Finding 1162034 (2024-006)

Material Weakness Repeat Finding
Requirement
ABHN
Questioned Costs
-
Year
2024
Accepted
2025-11-07
Audit: 371899
Organization: Puerto Rico Ports Authority (PR)
Auditor: GALINDEZ LLC

AI Summary

  • Core Issue: Funds from FEMA were improperly recorded as revenue without confirming if revenue recognition criteria were met.
  • Impacted Requirements: Misclassification of capital advances as revenue led to inaccuracies in the Schedule of Expenditures and Federal Awards (SEFA).
  • Recommended Follow-Up: Review and correct the classification of federal awards, ensuring proper identification and revenue recognition for future reporting.

Finding Text

During our procedures over the Authority’s funds received from FEMA we noticed the following: 1. Part of the funds received under ALN 97.036 were recorded as revenue without analyzing if the conditions for revenue recognition were met. When examining the evidence received, we noticed some of the funds were received as capital advances in which the Authority had recognized as revenue prior to expending the funds. These funds were incorrectly included in the original Schedule of Expenditures and Federal Awards (SEFA) without being expended. 2. The Authority did not correctly identify the correct federal award of funds received under ALN 97.056, Port Security Grant Program, which were originally identified under a the ALN 97.039, Hazard Mitigation Grant Program.

Corrective Action Plan

It should be noted that, although certain funds received were not properly identified as working capital advances, those funds were properly considered as received from FEMA through the COR‐3 office of the Government of Puerto Rico. This situation basically arises because the federal funds coming from FEMA are being handled by outside consultants, without any coordination with the Federal Funds Management Office (FFMO). The Authority’s management will ensure that, in the future, the FFMO will coordinate with the assigned outside consultants all the efforts necessary for the proper handling, identification and classification of funds received from FEMA.

Categories

Reporting

Other Findings in this Audit

  • 1162027 2024-004
    Material Weakness Repeat
  • 1162028 2024-005
    Material Weakness Repeat
  • 1162029 2024-008
    Material Weakness Repeat
  • 1162030 2024-005
    Material Weakness Repeat
  • 1162031 2024-006
    Material Weakness Repeat
  • 1162032 2024-007
    Material Weakness Repeat
  • 1162033 2024-005
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
20.106 AIRPORT IMPROVEMENT PROGRAM, INFRASTRUCTURE INVESTMENT AND JOBS ACT PROGRAMS, AND COVID-19 AIRPORTS PROGRAMS $14.18M
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) $4.68M
97.056 PORT SECURITY GRANT PROGRAM $750,000
16.922 EQUITABLE SHARING PROGRAM $246,293
20.500 FEDERAL TRANSIT CAPITAL INVESTMENT GRANTS $24,520
14.218 COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS $770