FINDING REFERENCE NUMBER 2024-045 (See Finding Reference Number 2024-017) FEDERAL PROGRAM (ALN – 96.001) SOCIAL SECURITY – DISABILITY INSURANCE U.S. SOCIAL SECURITY ADMINISTRATION AWARD NUMBERS 1804RQD100 (Federal Award Year: 10/1/2017 – 9/30/2018) 1904RQD100 (Federal Award Year: 10/1/2018 – 9/30/2019) 2004RQD100 (Federal Award Year: 10/1/2019 – 9/30/2020) 2104RQD100 (Federal Award Year: 10/1/2020 – 9/30/2021) 2204RQD100 (Federal Award Year: 10/1/2021 – 9/30/2022) 2304RQD100 (Federal Award Year: 10/1/2022 – 9/30/2023) 2404RQD100 (Federal Award Year: 10/1/2023 – 9/30/2024) ADMINISTRATION OFFICE OF THE SECRETARIAT COMPLIANCE REQUIREMENT REPORTING – FINANCIAL TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA According to the Program Operations Manual (POMS) DI 39506.203-Updating and Reconciling Unliquidated Obligations published by the Social Security Administration (SSA), legitimate unliquidated obligations must be backed up by records or papers that explain the nature of the obligations and provide evidence for the amounts reported. It is also crucial that the agency's reported unliquidated obligations reflect any modifications or cancellations of Consultative Examinations (CE) and Medical Evidence of Record (MER) authorizations. State authorities should check CE authorizations to see if the unliquidated obligation is an authorization that is still in existence and evaluate unliquidated obligations at least once a month to cancel those that are no longer valid. POMS 39506.210 Preparations Instructions for Form SSA-4513 instructs the State Agency to check the appropriate box in the report to indicate the attachment of Form-871. Uniform Guidance at 2 CFR §200.302 Financial Management Section (a) establish the administrative requirements for the program, which include the requirement that state and the other non-Federal entity's 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 general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. STATEMENT OF CONDITION The State Agency Report of Obligations for SSA Disability Programs, Form Report SSA-4513, was incomplete and inaccurate. During the audit procedures the following deficiencies were noted by us: 1) It was not specified in the Puerto Rico Disability Determination Services (PR-DDS) Accounting Department's Form SSA-4513 for September 2023 and June 2024 if Form SSA-871, State Agency Schedule for Equipment Purchases for SSA Disability Programs, had to be included with Form SSA-4513 for FYs 2024, 2023, 2022, 2021, 2020, 2019, and 2018. Whether this was necessary or not is unknown. 2) For the September 2023 Forms SSA-4513, the support for unliquidated obligations for FYs 2023, 2022, 2021 and 2020 were absent, incomplete or had differences. For FY 2023, there was a difference of $560,158 between the amount included in the report and the support provided for review. For FY 2022, there was a difference of $7,795 between the amount included in the report and the support provided for review. For FY 2021, there was a difference of $580,750 between the amount included in the report and the support provided for review. For FY 2020, there was a difference of $518,630 between the amount included in the report and the support provided for review and no support was provided for unliquidated obligations. 3) For the June 2024 Forms SSA-4513, the support for unliquidated obligations for FYs 2024, 2023 and 2022 were absent, incomplete or had differences. For FY 2024, there was a difference of $1,402,319 between the amount included in the report and the support provided for review. For FY 2023, there was a difference of $236,152 between the amount included in the report and the support provided for review. For FY 2012, there was a difference of $199,043 between the amount included in the report and the support provided for review. 4) There were discrepancies between the accounting system and the total amount of disbursements on Form SSA-4513 for June 2024 and September 2023, and no observations were submitted in the report remarks section and personnel were unable to provide explanations during the audit process. Following are the discrepancies: (1) September 2023 Form SSA-4513: a. $925 discrepancy in FY 2022 b. $24,806 discrepancy in FY 2021 c. $9,251 discrepancy in FY 2020 d. $8,682 discrepancy in FY 2019 e. $49 discrepancy in FY 2018 (2) June 2024 Form SSA-4513: a. ($156,693) discrepancy in FY 2024 b. $101,737 discrepancy in FY 2023 c. $925 discrepancy in FY 2022 d. $39,656 discrepancy in FY 2021 e. $63,275 discrepancy in FY 2020 5) The PR-DDS paid back $539,771 to the grantor for indirect costs charged in excess according to the Form 4513 for FY 2020. Because an expense is reported at the time a request is registered by the PR-DDS Accounting Department Special Payer, this resulted in an overstatement in previous Schedule of Expenditures of Federal Awards and in quarterly reports. 6) The PR-DDS Accounting Department submitted Form SSA-4513 for FY 2020 on July 16, 2024. This form was revised on July 19, 2024. We reviewed the revised form, but the report does not identify the updated form as revised. 7) The database submitted to support financial statements amounts, presents a difference of $192,759 between the accounting system (PRIFAS) and the database for FY 2024. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systematic deficiency. Information needed to effectively generate financial reports should be available through the financial management system. STATEMENT OF CAUSE Internal controls is not in place in the PR-DDS Accounting Department to ensure that vendor payments are processed on schedule. Furthermore, as mandated by DI 39506.203, the PR-DDS Accounting Department has not put monitoring measures in place to routinely assess unliquidated commitments. Furthermore, the PR-DDS Accounting Department lacks internal procedures for recording discrepancies between financial reporting and accounting systems. POSSIBLE ASSERTED EFFECT The PR-DDS raises the possibility of incurred costs without the option to obtain reimbursement from the Federal grant if appropriate procedures are not in place to pay suppliers on time and liquidate obligations on time. IDENTIFICATION OF REPEAT FINDING This is a repeat of a finding reported in the prior audit as Finding Numbers is 2023-024/2023-055. RECOMMENDATIONS We recommend the Accounting Department of PR-DDS establish procedures to make sure Form SSA-4513 is properly examined, recorded, and compliant with POMS DI 39506.203. To cancel commitments that are no longer valid, we advise the PR-DDS Accounting Department to check unliquidated obligations at least once a month. Furthermore, we recommend a formal reconciliation between the quarterly reports and the accounting system-documented disbursements, with an explanation of any discrepancies included in remarks of the Form SSA-4513.