Finding 1114368 (2022-004)

Finding Number: 2022-004 Federal Program: American Rescue Plan Act Assistance Listing: 21.027 Compliance Requirement: Reporting Category: Material Weakness in Internal Control- Financial Reporting Criteria On January 6, 2022, the U.S. Department of the Treasury (“Treasury”) adopted the 2022 final rule implementing the SLFRF program. The 2022 final rule became effective on April 1, 2022. This Compliance and Reporting guidance establishes that recipients must submit one initial Interim Report, quarterly or annual Project and Expenditure reports which include subaward reporting, and in some cases annual Recovery Plan reports. Organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropri-ate, the organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. The initial Project and Expenditure Report covered from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports cover one calendar year and must be submitted to Treasury by April 30. Condition For our tests, we requested copies of ARPA annual report (Project and Expenditure Report) for the fiscal year ending on June 30, 2022. After our examination of the ARPA annual report (Pro-ject and Expenditure Report), we noted that is a significant discrepancy between what is report-ed in the annual report versus what is registered on general ledger. The difference is the follow-ing:Cause These situations occurred because program management has not established effective proce-dures to ensure the timely performed reconciliations between the expenditures reported in the Annual Report versus the expenditures registered on the accounting system. Effect Because there is no timely and accurate reconciliation, the program may be providing incorrect financial reports to federal granting agency. In addition, the maintenance of alternate account-ing records (or program) that are not reconciled may result in inaccurate financial reporting. Questioned Costs None Prior Year Audit Finding None Recommendations The program should establish enhanced policies and procedures that must maintain an adequate communication with the Finance Office in order to assure the proper reconciliation between what is reported in the annual report with what is registered on the accounting system. Views of responsible officials Management concurs with the finding. We will enforce and continue strengthening control over financial reporting and enforce procedures to reconcile information of accounting balances, trans-actions, and ARPA annual report (Project and Expenditure Report), in order to prevent future dif-ferences. Responsible Officials Daiana González Hernández- Finance Director Estimated Completion Date Implementation is expected to be completed on or before July 31, 2025.