Finding 1179438 (2025-006)

Finding Reference 2025-006 Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Puerto Rico Department of Family Program: Child Care and Development Block Grant (ALN 93.575) Compliance Requirement: Earmarking (G) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) This finding is similar to prior-year finding 2024-006. Statement of Condition In our Earmarking Test, we found that the Municipality did not spend the required percentages according to the cost limitations and minimum required amounts of the approved budget for the categories of administration, quality services and quality services for infants and toddlers. Criteria The Clause Number Seven of the Grant Agreement states that the first party will provide the second party with a copy of the budget approved by the Assistant Program Administrator and/or the Assistant Administration Administrator, or a representative authorized by them. This budget may not be varied, changed, or altered without the prior written authorization of the first party. For this purpose, the second party must submit a written request for the change or adjustment to the budget to ensure the best use of funds. This request must be accompanied by the Expenditure Report and Projected Savings and/or any other reports of needs or other documents required by the first party. This request will be subject to the recommendation of the Program and the Budget Division of the first party. The first party may review the approved budget provided to the Supplier when it deems it appropriate to verify the effective use of the funds. Cause of Condition The Municipality’s Program Administration did not ensure that it spent the required percentage amounts to guarantee compliance with earmarking requirements for administration costs and quality improvement activities for infants and toddlers. Effect of Condition The program is not in compliance with earmarking requirements according to the approved budget. Recommendation Management should take the necessary steps to ensure that the Program complies with the quality earmarking requirements. The way to guarantee compliance would be by spending the entire allocation for the fiscal year. If management anticipates that it will not spend the entire allocation, it should request budget modifications from the delegating agency. Questioned Cost None Prior Year Finding Yes. This finding is similar to prior-year finding 2024-006. Views of Responsible Officials and Planned Corrective Action We concur with the finding. The Municipality has appointed as the official responsible the Finance Director for monitoring and reviewing compliance. Internal control procedures have been established to properly document and monitor the expenditure incurred and prospective obligations, and if the required amount or percentage cannot be spent, a waiver will be requested. Implementation Date: June 30, 2026 Responsible Person: Meyleen Hernández Rivera Finance Director