Corrective Action Plans

Finding 1221600 (2024-044)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Reporting Internal Control / Segregation of Duties Subrecipient Monitoring § 200.302 § 200.303 § 200.305 § 200.328 § 200.334

VIEWS OF RESPONSIBLE OFFICIALS ADFAN appreciates the observations presented in the audit and acknowledges the importance of strengthening its reporting processes. The agency recognizes that staffing limitations within the Finance Division have affected the ability to perform timely reviews and ensur...

VIEWS OF RESPONSIBLE OFFICIALS ADFAN appreciates the observations presented in the audit and acknowledges the importance of strengthening its reporting processes. The agency recognizes that staffing limitations within the Finance Division have affected the ability to perform timely reviews and ensure adequate segregation of duties. Additionally, the Finance Procedures Manual referenced during the audit was approved in 2009 and is currently undergoing a comprehensive revision to reflect the agency’s present operational structure and accounting practices. ADFAN is committed to improving its internal controls, enhancing staff training, and implementing the necessary measures to ensure full compliance with federal reporting requirements moving forward. IMPLEMENTATION DATE December 31, 2026 RESPONSIBLE PERSON Yazmín Cruz Colón, Budget Director

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Finding 1221598 (2024-043)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Internal Control / Segregation of Duties Questioned Costs Subrecipient Monitoring § 200.303

VIEWS OF RESPONSIBLE OFFICIALS ADFAN reaffirms its commitment to strengthening its financial reporting processes and ensuring full compliance with federal requirements. The agency will ensure that the SF 425 is completed using the appropriate accounting basis consistent with the financial system in ...

VIEWS OF RESPONSIBLE OFFICIALS ADFAN reaffirms its commitment to strengthening its financial reporting processes and ensuring full compliance with federal requirements. The agency will ensure that the SF 425 is completed using the appropriate accounting basis consistent with the financial system in use, and that all reported expenditures reconcile accurately with the accounting database. A reviewer will be designated to support the verification of information entered by the preparer, and a structured review process will be implemented prior to report submission. These corrective actions will be undertaken while acknowledging the current staffing limitations within the finance area and the ongoing revision of the Procedures Manual. Interim operational guidance will be provided to personnel to promote consistency and compliance until the updated manual is finalized. IMPLEMENTATION DATE December 31, 2026 RESPONSIBLE PERSON José A. Ruiz Quiñones, Interim Director of Finance

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Finding 1221597 (2024-042)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Internal Control / Segregation of Duties Questioned Costs § 200.302 § 200.305 § 200.334 § 200.335 § 200.336

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a comprehensive internal control framework. We are prioritizing the development of formal written policies, the standardization of regional data reporting, and the implementation of a rigorous oversight system to ensure all TANF progr...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a comprehensive internal control framework. We are prioritizing the development of formal written policies, the standardization of regional data reporting, and the implementation of a rigorous oversight system to ensure all TANF programmatic reports are complete, accurate, and filed on time. Action Steps: 1. Revise the Protocol of “TANF – Reporting Procedures Manual" that defines the full data lifecycle: collection, regional validation, quality control, supervisory review, and submission. 2. Regional Standardization – Establish mandatory, standardized templates for all regional offices to report programmatic data, ensuring uniformity and minimizing data entry errors. 3. Reporting Calendar & Oversight – Implement a master’s "Federal Reporting Calendar" that tracks all due dates for ACF-199, ACF-209, and other reports, with automated alerts sent to management 30 days prior to submission. 4. Training & Certification – Launch a mandatory training curriculum for all staff involved in reporting, focusing on 45 CFR Part 265 standards, data accuracy, and the consequences of reporting failures. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Blanca M. Medina Díaz Administrator Gerhil Medina Baez Auxiliary Administrator Operational Services Johana Hernandez Andaluz TANF Program Director

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Finding 1221596 (2024-041)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Reporting Subrecipient Monitoring Internal Control / Segregation of Duties § 200.302 § 200.303 § 200.305 § 200.328 § 200.329

VIEWS OF RESPONSIBLE OFFICIALS To resolve this, we are integrating these reporting requirements into the new Government ERP system, scheduled for launch in July 2026. This platform will provide the capability to generate accurate General Ledger data and automated financial reports, ensuring that all...

