the proper procedures to
follow and the relevant approval and revision tasks to be performed.
• Non-compliance with federal program requirements brought forth as a result of financial
information which is inaccurate.
Cause
The Department has not implemented a uniform internal accounting process that allows all the
Department's administrations (5) to consolidate accounting information for both fiscal and program
periods and reconcile with financial information with the Treasury Department.
In addition, the Department lacks uniform internal accounting software and applications between
the administrations of the Department, which precludes them from timely and accurate consolidation
of financial information.
Recommendation
The Department needs to implement a formal monthly closing of its accounting records and
financial reporting with the purpose of ensuring accurate and timely financial information.
Monthly closing procedures would be carried out most efficiently by developing a logical order for
closing procedures and assigning responsibility for completing the procedures to specific personnel.
As the Department is composed of various administrations, a task force should be assigned to
develop procedures which detail the data-gathering information process to accumulate financial data
of the administrations in a consistent manner. In addition, financial information should be
consolidated at the Department level in order to reconcile with the financial records of the Treasury
Department.
Procedures should include, at a minimum, the following: the month-end period, a list of monthly
closing tasks (post sub ledger balances to general ledgers, post journal entries, reconcile financial
records with those of the Treasury Department, etc.), and the due date of each task (2 weeks after
month end, etc.)
It is recommended that the closing and reconciliation procedures be documented in a checklist that
indicates the responsible individual who will perform each procedure and when completion of each
procedure is due. Following are recommendations regarding the required closing procedures and
suggestions to improve the financial reporting system:
• Determine that all transactions have been recorded and posted. Transactions should be
reviewed for completeness by scanning accounts to determine any unusual balances or
fluctuations from expectations.
• Reconcile general ledger accounts to underlying records and compareireconcile this
information with the records of the Puerto Rico Treasury Department. Any differences
observed during this process should be followed up in a timely manner in order to clarify
and clear any reconciling items between the two sets of financial records.
• Accumulate pertinent information necessary for the preparation of federal reports (financial
and performance reports). In addition, a proper flowchart of procedures and revisions should
be prepared to ensure that federal reports are filed and certified within established deadlines.
• Perform a budgetary analysis by comparing expected amounts of expenditure with actual
results. This will provide a more accurate measure of performance for federal programs and
the overall efficiency in the use of funds of the Department. This will enhance the monitoring
of program performance to ensure compliance with federal regulations and State Plan
objectives.
• Proper storage and backup of Department data files as part of the closing procedure. All files
should be properly backed up before monthly closing is determined to be complete.
• Differences observed during the reconciliation and closing procedure need to be discussed
with the management personnel responsible for providing oversight over each respective
area of the financial reporting cycle. Any adjustments necessary as a result of these
procedures should be posted in a timely manner and before the closing is completed.
Internal control manuals should be evaluated to ensure that they provide a clear and
descriptive flowchart which details personnel involved, flow of information, estimated time
frames for deliverables, and other control procedures relevant to the Department's
operations. The Department should also evaluate its existing manuals to determine if they
are updated and accurately reflect the procedures the Department currently carries out and
ensure that these are in compliance with federal requirements. Updated written procedures
and instructions will prevent or reduce misunderstandings, errors, inefficiencies or wasted
efforts, enhancing the efficiency of the operations of the Department.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan.
Criteria
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards, Part 200.512, Report Submission, (a) General, (I) states that the audit must be completed,
and the data collection form and reporting package must be submitted within the earlier of 30
calendar days after receipt of the auditors' report(s), or nine months after the end of the audit period.
Condition
The Department did not comply with the required due date for the submission of the Single Audit
Report Package as a result of systematic issues which have led to delays in the receipt and processing
of information required as part of the Single Audit.
Effect
The Department will be considered delinquent in the submission of the Single Audit Report Package
and if it does not respond to follow-up procedures from federal agencies, may face sanctions such
as:
• Draw-Down Restrictions
• Reimbursable Draw Down
• Withholding a Percentage of Federal Funds
• Suspension of Federal Funds
• Termination of Grant
Cause
During March 2020, the government of Puerto Rico declared a general lockdown as a result of the
COVID-19 Pandemic which had a significant impact in governmental agencies and businesses
across Puerto Rico, delaying operations on an island-wide scale. This resulted in significant delays
in the completion of the Single audits for the past fiscal periods which in turn has resulted in
complications regarding filing within required deadlines. In addition, the Department experienced
a high rate of turnover in personnel, in addition to the observations regarding reconciliation of
financial information as mentioned in audit finding 2021-01 and 2021-02, which resulted in
additional efforts to properly organize information, therefor causing significant delays in the flow
of information and completion of the 2021 audit.
