Finding Text
Part III – Findings and Questioned Costs Relating to Federal Awards
Finding No. 2024-001 – Bi-weekly Reporting
Federal Program
ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund
Name of Federal Agency
U.S. Department of Treasury
Pass-through Entity
Puerto Rico Department of Treasury
Category
Internal Control/Compliance
Compliance Requirement
Reporting
Criteria
The resolution 2022-52 states the following:
“WHEREAS, besides the compliance requirements of a federal award SAL must: (1) submit biweekly financial reports in which eligible use of funds is shown until the full expense is evidenced; (2) submit monthly reports in which evidence-based metrics demonstrate the effectiveness of the projects; and (3) include in a distribution agreement a provision that if the project fails to qualify for reimbursement because negligence or failure to meet applicable standards or requirements on the part of SAL, GPR has the option to recoup such funds from SAL.” In addition, as stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), § 200.303 Internal controls, “the non-Federal entity must:
(a)
Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
(b)
Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.”
Condition
During our reporting test, we detected reports that were submitted after the corresponding biweekly period. In addition, the expenditures in the reports contained errors of reporting related to the amounts for employee retentions for payroll taxes, which were included in the reports but are not expenditures incurred by the Organization.
Cause
Weak internal controls over the reporting process, including a lack of formalized oversight and monitoring mechanisms to ensure timely and accurate submission.
Effect
As a result of this condition, the grantor may issue warnings and/or impose penalties to the Organization. Also, the grantor was deprived of timely taking any action that it understood to be pertinent in the program. The analysis, evaluations, and decision-making of the grantee could be affected. Context
Of a total of twenty-four (24) bi-weekly reports required for ALN 21.027, four (4) of the bi-weekly reports
submitted were sent after their due date. In addition, all the reports sent to the oversight agency included the
FICA and Medicare retention made the by Organization to employees participating on the program, which do
not constitute expenditures made by the Organization.
Resolution applicability
Biweekly
report due
date
Report
Submission
Date
Days over
due Date
Res 2022-052, 2023-113 7/21/2023 7/28/2023 7
Res 2022-052, 2023-113 7/7/2023 7/14/2023 7
Res 2022-052, 2023-113 8/4/2023 8/11/2023 7
Res 2022-052, 2023-113 8/18/2023 8/25/2023 7
Identification of Repeat Finding
This is not a repeat finding.
Questioned Cost
None. The FICA and Medicare retentions were wrongly reported on the bi-weekly reports but they were not
claimed as federal expenditures by the Organization nor are included in the SEFA.
Recommendation
We strongly recommend the Organization to institute policies and procedures that stipulate the specific tasks
and the personnel in charge of filing the required reports. Also, the policies and procedures should designate
the member of management in charge of monitoring the compliance with the reporting requirements in order
to make sure that the Organization is filing the reports by their respective due dates and with the correct
amounts. It is critically important that timely and accurate reports be produced to ensure that the goals and
purposes of the grant have been achieved and accounted for properly.