VIEWS OF RESPONSIBLE OFFICIALS To resolve this, we are integrating these reporting requirements into the new Government ERP system, scheduled for launch in July 2026. This platform will provide the capability to generate accurate General Ledger data and automated financial reports, ensuring that all LIHEAP performance data is traceable to verified accounting sources and subject to multi-level supervisory approval workflows. Action Steps: 1. ERP-Driven Financial Reporting – Configure the ERP system to generate General Ledger reports that align precisely with LIHEAP financial data requirements. The ERP will serve as the "Single Source of Truth," eliminating discrepancies between accounting and reporting. 2. Automated Reconciliation Workflows – Utilize the ERP’s native reconciliation engine to automatically match expenditure records against reported LIHEAP budget obligations, ensuring figures are accurate and validated before submission. 3. Segregation of Duties (SOPs) – Formalize protocols where the ERP system enforces mandatory "Preparer-Approver-Certifier" roles. This ensures that performance data compiled by program staff is independently validated against ERP financial records by a supervisor. 4. Training on ERP Reporting – Train all staff on how to use ERP reporting modules for financial data extraction and the new protocols for reconciling this data with programmatic LIHEAP performance metrics. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Eddie J. Burgos Auxiliary Administrator for Finance and Budget Carlos Martinez Colón Finance Director Vanessa Ayala Gerena Director of Budget Nesvia Fontanez Marín Principal Accountant Federal Reports

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Finding 1221595 (2024-040)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Internal Control / Segregation of Duties Questioned Costs Subrecipient Monitoring § 200.302

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a rigorous compliance framework to ensure all reported Maintenance-of-Effort (MOE) expenditures are internally consistent, fully supported by source documentation, and reconciled prior to submission. We will formalize these processes ...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a rigorous compliance framework to ensure all reported Maintenance-of-Effort (MOE) expenditures are internally consistent, fully supported by source documentation, and reconciled prior to submission. We will formalize these processes through new protocols and dedicated oversight to guarantee the integrity of our federal reporting IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Eddie J. Burgos Auxiliary Administrator for Finance and Budget Carlos Martinez Colón Finance Director Vanessa Ayala Gerena Director of Budget Nesvia Fontanez Marín Principal Accountant Federal Reports

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Finding 1221594 (2024-039)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Reporting Questioned Costs § 200.1 § 200.331

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a robust internal control framework specifically dedicated to FFATA compliance. We are developing comprehensive protocols that define clear roles, responsibilities, and standardized procedures to ensure all applicable subawards are id...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a robust internal control framework specifically dedicated to FFATA compliance. We are developing comprehensive protocols that define clear roles, responsibilities, and standardized procedures to ensure all applicable subawards are identified, monitored, and reported to the FSRS in strict accordance with 2 CFR Part 170. Action Steps: 1. Protocol Development - Create a new "FFATA Compliance Protocol" that details the specific steps for subrecipient determination, data collection, and FSRS submission, while revising existing procurement SOPs to integrate these checks. 2. Roles & Responsibilities – Formalize the assignment of duties: (a) The Grants Management Officer will classify the entity as a subrecipient or contractor; (b) the Compliance Coordinator will extract the required data; and (c) the Finance Director will perform a final review before FSRS submission. 3. Subrecipient Determination Checklist – Implement a mandatory "Subrecipient Determination Checklist" based on 2 CFR §200.331 criteria, required for every new agreement exceeding $30,000. 4. Specialized Staff Training – Conduct mandatory training for procurement and grant personnel on FFATA regulations, the specific criteria for subrecipient classification, and the internal steps required for FSRS reporting IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Eddie J. Burgos – Auxiliary Administrator for Finance and Budget Carlos Martinez Colón – Finance Director Vanessa Ayala Gerena – Director of Budget Gerhil Medina Baez – Auxiliary Administrator Operational Services Johana Hernandez Andaluz – TANF Program Director

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Finding 1221593 (2024-038)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Questioned Costs Subrecipient Monitoring Material Weakness

VIEWS OF RESPONSIBLE OFFICIALS For the purpose of strengthening compliance with the requirements established under the Federal Funding Accountability and Transparency Act (FFATA) and other applicable federal regulations, ACUDEN developed a Standard Operating Procedure (SOP) that establishes clear an...

