Finding Text
FINDING REFERENCE NUMBER 2024-035 (See Finding Reference Number 2024-014) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant deficiencies related to the schedule preparation as follows: • The expenditures for some Federal programs were not accurately reported. To reconcile amounts in the SEFA with the audited financial accounts, the PRDF agree with the suggested auditor adjustments and posted them to the SEFA. • The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal programs. This situation led to delays and errors in the preparation of the schedule and the amounts initially submitted for the SEFA. • The initial SEFA submitted for audit procedures contained the following deficiencies because of inadequate internal controls: o There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions of the SEFA that were received contain incorrect and incomplete information. o Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA. For ALN 14.231 the amount of $3,119,131.54 was not separately presented, in addition for ALN 93.671 the distribution between COVID and regular funds was incorrectly presented by $2,075,855.34. o For ALN 93.558 expenditures were included that do not correspond to the program as follows: a total amount of $20,364,480 of programs expenditures correspond to ALN 93.560 and a total amount of $9,140,245.62 corresponds to ALN 93.667. The incorrect presentation of these amounts could affect the correct identification of the programs as Type A and Type B for major program determination. o For ALN 93.671 a total amount of $712,602.44 were included as program expenditure but those expenditures correspond to ALN 93.497. o During the fiscal year, reimbursements of expenses incurred related to ALN 97.036 were received in the amount of $2,828,481.01; however, for the initial SEFA submitted, no validation was performed on the amount of expenses of those reimbursements that should be included in the schedule. After the validation is completed, all the amounts should be included in the schedule as expenditure. PERSPECTIVE INFORMATION This is a systemic deficiency. The PRDF was unable to provide an accurate Schedule of Expenditures of Federal Awards (SEFA), and related supporting documentation in order to apply required audit procedures. The PRDF is composed of five (5) Administrations that manage federal funds. The Office of Secretariat is responsible for coordinating the work of the administrations, but there are no established procedures for coordinating the collection of information when preparing the SEFA for audit purposes. STATEMENT OF CAUSE The PRDF does not have an adequate procedure established to collect, organize, and validate the information necessary for the preparation of the SEFA in accordance with Federal regulations. POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to inaccurate Major Program Determination multiple times made by the auditors because of the different versions of the SEFA submitted, affecting the execution of the Single Audit in a reasonable time. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers 2023-019/2023-047. RECOMMENDATIONS We recommend the PRDF establish adequate procedures to coordinate the collection, organization, and validation of the required information to prepare the SEFA from each of the Administrations in a timely manner to ensure that all Federal programs/transactions are properly recorded and included in the schedule.