Recommendation
The Department must designate work teams amongst all relevant administrations which serve as
liaisons with auditors and be responsible for the delivery of information and documentation to
ensure compliance with due dates. The Department should maintain a clear line of communication
throughout its administrations and follow up accordingly to maintain a continuous flow of
information during audit procedures. In addition, the Department should request periodic follow-up
meetings with auditors to address any audit issues encountered which may affect meeting
established deadlines.
Questioned Costs
None
Management's Response
Refer to Grantee's Corrective Action Plan
Criteria:
Eligibility- Individual
Material Weakness and Noncompliance
The Department as an eligible State has submitted to the Secretary of the U.S. Treasury a State Plan
that outlines the way the State intends to conduct the TANF program as requested by 42 U.S.C. Part
602 Section (a)(1)(A)(i). The State Plan shall set forth objective criteria for the delivery of benefits
and the determination of eligibility and for fair and equitable treatment, including an explanation of
how the State will provide opportunities for recipients who have been adversely affected to be heard
in a State administrative or appeal process as required by 42 U.S.C. Part 602 Section (a) (1) (B) (iii).
The Temporary Assistance for Needy Families Program State Plan of Operation for fiscal years
2018 through 2020 of the Government of Puerto Rico (the State Plan), Chapter IV-Application
Process, establishes financial and non-financial eligibility requirements for applications and
redeterminations; the assistance unit that will be considered for benefits and services; supportive
evidence of eligibility requirements; and other eligibility factors and criteria
Condition:
We noted several files for participants of the referenced federal award were not complete to evaluate
properly and conclude participant/beneficiary was eligible, as required by the Department
procedures and federal law. As a result, we could not conclude participants reviewed were eligible
to receive benefits as required by the federal award.
Perspective - We selected a sample of fifteen (15) participant files as part of compliance testing
regarding eligibility, auditors noted several cases in which the following documentation was not
present in participants' files as follows:
• (4) Verification of Valid ID.
• (7) Income Verification Form for audited period.
• (2) Information Verification Form.
• (1) Participant file was not available for our review.
The valid identification is an eligibility control established in the program's state plan to prove the
existence of participants.
The Income Verification Form is a document completed by the TSAF (evaluators) to determine if
the applicant's net income, for a given period, does not exceed the Maximum Monthly Income for
compliance with the 150°0 poverty threshold.
Information Verification Forms must be completed during initial and re-evaluation processes to track
any change on the participants' attributes (whether income or Non income attributes).
Effect:
The Department may be qualifying participants who do not meet the eligibility requirements
established by federal regulations. This may ultimately result in sanctions, reduced funding, having
to return monies to the federal agency, or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion regarding the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. All documents established by the Department to evaluate and conclude participants
are eligible, need to be obtained and evidenced in the participant's file.
The Department should also properly communicate eligibility verification procedures to employees
and provide a clear outline as to the tasks, responsibilities, and supervision and approval tasks for
each employee within the eligibility verification process.
In case, any document established for verification of eligibility is temporarily waived due to specific
reasons (natural disasters, pandemic, etc.) the Department should formally communicate the
provisions of the temporary waiver, obtain approval of the federal awarding agency, and formal
communication should be included in the participant's file.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's corrective action plan
Criteria
Any family that includes an adult or minor child head of household or a spouse of the head of
household who has received assistance under any state program funded by federal TANF funds for
60 months (whether or not consecutive) is ineligible for additionally federally funded TANF
assistance. However, the state may extend assistance to a family on the basis of hardship, as defined
by the state, or if a family member has been battered or subjected to extreme cruelty. (42 USC
608(a)(7); 45 CFR sections 264.1(a), (b), and (c))
The TANF State Plan Section V Special Provisions, Point 2 states: Puerto Rico's eligibility and
payment standards will be utilized for families who arrive from another state or territory, rather than
using the latter's standards. Periods of cash assistance received under the TANF Program in another
state or territory will count towards TANF participant's lifetime limit of consecutive or nonconsecutive
60 months of assistance.
