Finding Text
2024-006 Type of finding: Federal Award. Situation: Significant deficiency; compliance with federal regulations. Federal Program: Community Development Block Grant (ALN 14.228) Compliance Requirements: Reporting Prior-Year(s) Audit Finding(s): None Questioned Costs: None Condition: The Municipality did not provide for our review the reports required to be submitted under the Community Development Block Grant program and the Community Development Disaster Recovery Program to the Puerto Rico Department of Housing. Context: The Municipality is required to submit monthly, quarterly and annual reports to the Puerto Rico Department of Housing for projects disbursed with funds from the Community Development Block Grant and Community Development Disaster Recovery Program. None of these reports were submitted to us for our review. Criteria: Community Development Block Grant awards establish that the Municipality is required to submit to the Puerto Rico Department of Housing (PRDOH) the reports of registrations, collections, disbursements of Program Income (Annual and Quarterly) and progress for projects disbursed with the CDBG program. For the Community Development Disaster Recovery Program, the grant agreement establishes that the Subrecipient will be responsible for submitting monthly reports to the (PRDOH) to inform status of tasks, work progress, construction schedule analysis, and financial status by project. Each report must be prepared in compliance with PRDOH’s reporting requirements. Cause: The Municipality did not have adequate internal controls and record-retention procedures to ensure that required Annual, Quarterly and Monthly Reports were properly prepared, retained, and made available for audit and monitoring purposes. Effect: The Municipality is not in compliance with its grant awards. As per 2 CFR 200.339 When the Federal agency determines that noncompliance cannot be remedied by imposing specific conditions, the Federal agency may take one or more of the following actions: (a) Temporarily withhold payments until the recipient or subrecipient takes corrective action, (b) Disallow costs for all or part of the activity associated with the noncompliance of the recipient or subrecipient., (c) Suspend or terminate the Federal award in part or in its entirety, among others measures. Auditor’s recommendation: The Municipality should implement internal controls and procedures to ensure that the required reports are completed and submitted in a timely manner, and made available for audit, as per program regulations. View of responsible officials: The Municipality Administration is currently addressing the control and compliance issue. Starting on January 2026 prior year reports will be submitted. Full compliance expected to start on January 2026 going forward. Audit Status: Unresolved