Corrective Action Plans

Finding 1221610 (2024-051)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Questioned Costs Special Tests & Provisions § 200.334 § 200.337

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a rigorous documentation and oversight framework. We are prioritizing the development of standardized file-handling protocols, the implementation of a uniform record-keeping system, and the execution of comprehensive staff training to...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a rigorous documentation and oversight framework. We are prioritizing the development of standardized file-handling protocols, the implementation of a uniform record-keeping system, and the execution of comprehensive staff training to ensure that all sanction-related evidence is preserved, organized, and readily accessible for audit and verification purposes. Action Steps: 1. Implement a new "Uniform Record Retention & Archiving SOP" that mandates a specific organization, labeling, and storage legend for all participant files, ensuring uniform accessibility across all regions. 2. Adopt a formal "Sanction & Work Verification Checklist" that [LP4.1]must be completed for every participant file. This checklist will specifically require the inclusion of sanction periods, justification forms for "just cause," and evidence of non-compliance. 3. Develop an internal tracking log to manage sanction periods. This log will ensure that participants who have failed to comply with the work verification plan are monitored, and payments are suspended or reinstated only upon documented evidence of compliance. 4. Conduct a mandatory regional training curriculum for all regional staff on the importance of file maintenance, the specific requirements for documenting sanctions, and compliance. IMPLEMENTATION DATE During Fiscal Year 2026-2027 RESPONSIBLE PERSON Yessenia Peña Díaz Assistance Secretary of Administration

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Finding 1221607 (2024-048)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Subrecipient Monitoring Special Tests & Provisions

VIEWS OF RESPONSIBLE OFFICIALS The following corrective actions will be implemented: 1. ACUDEN will conduct a minimum of four (4) monitoring visits per program year to each childcare provider receiving CCDF subsidies, during which compliance with health and safety requirements will be verified and d...

VIEWS OF RESPONSIBLE OFFICIALS The following corrective actions will be implemented: 1. ACUDEN will conduct a minimum of four (4) monitoring visits per program year to each childcare provider receiving CCDF subsidies, during which compliance with health and safety requirements will be verified and documented prior to the issuance of the CCDF Certification of Compliance. 2. ACUDEN will ensure adequate staffing levels to carry out all required provider inspections in accordance with Regulation No. 8687, Article 4.14, and the Manual of Procedures for the Determination of Eligibility of the Care Service Provider. 3. A visit log will be maintained for each provider to document inspection dates, findings, and follow-up actions, thereby establishing an audit trail for ongoing monitoring of compliance with applicable health and safety standards IMPLEMENTATION DATE September 2026 RESPONSIBLE PERSON Marisel Felix Director of Licensing, Health, and Safety

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Finding 1221604 (2024-047)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Internal Control / Segregation of Duties Reporting Questioned Costs § 200.303

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a comprehensive internal control framework for EBT operations. We are prioritizing the development of current, formal written procedures, the implementation of a rigorous supervisory review cycle, and the enforcement of mandatory trai...

VIEWS OF RESPONSIBLE OFFICIALS ADSEF is committed to establishing a comprehensive internal control framework for EBT operations. We are prioritizing the development of current, formal written procedures, the implementation of a rigorous supervisory review cycle, and the enforcement of mandatory training to ensure that all EBT transactions are fully reconciled, documented, and compliant with federal requirements. Action Steps: 1. ERP-Driven Reconciliation - Configure the ERP system to automatically ingest and reconcile EBT Daily Activity and Payment Summary files against federal drawdowns (PMS/SF-425) and General Ledger expenditure records. 2. Updated Procedures Manual - Develop and approve a new "EBT Reconciliation Procedures Manual" that integrates the ERP's automated workflows, superseding the 2012 document and establishing frequency, roles, and oversight. 3. ERP Variance Reporting - Utilize the ERP to generate "Exception Reports" for any unmatched transactions between EBT disbursements and federal drawdowns. 4. Staff Training & ERP Integration - Execute mandatory training for all staff on the ERP’s automated reconciliation capabilities and the new standardized SOPs for verifying EBT settlement accuracy. 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 1221603 (2024-046)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

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

VIEWS OF RESPONSIBLE OFFICIALS We are resolving these deficiencies by leveraging the new Government ERP system, scheduled for launch in July 2026. This platform will provide the essential functionality to properly configure our Chart of Accounts, ensuring that all TANF and PTTA administrative expend...

