Finding Text
FINDING REFERENCE 2025-006 FEDERAL AGENCY U.S. Department of Homeland Security FEDERAL PROGRAM TITLE AND ALN: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (ALN 97.036) COMPLIANCE REQUIREMENT TYPE OF FINDING Special Test – Project Accounting (N) (MW) TYPE OF FINDING Material Weakness in Internal Control (MW), Instance of Noncompliance (NC) CONDITION During fiscal year 2024–2025, the Municipality recorded $348,107 in payroll and other program expenditures under the generic accounting code FDESPINT in its accounting system. According to Program staff, the expenditures recorded under this code relate to multiple FEMA Project Worksheets (PWs); however, the costs were not recorded and tracked individually by PW. As a result, the Municipality is unable to maintain adequate accounting and budgetary control over program expenditures at the individual PW level, limiting its ability to properly monitor costs, ensure compliance with approved funding, and support accurate financial reporting for each project. CRITERIA As established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, all recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Also, as established in 44 CFR 206.205, Payment of claims. (b) Large Projects, (1) the recipient shall make an accounting to the Regional Administrator of eligible costs for each approved large project. In submitting the accounting the recipient shall certify that reported costs were incurred in the performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, and that payments for that project have been made in accordance with 2 CFR 200.305. Each large project shall be submitted as soon as practicable after the subrecipient has completed the approved work and requested payment. CAUSE OF CONDITION The Municipality’s internal controls and procedures regarding recording, tracking and reporting on the Program’s expenditures were not followed adequately to ensure that all the FEMA transactions were accounted individually by each approved project. EFFECT OF CONDITION The Program’s financial transactions can be incorrectly recorded in the accounting records, that can lead the Municipality to be in noncompliance with the requirements established in the Federal regulation. RECOMMENDATION We recommend the Municipality to continue strengthening the internal controls and accounting procedures over the recordkeeping of the accounting transactions of the FEMA Program. QUESTIONED COSTS None. PRIOR YEAR FINDING This finding is a prior year finding identified as 2024-008. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION The Municipality has reclassified all expenditures to the appropriate program fund and project codes corresponding to each individual PW. In addition, the Finance Department has assigned program and accounting staff to ensure the proper recording and classification of expenditures, thereby maintaining compliance with FEMA and other funding requirements. IMPLEMENTATION DATE February 23, 2026. RESPONSIBLE PERSON Mrs. Omayra Báez Caraballo Finance Department Director