Finding 1123425 (2024-005)

Finding Reference 2024-005 Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: Puerto Rico Department of Family Program: Child Care and Development Block Grant (Assistance Listing No. 93.575) Compliance Requirement: Earmarking (G) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition In our Earmarking Test, we were not able to corroborate compliance with the earmarking requirements because the Municipality did not submit the program’s annual closing reports. Criteria 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less than seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50. 45 CFR, Subpart F, Section 95.50 (d) states of the aggregate amount of funds expended, no more than five percent may be used for administrative activities as described in 45 CFR 98.54. 45 CFR, Subpart F, Section 95.50 (e) states that not less than 70 percent of the Mandatory and Federal and State share of Matching Funds shall be used to meet the child care need of families. Cause of Condition The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame. The personnel in charge of the fiscal area have been changed again. The current program accountant has been correcting prior year programs situations, as requested by the pass-through entity. Therefore, the preparation of annual closing reports has not been achieved. Effect of Condition The program is not in compliance with 45 CFR, Subpart F, Section 98.50. Recommendation We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and develop complete and accurate reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the pass-through agency. This will ensure better control of the program. Questioned Cost None. Prior Year Finding This finding is similar to prior year finding 2023-004. Views of Responsible Officials and Planned Corrective Action: We concur with the finding. Objective of the plan: The objective of this Corrective Action Plan is to address the observations identified in the audit and establish preventive measures to avoid future recurrences. Corrective Actions: 1. Schedule restructuring: • Create a detailed calendar with clear dates to define intermediate delivery deadlines to avoid delays (collection of information, analysis, writing, review, and submission) 2. Implementation of alerts and reminders: • Set up automatic alerts and email reminders for key dates (for example, 3 days before each deadline) 3. Review and Quality Control: • Establish an internal review of reports before final submission to ensure that the information reported is accurate and complete. The revision includes compliance with the requirements established by the agency. Compliance Monitoring: • Biweekly meetings: The team will have biweekly meetings to have updates regarding the progress and achievement of the deadlines. • Email notifications: Emails will be sent to document the timely submission of reports and when needed, waivers will be requested explaining situations that may have delayed the process to prepare accurate and complete reports on time. Evaluation: • Monthly evaluations will be performed to measure the compliance of the submission of the reports on the timeframe established by the agency. • Adjustments to the processes according to the response of the team. Implementation Date: March 2025 Responsible persons: • Person responsible for the implementation: Mrs. Erika J. Acevedo, Program’s Accountant • Person responsible for the supervision: Mrs. Yolanda Maldonado, Federal Program’s Director