Condition
We noted the Department concluded a participant was eligible to be a beneficiary of the federal
award when it did not comply with the requirement established for eligibility. The participant
received benefits during a period that exceeded 60 months.
Perspective We selected a sample of fifteen (15) participant files as part of compliance testing
regarding the eligibility requirement. Auditors observed one (1) instance in which a participant
continued to receive program benefits after exceeding the 60-month period established for Category
C (head of household) participants without approval or justification. The Participant exceeded the
maximum participation period by a total of six (6) months.
Effect:
As a result, the Department has disbursed federal program benefits to ineligible participants. This
may ultimately result in sanctions, reduced funding, having to return monies to the federal agency,
or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion over the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. Emphasis and efforts should be directed towards minimizing the time elapsed
between the evaluation of eligibility technicians and corresponding supervisors to properly detect
any potential errors before disbursement of funds occurs. The Department should also properly
communicate eligibility verification procedures to employees and provide a clear outline as to the
tasks, responsibilities, and supervision and approval tasks for each employee within the eligibility
verification process.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's Corrective Action Plan
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.
The Department's Local Office Procedure Manual (the "Manual"), establishes the following
procedures for the exchange of information of persons receiving Social Security Benefits
(BENDEX): (a) The BENDEX list is issued monthly to the Director of each Region. (b) The
Regional Director sends it to the corresponding local office. (c) The list is assigned and delivered to
the technicians to crosscheck the information of the list with the participants' file. (d) The technicians
will make a note on the Daily Contact Form (ADSEF-106G) including the finding, date of
crosscheck, and name. In the BENDEX list the technicians must write their initials and the date on
which the evaluation was made.
Condition:
We noted several files for participants of the referenced federal award were not complete to evaluate
properly and conclude participant/beneficiary was eligible, as required by the Department
procedures and federal law. As a result, we could not conclude participants reviewed were eligible
to receive benefits as required by the federal award.
Perspective - We selected a sample of 15 participant files as part of compliance testing regarding
eligibility, auditors noted several cases in which the following documentation was not present in
participants' files as follows:
• (4) Period of Participation Form. (Cat. C)
• (3) Verification of eligible age of all minors within familiar unit. (Cat. C)
• (1) Child Support Agreement for non-custodial parents. (Cat. C)
• (2) Verification of Valid ID. (Cat. A & D)
• (2) Medical Cert cation From Specialist Form (TANF-34). (Cat. D)
• (7) Benefit Determination Worksheet for audited period. (All Cat.)
• (1) Participant file was not available for our review.
The Participation Verification Form is a form completed by TSAF when reevaluating a case to
ascertain that a participant has not exceeded the 60-month period established by the program for
category C participants.
The Child Support Cooperation Agreement for non-custodial parents is an eligibility requirement
for all Category C participants as evidence of custodial parent's cooperation with the ASUME
administration in identifying the minor's father and establishing an alimony.
The Valid Identification is an eligibility control established in the program's state plan to prove the
existence of participants.
The Medical Certification From Specialist Form (TANF-34) is an eligibility requirement that must
be provided by applicants under category D to certify that they are incapable of compliance with
work, study, or training requirements due to their mental or physical health.
The Benefit Determination Worksheet is a form completed on an annual basis for the determination
and communication of the amount of benefits a participant is eligible to receive during an established
period.
Effect:
The Department may be qualifying participants that do not meet the eligibility requirements
established by federal regulations. This may ultimately result in sanctions, reduced funding, having
to return monies to the federal agency, or cancellation of grants.
Cause:
The Department is not adhering to the established internal control procedures and not adequately
documenting its evaluation and conclusion over the eligibility of participants.
Recommendation:
The Department must adhere to its existing internal control procedures to properly document
eligibility verification procedures performed and to ensure compliance with federal regulations and
the State Plan. All documents established by the Department to evaluate and conclude participants
are eligible, need to be obtained and evidenced in the participant's file.
The Department should also properly communicate eligibility verification procedures to employees
and provide a clear outline as to the tasks, responsibilities, and supervision and approval tasks for
each employee within the eligibility verification process.
In case, any document established for verification of eligibility is temporarily waived due to specific
reasons (natural disasters, pandemic, etc.) the Department should formally communicate the
provisions of the temporary waiver, obtain approval from the federal awarding agency, and formal
communication should be included in the participant's fi le.
Questioned Costs:
Could not be determined.
Management's Response:
Refer to Grantee's Corrective Action Plan