VIEWS OF RESPONSIBLE OFFICIALS For the purpose of strengthening compliance with the requirements established under the Federal Funding Accountability and Transparency Act (FFATA) and other applicable federal regulations, ACUDEN developed a Standard Operating Procedure (SOP) that establishes clear and uniform guidelines for the collection, validation, and reporting of information related to federal funds. This procedure defines the responsibilities of the areas involved in the management of federal awards, promotes the timely submission of accurate and complete reports, and ensures that processes related to the identification and reporting of eligible subawards are carried out. IMPLEMENTATION DATE July 15, 2026 RESPONSIBLE PERSON Rafael E. Vargas Ortiz Deputy Administrator

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Finding 1221589 (2024-037)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Reporting Internal Control / Segregation of Duties Questioned Costs § 200.302 § 200.303 § 200.305 § 200.334 § 200.335

VIEWS OF RESPONSIBLE OFFICIALS To resolve these systemic issues, the Government of Puerto Rico is transitioning to a new Enterprise Resource Planning (ERP) system, scheduled for live launch in July 2026. This modern platform will centralize our financial data and provide the necessary automation to ...

VIEWS OF RESPONSIBLE OFFICIALS To resolve these systemic issues, the Government of Puerto Rico is transitioning to a new Enterprise Resource Planning (ERP) system, scheduled for live launch in July 2026. This modern platform will centralize our financial data and provide the necessary automation to ensure that all federal reports are accurate, traceable to source documentation, and subject to multi-level supervisory approval workflows. Action Steps: 1. ERP Implementation & Workflow – Deploy the new ERP system to centralize all financial accounting. The system will be configured to require distinct user roles for the preparation, review, and certification of federal reports. 2. Automated Traceability – Utilize ERP reporting tools to ensure all administrative expenditures are linked to valid source documentation (e.g., invoices, payroll registers), providing a clear audit trail from report to General Ledger. 3. Implement report validation tool – No federal report may be submitted until an independent, designated official has digitally validated the report against source accounting records. 4. Reconciliation SOPs – Formalize a written SOP requiring monthly reconciliations of reported federal expenditures against the ERP database. These reconciliations will be retained as evidence of review for audit purposes. 5. Training & Accountability – Conduct mandatory training for all staff on new reporting workflows and the importance of segregation of duties, ensuring all personnel understand their responsibility in maintaining accurate financial data. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Eddie J. Burgos Auxiliary Administrator for Finance and Budget Carlos Martinez Colón Finance Director Vanessa Ayala Gerena Director of Budget

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Finding 1221575 (2024-035)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Reporting Subrecipient Monitoring § 200.510

VIEWS OF RESPONSIBLE OFFICIALS To resolve this finding, the Government of Puerto Rico is transitioning to a new Enterprise Resource Planning (ERP) system. This new government-wide financial system is scheduled for a live launch in July 2026. This modern platform will provide the PRDF with the capabi...

VIEWS OF RESPONSIBLE OFFICIALS To resolve this finding, the Government of Puerto Rico is transitioning to a new Enterprise Resource Planning (ERP) system. This new government-wide financial system is scheduled for a live launch in July 2026. This modern platform will provide the PRDF with the capability to produce all required SEFA preparation for Single Audits in a more agile and reliable manner. By streamlining data collection and fiscal reporting, this system will ensure that the Department meets all federal audit requirements on time. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Yessenia Peña Díaz Assistance Secretary of Administration

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Finding 1221560 (2024-032)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Matching / Level of Effort / Earmarking Subrecipient Monitoring Reporting § 200.303

