Finding Text
FINDING REFERENCE NUMBER 2024-032 (See Finding Reference Number 2024-011) FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2023G996117 (Federal Award Year: 10/1/20212 – 9/30/2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA In accordance with the Compliance Supplement every fiscal year, a state must maintain an amount of “qualified state expenditures” (as defined in 42 USC 609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the state’s historic state expenditures. In addition, it states that the applicable percentage for each fiscal year is 80 percent of the amount of non-Federal funds the state spent in FY 1994 on AFDC or 75 percent if the state meets the TANF work participation rate requirements (42 USC 607(a)) for the fiscal year. This is termed “basic MOE”, and the requirement is based on the Federal fiscal year. Any MOE expenditures above this required amount are referred to as “excess MOE”. In accordance with the regulation, the amount of MOE required for Puerto Rico is $21,185,453. 2 CFR section 200.303 (a) establishes that the recipient and subrecipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). STATEMENT OF CONDITION As part of our internal controls and compliance procedures for compliance with the MOE requirement, we requested the Grant Award report for 2023, covering the period from July 1, 2022, to September 30, 2023, to verify compliance with the MOE. The report covering this period reflects an MOE of $11,779,885, a deficiency of $9,405,568. Additionally, the reported expense amounts could not be validated against the PRIFAS database. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is systematic. Puerto Rico government agencies fail to demonstrate that they maintain constant communication and follow up on information requests to ensure that all required documentation is available to complete reports. In ADSEF no one has been assigned with the responsibility of monitoring compliance with the Level of Effort requirement. Additionally, procedures and internal controls manuals should provide for and ensure the segregation of duties and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare the financial statement and SEFA. STATEMENT OF CAUSE According to discussions with ADSEF personnel, since 2018, another agency of the Government of Puerto Rico, the Health Insurance Administration (ASES, by its Spanish Acronym), has not provided information to comply with the spending levels of other state programs. In addition, during our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, and no one is assigned the responsibility of monitoring compliance with the Level of Effort requirement. POSSIBLE ASSERTED EFFECT ADSEF is not in compliance with reporting state program expenditure levels, as required by program regulations. Additionally, ADSEF is not ensuring that the reports are accurate and traceable to the accounting database used to prepare their financial reports. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-014/2023-042. RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported. Puerto Rico government agencies must maintain constant communication and follow-up on information requests to ensure that all required documentation is available to complete reports. In addition, ADSEF should implement internal controls procedures that ensure continuous monitoring of the required level of effort.