FEMA Public Assistance Advances and Completed Reimbursement Management position. Management accepts the need to address the reported documentation and control deficiency. The original $666,000 and subsequent advances have been fully reimbursed to the Municipality’s FEMA fund; completed reimbursement...
FEMA Public Assistance Advances and Completed Reimbursement Management position. Management accepts the need to address the reported documentation and control deficiency. The original $666,000 and subsequent advances have been fully reimbursed to the Municipality’s FEMA fund; completed reimbursement is distinct from resolution of the historical finding. Management response. The original $666,000 was reimbursed in full to the Municipality’s FEMA fund bank account before the issuance of the Single Audit Report for the fiscal year ended June 30, 2025. The Municipality provided the supporting evidence of these reimbursements to the independent auditors for their review and examination before issuance of their report. The reimbursement occurred after June 30, 2025 and is reported as subsequent corrective action. No principal remains outstanding on these municipal interfund advances. The reimbursement evidence is available, upon request, for review and examination by the cognizant agency for audit, if designated, or the applicable oversight agency for audit; FEMA; COR3; and any other pertinent regulatory or oversight entity and its authorized representatives. Héctor Rubén Caraballo Díaz, Director of Finance, will coordinate timely access to the supporting records and municipal personnel under 2 CFR 200.337. The Municipality will protect sensitive information in public filings while providing authorized reviewers the records needed for their examination. The supporting package includes the municipal advance chronology, COR3 reimbursement and credit documentation, and the May 11, 2026 bank confirmation for a cash transfer to the FEMA account. Management’s full-repayment representation reflects the combined settlement of the advances and related credits. Management confirms that no principal remains outstanding for the original $666,000. Management’s representation of full reimbursement is not a representation that FEMA or COR3 has issued a final allowability or closeout determination. The transfer confirmation records approval and transmission; the resolution file will also retain evidence of the receiving-account posting and the reconciliation supporting the application of credits. These records substantiate completed repayment and preserve the distinction between settlement of principal and compliance with the original award conditions. Finding 2025-008 retains $666,000 in questioned costs for insufficient documentation of the final use and disposition of the original advance. Management’s reimbursement disclosure supplements that finding and does not depend on a change to its wording. Reimbursement does not retrospectively authorize the original use of restricted cash or automatically eliminate the historical finding. The responsible agency or pass-through entity will determine the disposition of questioned costs and any required remedy under 2 CFR 200.521. Management requests full consideration of the reimbursement evidence and appropriate credit for amounts already restored. Restoration to the municipal FEMA fund is not, by itself, repayment to the grantor or formal agency resolution. Corrective Action 1. Completed: reimburse the original $666,000, and provide the supporting evidence to the independent auditors for review and examination before report issuance. Preserve the evidence, dated transmittal, recipients, and index of documents provided. Delivery for examination is not represented as auditor agreement with management’s conclusions. 2. Complete the reviewed reconciliation of advances, COR3 credits, and the May reimbursement to bank and interfund records, and retain the separate tracing of the original use. Document credit eligibility, the source of legally available repayment funds, any excess, and the fiscal year 2026 entries. This reconciliation documents completed interfund settlement and the amounts for which management requests credit in agency resolution. 3. Preserve the posting of the May transfer in the receiving FEMA bank account, the reciprocal municipal ledger entries, and the dated delivery of the evidence to the auditors. For each COR3 credit applied, document the project, underlying eligible expenditure, original municipal funding, entitlement to reimbursement, and absence of duplicate recovery. A COR3 receipt by itself does not demonstrate repayment of an interfund advance. 4. Prohibit advances of FEMA cash for unrelated municipal operations. Permit an interfund reimbursement only after review establishes the specific award, eligible cost previously paid, lawful purpose, available support, and absence of duplicate reimbursement. 5. Retain a transaction-level account of the original $666,000 advance and its ultimate use, distinct from the later restoration. Identify the affected disaster and award, disbursements, eligible-cost support, and any unsupported use. Present the original questioned amount, amounts restored, any amount the agency sustains, and additional remedies separately; repayment will not be netted against the historical finding to imply that no reportable condition occurred. 6. Maintain monthly FEMA bank, project, interfund, and reimbursement reconciliations, with separate preparer and reviewer approval. Resolve exceptions promptly and retain the evidence supporting each release of funds. 7. Provide the reconciled resolution file to COR3 and request written disposition of Finding 2025-008 and its $666,000 questioned cost. Evaluate and address substantiated interest, grant repayment, accounting adjustments, or other remedies required by applicable rules or a written agency determination, preserving available review or appeal rights. Obtain instructions identifying the required recipient, award, amount, and credit for the completed restoration; do not assume that an interfund reimbursement extinguishes a separate grant repayment obligation. 8. Assess Federal cash balances, disbursement timing, and any applicable interest or excess-cash return requirement under the governing award and payment rules. Document the period and legal basis of any amount due rather than estimating interest without authority. The restoration will not be used to support duplicate Federal reimbursement or an unsupported new draw. 9. Keep the reimbursement evidence available for regulatory examination now. Submit the evidence already available to COR3 by September 30, 2026, identify supplemental reconciliation work due October 31, 2026, and complete the resolution submission by November 30, 2026 or any earlier agency deadline. Preserve the distinction between documents already delivered to the auditors and later supplements; do not describe subsequent workpapers as having been provided before report issuance. Implementation Milestones Required Action Owner Completion Evidence Target Date Reimburse original and subsequent advances to the FEMA fund. Finance Director Advance chronology, COR3 credits, May 11 transfer evidence Completed May 11, 2026 Provide reimbursement evidence to the independent auditors. Finance Director Evidence for review and examination; dated preissuance transmittal; regulatory access Completed before report issuance Approve transfer controls and reconcile the completed settlement. Finance Director Approved procedure, signed reconciliation, ledger support Sep. 30, 2026 controls; Oct. 31, 2026 reconciliation and tracing Provide available reimbursement evidence to COR3; complete resolution file and request written disposition. Finance and FEMA Program Staff / Resolution file, transmittal, agency correspondence Sep. 30, 2026 initial evidence; Nov. 30, 2026 complete file; decision external Demonstrate monthly preventive controls. Finance and FEMA Program Staff / Three consecutive reviewed monthly reconciliations Dec. 31, 2026 Responsible official. Héctor Rubén Caraballo Díaz, Director of Finance Anticipated completion. Principal reimbursement completed May 11, 2026; evidence delivered to the auditors before issuance. Documented preventive controls and three monthly reviews by December 31, 2026. Formal resolution of any retained questioned costs remains subject to COR3 or FEMA under 2 CFR 200.521. Evidence of completion. Retain evidence of full settlement of the original $666,000 and subsequent advances, the application of credits, reconciliation to the FEMA fund and municipal ledgers, and preissuance delivery to the auditors. Demonstrate preventive controls for three monthly cycles. Track any retained questioned cost and additional remedy until the responsible agency documents its disposition, with appropriate recognition of restored amounts. Auditor revision of the finding is not a closure condition.