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to leveraging the new Government ERP for Matching, LOE, and Earmarking functions, while implementing a tracking system to document the MOE requirement. We will ensure that all data is traceable, accurate, and fully reconcilable to our core financial ...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to leveraging the new Government ERP for Matching, LOE, and Earmarking functions, while implementing a tracking system to document the MOE requirement. We will ensure that all data is traceable, accurate, and fully reconcilable to our core financial records. Action Steps: 1. Implement an MOE Tracking Tool - To secure, centralized "MOE Compliance Repository". This system will ingest raw expenditure data, map it to TANF-eligible families, and provide an audit-ready trial for the $21.1M requirement. 2. Inter-Agency Data Integration - Establish a formal Data Sharing Agreement and automated interface with ASES (and other contributing agencies) to push expenditure data directly into our MOE repository, eliminating manual reliance on partner reports. 3. Automated Segregation of Duties - Configure the workflow to enforce a mandatory "Preparer-Approver-Certifier" process. The system will prevent report submission unless it has been digitally signed by the designated Finance Officer after reconciliation. 4. Reconciliation Controls - Implement a "Cross-System Reconciliation Control" 5. Appointment of Compliance Official - Designate an MOE Compliance Officer responsible for the continuous, year-round monitoring of expenditure levels and for coordinating inter-agency requests for documentation. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Waleska Lopez Faria Assistant Secretary for Human Resources Assistant Administrator on Administration – Eddie Burgos Budget Director – Vanessa Ayala Financial Director – Carlos Medina

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Finding 1221559 (2024-031)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Questioned Costs Subrecipient Monitoring Eligibility § 200.334

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a rigorous compliance framework to ensure all participant files are complete, accurate, and readily available for audit as required by federal regulations. Action Step: 1. Standardized Documentation Checklist- Implement a mandatory, u...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a rigorous compliance framework to ensure all participant files are complete, accurate, and readily available for audit as required by federal regulations. Action Step: 1. Standardized Documentation Checklist- Implement a mandatory, uniform "Eligibility Documentation Checklist" that must be completed for 100% of non-PAN/TANF applicants, ensuring ID, residency, and utility evidence are present before approval. 2. Supervisory Sign-off - Require a supervisor to perform a "Document Completeness Review" for every non-PAN/TANF file before the benefit is authorized. Files lacking mandatory documentation will be rejected by the system/workflow automatically. 3. Analysis of the Existing File Uniformity Procedure for Compliance Verification – Assessment of the physical and digital filing layout across all regions. A uniform legend and organization protocol will be mandated to facilitate monitoring and eliminate systemic filing errors. 4. Compliance Training - Execute mandatory, recurring training sessions for all regional staff on document requirements and the legal necessity of preserving records for the full three-year federal mandate. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Blanca M. Medina Díaz Administrator Gerhil Medina Baez Auxiliary Administrator Operational Services Marta Soto Ayala NAP Program Director Johana Hernandez Andaluz TANF Program Director

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Finding 1221554 (2024-029)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Eligibility § 200.303

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to a comprehensive transformation of our eligibility lifecycle. We are implementing a standardized, high-efficiency recertification model that accelerates the verification process while simultaneously enforcing strict compliance with all federal docu...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to a comprehensive transformation of our eligibility lifecycle. We are implementing a standardized, high-efficiency recertification model that accelerates the verification process while simultaneously enforcing strict compliance with all federal documentation requirements and cybersecurity protocols. Action Step: 1. Standardized SOPs & File Uniformity – Implement a mandatory "TANF Case Management Handbook." This SOP mandates a uniform file legend and sequence for all regions, ensuring that evidence for Child Support, IRPs, and school attendance is consistently filed. 2. Revised Recertification Protocol – Revise the recertification workflow to reduce processing times. This includes pre-filling eligibility renewal forms with existing data and automating the flagging of missing documents 30 days prior to the expiration of the 6-month certification period. 3. Mandatory Supervisory Review – Supervisors will approve a verification checklist for every new case and recertification, confirming that all 11 required documents are present before benefit approval. 4. Continuous Training Initiative – Launch a mandatory quarterly training course for all staff on eligibility rules, the 60-month time limit tracking, and the legal consequences of improper benefit issuance. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Blanca M. Medina Díaz Administrator Gerhil Medina Baez Auxiliary Administrator Operational Services Johana Hernandez Andaluz TANF Program Director

