Finding Text
Section III – Major Federal Award Program Findings and Questioned Costs Finding Reference 2025-004 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 (Assistance Listing No. 93.575) Compliance Requirement: Earmarking (G) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition In our Reporting Test, we found that the Program did not comply with the quality earmark limitation that requires the program to spend at least nine percent (9%) of the funds on quality activities. Criteria 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds expended by a State or Territory, no less than seven percent in fiscal years 2016 and 2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year 2020 and each succeeding fiscal year shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section 98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each succeeding fiscal year shall be used to carry out activities as such activities relate to the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that nothing in this section shall preclude the State or Territory from reserving a larger percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of Section 98.50. 45 CFR, Subpart F, Section 95.50 (d) states of the aggregate amount of funds expended, no more than five percent may be used for administrative activities as described in 45 CFR 98.54. 45 CFR, Subpart F, Section 95.50 (e) states that not less than 70 percent of the Mandatory and Federal and State share of Matching Funds shall be used to meet the child care need of families. Cause of Condition The Municipality’s Program Administration did not ensure that the required percentage amounts were spent to guarantee compliance with earmarking requirements. Effect of Condition The program is not in compliance with 45 CFR, Subpart F, Section 98.50. Recommendation We recommend the Municipality to recruit an accountant soon and provide the training needed to understand the program requirements. If it is anticipated that the entire allocation will not be spent, budget adjustments should be requested to the pass-through agency to comply with the earmarking requirements. Questioned Cost None. Prior Year Finding This finding is similar to prior year finding 2024-005 and 2023-004. Views of Responsible Officials and Planned Corrective Action We concur with the finding. Corrective Action Implemented 1. Request for Technical Assistance Technical assistance was requested from the corresponding state agency and all municipal components involved in the process, with the purpose of: • Establishing a structured work plan. • Aligning compliance processes. • Clearly defining the documentation required for quarterly reports. • Reviewing the processes of the Fiscal Monitoring System Portal. • Incorporating technical recommendations issued by the agency. 2. Measures Adopted by This Office As a result of the technical assistance, the following corrective actions were implemented: • Development of a Required Documentation Checklist to standardize the collection of information. • Clear definition of the scope of collaborative work among offices. • Formal establishment of tasks, roles, and responsibilities. • Assignment and monitoring of the limited staff designated by the office. • Update of the Fiscal Monitoring System Portal to grant access to newly authorized personnel. • A deadline will be established for the submission of the quarterly report, thereby ensuring compliance with the minimum percentage required by the program under the quality activities category. Results Achieved As a result of the implementation of the corrective action plan: • The required information from the various municipal offices was collected completely and in a timely manner. • The quarterly report was submitted by the established deadline (01/15/2026). • The agency validated compliance (01/30/2026). • The disbursement of funds was successfully received (02/04/2026). Evidence of Effectiveness • Compliance with the established deadline. • Confirmation of receipt and approval of the report. • Disbursement processed without findings or additional requirements. • Strengthened interdepartmental coordination. • A documented and standardized process for future quarterly cycles. Standardization and Prevention • The Checklist was adopted as an official tool of the process. • The assignment of roles and responsibilities was formally established. • Access to the Fiscal Monitoring System Portal is kept up to date. • Continuous monitoring was established to ensure compliance in future quarters. Observation Regarding Human Resources Although the corrective action proved effective and allowed for the timely submission of the report and receipt of the disbursement, the personnel currently assigned to the process also support multiple additional programs. While the situation was corrected following internal reorganization, the shared operational workload could pose a risk to the long-term sustainability of the control. It is recommended that the allocation of additional human resources be evaluated to strengthen operational continuity and prevent recurrence of the previously identified issue. Conclusion and Closure The corrective action implemented proved to be effective and sustainable, eliminating the deficiencies identified in the process of collecting and submitting quarterly reports. Regulatory compliance and strengthened administrative management are evidenced, ensuring continuity in the timely receipt of future disbursements. Implementation Date: Fiscal Year 2025-2026 Responsible persons: • Person responsible for the implementation: Mr. Carlos Flores, Federal Program’s Subdirector • Person responsible for the supervision: Mrs. Yolanda Maldonado, Federal Program’s Director