FINDING REFERENCE NUMBER 2024-002 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A220003 – 22A (07/01/2022 – 09/30/2023); H027A230003 – 23A (07/01/2023 – 09/30/2024); H173A220002 (07/01/2022 – 09/30/2023); H173A230002 (07/01/2023 – 09/30/2024) COMPLIANCE REQUIREMENTS ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Section 200.302 (a) establishes that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state’s own funds. In addition, the state and the other non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403 (b) establishes that except where otherwise authorized by statute, costs must be adequately documented in order to be allowable under Federal awards. STATEMENT OF CONDITION As part of our procedures over internal controls and compliance for the allowable activities’ requirement, we selected a sample of seventy-three (73) disbursements to suppliers made during the fiscal year under audit. We noted the following deficiencies: 1. In thirty-seven (37) disbursement receipts related to evaluation and therapy intervention services, service sheets with the signature or stamp of the institution that provided the services were not found. They were requested on several occasions and were not provided. 2. In nine (9) disbursement vouchers, the Excel master sheet and the adjustment report presented different amounts. No justification was provided for the differences in the reports. 3. In an evaluated disbursement voucher, a student was included who is billed $34,000 per month. In the student's file in MIPE, there is no breakdown of how the institution arrived at that amount in its service quote. The average monthly payments at that institution fluctuate between $9,300 and $20,800 per month. We were not provided with evidence of the educational cost analysis for this participant monthly cost. 4. In nine (9) disbursement vouchers, the payments to the suppliers for therapy services do not match the cost assigned by contract for these services. 5. In nine (9) disbursement voucher, the educational cost of a participant is not consistent with the proposal that the Institution includes in MIPE. 6. In four (4) disbursement vouchers evaluated, we were not provided with evidence of the supplier's proposals, nor was there evidence of receipt by the PRDE personnel demonstrating that the services were received as contracted. 7. In thirty-nine (39) vouchers evaluated, it was found that the invoiced expenses corresponded to both cluster programs (ALNs 84.027 and 84.173), and the invoices established this. However, the expenses in the system were recognized in grant ALN 84.027, not according to the participants attended and invoiced, according to their age. 8. In two (2) vouchers evaluated for training services, it was found that there were participants who were not employees of the IDEA program. 9. In a disbursement voucher, the cost per student could not be validated with the supplier's proposal per student, since it was not located in MIPE. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training and controls that require standard evaluation, approval, and reporting of expenditures incurred. STATEMENT OF CAUSE According to interviews carried out and documentation evaluated, some goods and services are received in the different Regional Offices (ORE), and each one carries out similar, but not standard, processes when certifying as received or pre-intervening invoices. Regarding the distribution of expenses, according to interviews and evaluated documentation, it was found that at the time of binding a contract, an analysis of the assigned participants is not made, in order to be able to make a distribution between the two programs of the cluster according to the age of the participant. In addition, according to interviews, although the contract budget is validated, they only limit themselves to verifying the amount available in general and there is no distribution of the expense according to the service provider's invoice. POSSIBLE ASSERTED EFFECT The PRDE is reporting expenses within the cluster that do not necessarily reflect the actual expenses incurred by each program in the cluster, this deficiency requires that when the period of availability of funds is ending, some adjustments be made to reclassify expenses, up to the amount of the award. In addition, the PRDE may have incurred payments for which the service or goods were not provided as contracted. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2023-003). RECOMMENDATIONS We recommend that the PRDE establish standardized written guidelines and train the staff of the Regions to carry out and document the reviews and approvals of services, and ascertain that this information is uploaded in the accounting system of SIFDE. In addition, the personnel must be instructed to account for the budget and expense of therapy and related services, according to the enrollment of students who will attend, in accordance with the program that applies within the cluster. VIEWS OF RESPONSIBLE OFFICIALS The PRDE acknowledges the auditor’s finding. Management clarifies that all requested information was available and existed within the PRDE systems; however, it was not provided in a timely manner due to circumstances beyond the Department’s control, including competing deliverables required from the same operational areas. Regarding the disbursement vouchers referenced by the auditors, including the Excel Master and Adjustment Reports, the program area reviewed the documents and confirmed that they reconciled accurately. The timing differences were due to automatic and manual adjustments. All supporting information was available in PRDE’s databases, including SIFDE and MIPE, and has been included as part of this response for further reference. For the student billed for $34,000, all supporting documentation—such as the proposal, approval of payment, and related evidence—was and remains available in MIPE. As part of PRDE’s internal controls, all necessary documentation must be uploaded into the system before any transaction can proceed. It is also important to note that auditors were granted full access to both MIPE and SIFDE at the beginning of their audit procedures. In relation to Findings 4 and 5, documentation was available in MIPE. Management notes that certain contracts and proposals may have amendments, and it appears the auditors may have reviewed an incorrect version of the file. Similarly, for Finding 6, the area revalidated the information during the preparation of this response and confirmed that the documentation cited as missing was, in fact, available in the MIPE portal. Additionally, management evaluated the matter related to expense recognition. In accordance with federal regulations and to ensure compliance with IDEA requirements, PRDE is authorized to cover certain expenses of the Preschool Grant (84.173) using IDEA Part B (84.027) funds. As detailed in the prior Single Audit report: “IDEA Part B, Section 611 funds can be used for students ages 3 to 21. According to the description provided by OSEP, the Grants to States program assists states in meeting the excess costs of providing special education and related services to children with disabilities. States must serve all children with disabilities between the ages of 3 through 21, unless inconsistent with State law or court orders. Under 34 CFR § 300.202(a), the LEA must use IDEA Part B funds to pay the excess costs of providing special education and related services to children with disabilities.” Regarding the vouchers related to training services, PRDE does not concur with that portion of the finding, as the contract does not stipulate that the teachers must be an IDEA employee. This contract was previously evaluated as part of the auditors’ procedures. The PRDE accepts the auditors’ recommendations and will implement corrective actions to improve the timely submission of documentation and strengthen internal coordination among areas involved in responding to audit requests Auditor Comment on Management Response for Finding No. 2024-002 In response of the second paragraph, our Auditors held three (3) meetings with PRDE’s personnel and the amounts were not reconciled. For the third response, no justification exists in MIPE or SIFDE that the amount paid is reasonable and in accordance with the contract. In fact, if all costs disclosed in the contract were applied to that student, the amount is less than the $34,000 paid monthly. For the fourth response related to Conditions 4 and 5, our Auditors requested all information to be available. We held three (3) meetings, and the information did not reconcile and was not available for our evaluation. In addition, we understand and acknowledge that contracts have amendments; however, these amendments relate to increases in the total amount because an original contract is based on a certain quantity, and amendments are made as funds are received. The cost per student established in the contract or proposals remained unchanged in these amendments. The lack of verification between the supplier's cost as stated in the contract and the cost invoiced by the supplier is a significant problem because the supplier is billing for a cost that was not part of the original agreement or proposal. For the fifth through seven responses, the Uniform Guidance requires that financial management system record the expenditures in the program that benefited from the services; no in the program with more budget.. IMPLEMENTATION DATE None RESPONSIBLE PERSON Enid Díaz Executive Director Alayra Figueroa Associate Secretary of Special Education