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Finding 1221553 (2024-028)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Eligibility § 200.303

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to a comprehensive transformation of our eligibility lifecycle. We are implementing a standardized, high-efficiency recertification model that accelerates the verification process while simultaneously enforcing strict compliance with all federal docu...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to a comprehensive transformation of our eligibility lifecycle. We are implementing a standardized, high-efficiency recertification model that accelerates the verification process while simultaneously enforcing strict compliance with all federal documentation requirements and cybersecurity protocols. Action Step: 1. Standardized SOPs & File Uniformity Implement a mandatory "TANF Case Management Handbook." This SOP mandates a uniform file legend and sequence for all regions, ensuring that evidence for Child Support, IRPs, and school attendance is consistently filed. 2. Revised Recertification Protocol Revise the recertification workflow to reduce processing times. This includes pre-filling eligibility renewal forms with existing data and automating the flagging of missing documents 30 days prior to the expiration of the 6-month certification period. 3. Mandatory Supervisory Review Supervisors will approve a verification checklist for every new case and recertification, confirming that all 11 required documents are present before benefit approval. 4. Continuous Training Initiative Launch a mandatory quarterly training for all staff on eligibility rules, the 60-month time limit tracking, and the legal consequences of improper benefit issuance IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Blanca M. Medina Díaz Administrator Gerhil Medina Baez Auxiliary Administrator Operational Services Johana Hernandez Andaluz TANF Program Director

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Finding 1221552 (2024-027)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Eligibility § 200.303

VIEWS OF RESPONSIBLE OFFICIALS During Fiscal Year 2024, started to eliminate the use of Social Security Numbers as primary case identifiers and started to implement a system generated unique internal ID for all participants, strengthening adherence to federal PII safeguarding requirements. Action St...

VIEWS OF RESPONSIBLE OFFICIALS During Fiscal Year 2024, started to eliminate the use of Social Security Numbers as primary case identifiers and started to implement a system generated unique internal ID for all participants, strengthening adherence to federal PII safeguarding requirements. Action Step: 1. Standardized SOP’s – Develop and distribute a mandatory "Eligibility Determination & File Maintenance Manual." This SOP will supersede current regional methods and outline exactly how to document income, verify citizenship, and conduct recertifications. 2. Automated Eligibility Verification – Integrate the Eligibility System with external verification databases (such as income verification sources) to replace reliance on estimates, ensuring all eligibility determinations are based on certified, documented data. 3. Mandatory Supervisory Review – Establish a mandatory "Dual-Control" review process. Before any eligibility determination is finalized, a supervisor must sign off on the completeness of the documentation (e.g., Authorization Release, Citizenship Declaration). 4. Training & Certification – Launch a recurring, mandatory training program for all eligibility technicians and supervisors. Training will cover regulatory compliance (2 CFR §200.303), PII protection, and the correct application of verification methods. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Blanca M. Medina Díaz Administrator Gerhil Medina Baez Auxiliary Administrator Operational Services Marta Soto Ayala NAP Program Director`

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Finding 1221551 (2024-026)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Cash Management Internal Control / Segregation of Duties § 200.302 § 200.303 § 200.305

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to a fundamental restructuring of our cash management lifecycle. By migrating drawdown processes into our ERP system, we will ensure that every request is supported by system-generated documentation, enforced through systematic segregation of duties,...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to a fundamental restructuring of our cash management lifecycle. By migrating drawdown processes into our ERP system, we will ensure that every request is supported by system-generated documentation, enforced through systematic segregation of duties, and fully reconciled against the general ledger in real-time. Action Step: 1. ERP-Based SOP Manual-Implement of the Procedure Manual of ERP system. This manual will supersede legacy documentation and clearly map every procedural step to a specific ERP function. 2. Systemic Segregation ERP is configurated to enforce mandatory "Preparer" and "Approver" roles. The system will prevent a single user from both creating and authorizing a drawdown request, ensuring logical segregation of duties. 3. Automated Reconciliation-Implement a system-level control where the ERP automatically reconciles drawdown requests. Any variance will trigger a "Pending Review" flag, preventing unauthorized processing. 4. Real-Time Supervisory Review-Require supervisors to conduct an audit of all drawdown documentation directly within the ERP interface. No request will be released for funding without a digital system approval following a reconciliation review IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Eddie J. Burgos Auxiliary Administrator for Finance and Budget

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Finding 1221550 (2024-025)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Internal Control / Segregation of Duties Questioned Costs § 200.302 § 200.305 § 200.334 § 200.335 § 200.336

VIEWS OF RESPONSIBLE OFFICIALS ADFAN concurs with the finding. The agency acknowledges the requirement to maintain written procedures in accordance with 2 CFR §200.302, including procedures related to cash management and the determination of allowable costs under federal awards. The condition identi...

VIEWS OF RESPONSIBLE OFFICIALS ADFAN concurs with the finding. The agency acknowledges the requirement to maintain written procedures in accordance with 2 CFR §200.302, including procedures related to cash management and the determination of allowable costs under federal awards. The condition identified was impacted by limited staffing resources within the Finance Area, which affected the timely completion and formalization of the required written procedures. In addition, the Finance Procedures Manual is currently under review and revision to ensure compliance with Uniform Guidance requirements and to strengthen internal controls over federal programs. As corrective action, ADFAN is completing the update and formalization of the Finance Procedures Manual, which will incorporate the written procedures required by Uniform Guidance. Upon completion, the revised manual will be formally approved, communicated to relevant personnel, and implemented across the agency. Management will also continue assessing staffing needs and resource allocation within the Finance Area to support the ongoing maintenance and monitoring of financial policies and procedures. IMPLEMENTATION DATE December 31, 2026 RESPONSIBLE PERSON Rafael López Arocho Assistant Administrator on Administration

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Finding 1221548 (2024-024)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Questioned Costs Allowable Costs / Cost Principles § 200.302 § 200.305 § 200.328 § 200.329 § 200.334

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to transitioning from manual, offline tracking to a fully integrated, system-based approach within our Enterprise Resource Planning (ERP) system. Action Step: 1. ERP System Configuration: Configure the ERP system to automatically flag and categorize ...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to transitioning from manual, offline tracking to a fully integrated, system-based approach within our Enterprise Resource Planning (ERP) system. Action Step: 1. ERP System Configuration: Configure the ERP system to automatically flag and categorize transactions eligible for indirect cost calculation by class object, replacing manual Excel-based methods. 2. Indirect Cost SOP-Develop and implement written formal procedures detailing the extraction of data from the ERP, ensuring traceability back to the source transaction IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Eddie J. Burgos Auxiliary Administrator for Finance and Budget Carlos Martinez Colón Finance Director Vanessa Ayala Gerena Director of Budget

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Finding 1221546 (2024-023)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Allowable Costs / Cost Principles § 200.302 § 200.303 § 200.305 § 200.328 § 200.329

VIEWS OF RESPONSIBLE OFFICIALS ADSEF acknowledges the findings regarding weaknesses in the Random Moment Sampling (RMS) methodology used for allocating administrative costs. We conclude that the absence of formal written procedures, combined with insufficient communication between the Human Resource...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF acknowledges the findings regarding weaknesses in the Random Moment Sampling (RMS) methodology used for allocating administrative costs. We conclude that the absence of formal written procedures, combined with insufficient communication between the Human Resources Appointments Office and the Finance Division, has contributed to inaccuracies in the distribution of administrative expenses across federal programs. ADSEF reaffirms its commitment to strengthening its cost allocation plan to ensure that only allowable costs, directly associated with the administration of federal awards, are charged to the TANF program, in strict compliance with 2 CFR §200.302. Action Steps: 1. Policy Formalization Develop, approve, and implement a comprehensive Standard Operating Procedure (SOP) that formalizes the RMS methodology, including clear and standardized definitions for all survey response categories. 2. HR–Finance Liaison Establish a structured monthly reporting protocol between the Human Resources Appointments Office and the Finance Division to ensure the RMS participant list remains accurate, complete, and current. 3. RMS Questionnaire Update Revise the RMS questionnaire to remove non-federal program selections and ensure that all response options align directly with federally allowable functions. 4. Quarterly Oversight Institute a mandatory quarterly review of RMS results by senior management to validate alignment between RMS survey data and accounting system allocations IMPLEMENTATION DATE March 31, 2027 RESPONSIBLE PERSON Eddie J. Burgos Auxiliary Administrator for Finance and Budget Coral M. Caceres Alvarez Auxiliary Administrator Human Resources Carlos Martinez Colón Finance Director Vanessa Ayala Gerena Director of Budget Gerhil Medina Baez Auxiliary Administrator Operational Services Rafael Acosta Sepulveda Program Director

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Finding 1221542 (2024-022)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Internal Control / Segregation of Duties Questioned Costs § 200.302 § 200.328 § 200.329 § 200.334 § 200.335

VIEWS OF RESPONSIBLE OFFICIALS The data will be evaluated by the IT department to verify the controls in place at the time the files identified as duplicates were issued. Regarding the issuance, the IT department acknowledges an error in the file transmission, which resulted in the information not b...

VIEWS OF RESPONSIBLE OFFICIALS The data will be evaluated by the IT department to verify the controls in place at the time the files identified as duplicates were issued. Regarding the issuance, the IT department acknowledges an error in the file transmission, which resulted in the information not being matched against the issuance. The data will be available as reference for evaluation. For reconciliation purposes, work will be performed efficiently and within the established timeframes to ensure that all transactions are recorded promptly in the system. This will enable the accurate completion of the reconciliation process, as well as the recording of issuances and any other related transactions, in accordance with established procedures. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Blanca M. Medina Díaz Administrator Eddie J. Burgos Auxiliary Administrator for Finance and Budget Carlos Martinez Colón Finance Director Vanessa Ayala Gerena Director of Budget Carmen Ramírez IT Director

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Finding 1221541 (2024-021)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Allowable Costs / Cost Principles Questioned Costs Subrecipient Monitoring § 200.300 § 200.306 § 200.309 § 200.403

VIEWS OF RESPONSIBLE OFFICIALS The PRDF Human Resources Department will conduct personal file reviews at the beginning of next fiscal year; to include any missing paperwork and the department will establish as a procedure a periodical review of all files. IMPLEMENTATION DATE First quarter of Fiscal ...

VIEWS OF RESPONSIBLE OFFICIALS The PRDF Human Resources Department will conduct personal file reviews at the beginning of next fiscal year; to include any missing paperwork and the department will establish as a procedure a periodical review of all files. IMPLEMENTATION DATE First quarter of Fiscal Year 2026-2027 RESPONSIBLE PERSON Waleska Lopez Faria Assistant Secretary for Human Resources

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Finding 1221540 (2024-020)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Allowable Costs / Cost Principles Questioned Costs § 200.300 § 200.306 § 200.309 § 200.403

VIEWS OF RESPONSIBLE OFFICIALS ADSEF acknowledges the findings regarding the lack of documentation for one employee and the payroll discrepancies identified in the FY 2024 single audit. We conclude that the inability to provide personnel files for validation of wages charged to the federal program c...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF acknowledges the findings regarding the lack of documentation for one employee and the payroll discrepancies identified in the FY 2024 single audit. We conclude that the inability to provide personnel files for validation of wages charged to the federal program constitutes a material weakness in internal controls over allowable costs. ADSEF will conduct a comprehensive reconciliation of all payroll registers against personnel records for the affected periods to ensure that only eligible, verified, and properly documented costs are charged to the TANF program. Action step: 1. Personnel Record Audit 2. Policy Update 3. Payroll Reconciliation 4. Training IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Eddie J. Burgos Auxiliary Administrator for Finance and Budget Coral M. Caceres Alvarez Auxiliary Administrator Human Resources Carlos Martinez Colón Finance Director Vanessa Ayala Gerena Director of Budget

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Finding 1221472 (2024-002)

Material Weakness 2024

COUNTY OF BLACKFORD

IN

Procurement, Suspension & Debarment Subrecipient Monitoring Internal Control / Segregation of Duties § 200.214 § 200.303

Finding 2024-002 – Procurement and Suspension and Debarment Contact Person Responsible for Corrective Action: Lisa Simmons, Auditor (765) 348-1620 lsimmons@blackfordcounty.in.gov Views of Responsible Officials and Corrective Action Planned: Blackford County acknowledges and agrees with the finding r...

Finding 2024-002 – Procurement and Suspension and Debarment Contact Person Responsible for Corrective Action: Lisa Simmons, Auditor (765) 348-1620 lsimmons@blackfordcounty.in.gov Views of Responsible Officials and Corrective Action Planned: Blackford County acknowledges and agrees with the finding related to Suspension and Debarment compliance and will implement additional procedures to ensure all covered transactions comply with federal requirements. To correct this finding, the County will implement the following actions: 1. A formal procurement and suspension and debarment procedure will be documented requiring verification of vendor eligibility for all covered transactions equal to or exceeding $25,000 involving federal funds. 2. Prior to each covered transaction, the County will verify vendor eligibility by one of the following methods: o Checking the System for Award Management (SAM.gov) exclusion records (formerly EPLS) o Obtaining a written certification from the vendor o Including the required suspension and debarment clause within the contract or agreement 3. Documentation supporting the verification process will be retained in the grant procurement file for audit purposes. 4. A standardized procurement checklist will be implemented to ensure all federal compliance requirements, including suspension and debarment, are completed prior to contract execution. 5. Management will perform periodic reviews of procurement files to verify compliance and consistency. 6. Staff involved in procurement and grant administration will receive additional training on federal procurement requirements and compliance expectations. These corrective actions will strengthen internal controls and ensure compliance with federal procurement and suspension and debarment requirements going forward. Anticipated Completion Date: December 31, 2026

View Audit 405742

Finding 1220080 (2024-004)

Material Weakness 2024

Lake County

IN

Procurement, Suspension & Debarment Subrecipient Monitoring § 200.1 § 200.303 § 200.317 § 200.318 § 200.319

FINDING 2024-004 Finding Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Contact Person Responsible for Corrective Action: Burzynski Thaddeus Contact Phone Number and Email Address: 219-755-3200, burzytx@lakecountyin.org Views of Respo...

FINDING 2024-004 Finding Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Contact Person Responsible for Corrective Action: Burzynski Thaddeus Contact Phone Number and Email Address: 219-755-3200, burzytx@lakecountyin.org Views of Responsible Officials: We concur with the finding. Description of Corrective Action Plan: As this finding is shared between The Lake County Board of Commissioners and the Lake County Parks & Recreation Department, both departments will develop procedures to ensure the appropriate procurement methods are used for vendors that are within the Small Purchase Threshold. Both departments will also ensure that vendors are not suspended or debarred when expanding federal funds. Lastly, appropriate documentation will be maintained to ensure compliance with procurement, suspension and debarment in the future. Anticipated Completion Date: December 2026

View Audit 405251

Finding 1218998 (2024-002)

Material Weakness 2024

Pearl River County, Mississippi

MS

Subrecipient Monitoring § 200.332

Pearl River County Board of Supervisors and the County Administrator will work with the Airport Board to ensure compliance and monitoring of all future federal grants. We will establish an effective process to implement in the future to monitor all expenditures and receipts.

View Audit 405010

Finding 1218984 (2024-006)

Material Weakness 2024

Cheyenne and Arapaho Tribes

OK

Internal Control / Segregation of Duties Special Tests & Provisions Questioned Costs

The Department is working with Human Resources to strengthen procedures for initiating, completing, and maintaining documentation for required background investigations in accordance with tribal policy. Person Responsible: Kayla Tallbear, Acting Treasurer Estimated Completion Date: December 31, 2026

View Audit 404989

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