Finding Text
Section III – Major Federal Award Program Findings and Questioned Costs Finding Reference 2025-005 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: Period of Performance (H) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition: During our audit procedures over the period of performance requirement, we identified that the Municipality disbursed $45,000 from the Child Care Emergency Ready Program after the approved period of performance had ended. Criteria: 45 CFR section 98.60 (d)(5)(i) states that determination of whether funds have been obligated and liquidated will be based on state or local law. Section (d)(9) states that any funds not obligated during the obligation period specified in paragraph (d) of this section will revert to the Federal government. Any funds not liquidated by the end of the applicable liquidation period specified in paragraph (d) of this section will also revert to the Federal government. Clause thirteen of the contract agreement establishes that a period not exceeding thirty days, following the expiration of the contract term, for the settlement of obligations pending payment. After that date, the payment of obligations with federal funds shall not be authorized. After this period, the Municipality shall be responsible for settling the obligations with its own funds. The Municipality may submit a written request to the Administrator for a waiver to extend this period for an additional sixty days, which may be granted as an exception. Cause of Condition: The Municipality lacked effective internal controls to ensure that the disbursements were limited to the approved period of performance. Monitoring procedures were insufficient to identify and prevent expenditures processed after the period of performance without proper authorization. Effect of Condition: Funds were expended in violation of federal requirements. This noncompliance may result in the Municipality being required to repay the questioned costs to the pass-through entity or federal government. Recommendation: We recommend that the Municipality strengthen internal controls over federal award compliance by implementing procedures to ensure that all expenditures are incurred within the approved period of performance. Additionally, the Municipality should seek guidance from the pass-through entity regarding the disposition of the questioned costs and pursue reimbursement or corrective action as required. Questioned Costs: $45,000 Prior Year Findings: No. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings. A letter was sent to ACUDEN detailing the adverse situations and the steps taken by our municipality to obtain reconsideration. This is because the payment was made without the extension letter, even though we had the authorization to commit the funds. Furthermore, the Emergency Ready funds reports were submitted, and we have not received any finding feedback from the Agency. We are still awaiting a response from the letter submitted. The Sub Director of Finance will establish an internal control system in which the comply with the due dates of agreements and various federal proposals, as well as with reports, payments of funds, and obligations, including Child Care, will be periodically monitored. Implementation Date: Fiscal Year 2026-2027. Responsible Person: José A. Mathews Maisonet Program Accountant