VIEWS OF RESPONSIBLE OFFICIALS We are resolving these deficiencies by leveraging the new Government ERP system, scheduled for launch in July 2026. This platform will provide the essential functionality to properly configure our Chart of Accounts, ensuring that all TANF and PTTA administrative expenditures are automatically segregated by federal award and Assistance Listing Number (ALN). This system will be the foundation for accurate, traceable, and reconcilable financial reporting, supported by robust internal controls and multi-level supervisory oversight. Action Steps: 1. ERP Chart of Accounts Configuration – Configure the ERP system with a granular Chart of Accounts that strictly segregates TANF and PTTA administrative expenditures, ensuring every transaction is coded to the correct federal grant and ALN. 2. Automated Reporting Workflow – Utilize the ERP's financial reporting modules to generate ACF-196TR reports directly from the General Ledger, ensuring reported expenditures are 100% traceable to source transactions. 3. Digital Reconciliation Workpaper – Require the ERP to generate an automated "Reconciliation Package" for every ACF-196TR submission, which links reported line items directly to General Ledger accounts, eliminating discrepancies. 4. Staff Training & ERP Stabilization – Execute comprehensive training for all finance staff on the new ERP accounting structure, reconciliation modules, and federal reporting requirements, ensuring the system is utilized for full audit compliance. 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 1221601 (2024-045)

Material Weakness 2024

Commonwealth of Puerto Rico - Department of the Family

PR

Reporting Questioned Costs Procurement, Suspension & Debarment § 200.302

VIEWS OF RESPONSIBLE OFFICIALS The Department of the Family and PR-DDS acknowledge the audit finding regarding the differences identified between the balances reported on Form SSA-4513, the PRIFAS accounting records, and the supporting documentation for unliquidated obligations. To address this issu...

VIEWS OF RESPONSIBLE OFFICIALS The Department of the Family and PR-DDS acknowledge the audit finding regarding the differences identified between the balances reported on Form SSA-4513, the PRIFAS accounting records, and the supporting documentation for unliquidated obligations. To address this issue, the following corrective actions will be implemented: 1. Monthly meetings will be held between the Department of the Family’s Finance staff and PR-DDS administrative and fiscal personnel to review and monitor all outstanding obligations and any differences identified between the PRIFAS records and the reports prepared for the Social Security Administration (SSA). 2. A formal monthly reconciliation will be performed between the balances reported on Form SSA-4513 and the financial records maintained in PRIFAS. Any discrepancies identified will be analyzed, documented, and supported with appropriate evidence. 3. Differences between the PRIFAS records and valid obligations that are not reflected in the system will be explained and documented in the comments section of Form SSA-4513, as applicable. 4. The review process for unliquidated obligations will be strengthened through periodic evaluations to identify obligations that should be modified, liquidated, or canceled in accordance with SSA requirements. 5. Written internal procedures will be developed for the preparation, review, and approval of Form SSA-4513, including the retention of supporting documentation necessary to substantiate the reported balances. Management further notes that certain obligations related to Medical Evidence of Record (MER) and Applicant Travel (AT) are authorized and monitored by PR-DDS before the related disbursements occur. These obligations are not recorded in the PRIFAS accounting system until payment is processed by the Special Payments Office (OPE). As a result, temporary differences may exist between the balances reflected in PRIFAS and the unliquidated obligations reported on Form SSA-4513. To address this situation, PR-DDS and the Department of the Family’s Finance Office have established a monthly reconciliation process to identify, document, and explain all temporary differences between PRIFAS records and the obligations maintained by PR-DDS. In addition, any significant differences will be properly disclosed and explained in the comments section of Form SSA-4513 and supported by the appropriate documentation. IMPLEMENTATION DATE The monthly meetings and formal reconciliation process began during Fiscal Year 2026 and will continue an ongoing basis. Expected Completion Date: September 30, 2026 RESPONSIBLE PERSON Ramón Luis Vargas Escalante Chief Accountant of Finance

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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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