Finding 1163376 (2024-003)

FINDING NO. 2024-003 GRANT AWARDS REVIEW Repeated Finding: Yes Criteria: As more fully described in finding 2024-004, the subrecipient agreement between the Bank and the Puerto Rico Department of Housing (PRDOH), establishes in the Terms and Conditions that the Bank, as Subrecipient, shall comply with applicable PRDOH’s policies and guidelines as established in Program Guidelines and their amendments, if any, which made an integral part of the subrecipient agreement. Condition: As described in finding 2024-004, during our examination, we performed different audit testing to validate compliance with criteria described above. From a total of 974 SBF Program Recovery Grants (the grants) awarded to business applicants during the year ended June 30, 2024, in the amount of $66,108,871, we performed a grant award test to validate various compliance requirements for the grant. We selected a sample of sixty-one (61) grants awarded as follows: sixteen (16) awarded for working capital purposes, fourteen (14) awarded for working capital and equipment and thirty-one (31) grants awarded for the purchase of equipment, in total amount of $3,630,774. In addition, we performed a closeout test to validate procedures surrounding closeout of the grant. We selected a sample of sixty-one (61) cases, in the total amount of $3,598,259 from a total of 1,911 grants awarded amounting to $99,766,799 for which closeout procedures were completed during the year ended June 30, 2024. Also, we performed a recapture of funds test to validate procedures surrounding recapture of grant funds. We selected a sample of twenty-five (25) cases, in the total amount of $906,561 from a total of 318 grants awarded amounting to $11,492,282 for which recapture of funds were completed during the year ended June 30,2024. As more fully described in finding 2024-004, we noted the following: - Amount Awarded Computed Incorrectly - Incorrect Data in Grant Management System of Record for the Grants - Missing Documents in Grant Management System of Record for the Grants - Inadequate Documentation and Implementation of Procedures Cause: Management has not consistently applied procedures as described in the Bank’s policies for underwriting, duplication of benefits, expenditure review and closeout as more fully described in finding 2024-004. Effect: Refer to finding 2024-004 for the effect of this observation. Recommendation: Refer to finding 2024-004 for the recommendation for the observations associated with this finding.