Finding 1203027 (2025-004)

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 (ALN 93.575) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition: During our audit procedures, we found that the Program quarterly and annual closing reports were not submitted timely, as required by the contract agreement. Criteria: 45 CFR Part 98.67 (c) Fiscal control and accounting procedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provisions of this part. Also, the contract agreement states in Clause eleven (11) that the Municipality is responsible for the presentation of the trial balance and annual partial closing report fifteen (15) calendar days after the end of the contract. Ninety (90) days after, the Municipality should liquidate all obligations and present to the pass-through entity the final annual closing report (CC-006). Cause of Condition: The Program does not have effective internal controls to ensure that the required documentation and reports are submitted to the pass-through agency in the requested time frame. Effect of Condition: The Program is not in compliance with 45 CFR Part 98.67- Fiscal Requirements (c) (1) (2). Recommendation: Management should take the necessary steps to ensure that the Program submits its financial reports within the time frame required by the state pass-through agency. Questioned Costs: None. Prior Year Findings: Yes. This finding is similar to prior-year finding 2024-004 and 2023-004. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings. The ACUDEN agency has not yet closed the budget year 2024-2025. Therefore, even though the contract has ended, the remaining reimbursement from the agency has not been received. Therefore, the full closing report cannot be completed until this final amount is received. As a corrective measure for finding 2025-005, the Sub Director of Finance will establish an internal control system in which the processes and compliance with the submission of accounting reports for federal programs, including Child Care, will be periodically monitored. Implementation Date: Fiscal Year 2026-2027. Responsible Person: José A. Mathews Maisonet Program Accountant