2024-004 Type of finding: Federal Award Situation: Significant deficiency; compliance with federal regulations. Federal Program: All Programs Compliance Requirements: Reporting Prior-Year(s) Audit Finding(s): 2023-002, 2022-002 Questioned Costs: None Condition: The Municipality could not provide, on a timely basis, the information needed to complete the preparation of their financial statements, therefore the financial statements were available to be audited after the due date established by the federal government. The Single Audit reporting package, as defined and required in 2 CRF 200.512 for fiscal year ended June 30, 2024, was not submitted timely. Context: The Municipality is required by law to design and implement procedures that support the preparation of its financial statements. The Municipality could not provide, on a timely basis, the information needed to complete the preparation of their financial statements, therefore the financial statements were available to be audited after the due date established by the federal government. Criteria: As per 2 CRF 200.12, the audit, data collection form, and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period. 2 CRF 200.508 states that it is the auditee's responsibility to to (1) prepare financial statements, including the schedule of expenditures of federal awards in accordance with 2 CFR 200.510, (2) promptly follow up and take corrective action on audit findings, including preparing a summary schedule of prior audit findings and a corrective plan, and (3) provide the auditor access to personnel, accounts, books, records, supporting documentation, and any other information needed for the auditor to perform the audit required by this part, among other things. Municipal Code (Law 107, August 2020, as amended) , Chapter 2, Article 2.007 states that the Finance Director will among other things, maintain and guard all books, files and documents related to the accounting and financial activity of the Municipality; take appropriate measures to implement and recommend internal controls procedures to protect and account for Municipal property and funds; and supervise, among other things, the preparation of financial reports. Chapter 8, Article 2.095 states that the Municipality must ascertain that their accounting system complies with the following: (1) Provide complete information on the results of municipal operations; (2) provide the appropriate financial information necessary for an efficient municipal administration (3) has effective control and accounting of all funds, property, and assets belonging to the municipality; and (4) produce reliable reports and financial statements that serve as the basis for the preparation and justification of the budgetary needs of the municipality. Cause: The Municipality’s accounting system does not provide the necessary information for the compilation of their financial statements. In order to address this situation, the Municipality has engaged a consultant to assist with the preparation, analysis, and necessary adjustments to prepare the Municipality’s financial statements. However, this procedure involves the participation of various municipal employees at different levels in the Municipality’s organizational structure which adds time to an already time-consuming task. The financial statements are finally available for audit after being approved by the Municipality. In addition to the situation described above, the Municipality has experienced a backlog in the compilation of the data required for the preparation of their financial statements since the major disaster area declared on September 18, 2022, due to the passage of Hurricane Fiona. Although the federal government granted time flexibilities regarding the submissions of financial statements for the fiscal year ended June 30, 2021, no flexibilities were granted for fiscal year ending June 30, 2022, and beyond. The Municipality issued their June 30, 2023 on June 17, 2025 and submitted their data collection form on August 29, 2025. This situation prevented the timely submission of the current fiscal year Single Audit reporting package. Effect: Because of the situation described above, the financial records needed for the preparation and subsequent audit of the financial statements were not obtained timely. The Municipality did not comply with the report submission requirement since the audit was not submitted within nine months after their fiscal period end date. Auditor’s recommendation: Management should design and implement procedures that support the timely compilation of data and the necessary approvals across management for the preparation of its financial statements. Management should continue to fulfill their auditee responsibilities as stated in 2 CRF 200.508, which among other things, require management to prepare appropriate financial statements and provide the auditor with access to personnel, accounts, books, records, supporting documentation, and other information as needed for the auditor to perform the audit to ensure that subsequent financial reporting packages are submitted timely. View of responsible officials: The Municipality is working diligently to publish its statements on time. In 2025 the Municipality published two audited statements (2022 and 2023) and the 2024 audited statements are expected to be published in January 2026. The 2025 audited financial statements will be published on time. Auditor Comments: The submission dates of the Municipality’s financial statements for the last two years, as published in FAC.gov are as follows: Fiscal Year / Published Date June 30, 2023 / August 29, 2025 June 30, 2022 / October 9, 2024 Audit Status: Unresolved