FINDING REFERENCE NUMBER 2025-005 FEDERAL PROGRAMS (ALN – 84.027) SPECIAL EDUCATION – GRANTS TO STATES (IDEA, PART B) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.173) SPECIAL EDUCATION – PRESCHOOL GRANTS (IDEA PRESCHOOL) – SPECIAL EDUCATION CLUSTER (IDEA) (ALN – 84.425R) COVID-19 EDUCATION STABILIZATION FUND: CORONAVIRUS RESPONSE AND RELIEF SUPPLEMENTAL APPROPRIATIONS ACT, 2021 – EMERGENCY ASSISTANCE FOR NON-PUBLIC SCHOOLS (CRRSA EANS) (ALN – 84.425U) COVID-19 EDUCATION STABILIZATION FUND: AMERICAN RESCUE PLAN – ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ARP ESSER) (ALN – 84.938A) HURRICANE EDUCATION RECOVERY – IMMEDIATE AID TO RESTART SCHOOL OPERATIONS (RESTART) U.S. DEPARTMENT OF EDUCATION AWARD NUMBERS H027A220003 (07/01/2023 – 09/30/2023); H027A230003 (07/01/2023 – 09/30/2024); H027A240003 (07/01/2024 – 09/30/2025); H173A230002 (07/01/2023 – 09/30/2024); H173A240002 (07/01/2024 – 09/30/2025); S425R210053 (06/28/2021 – 03/31/2025); S425U210029 (03/24/2021 – 03/28/2026); S938A180002 (04/26/2018 – 09/30/2025) COMPLIANCE REQUIREMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT TYPE OF FINDING INTERNAL CONTROL AND COMPLIANCE – MATERIAL WEAKNESS AND MATERIAL NONCOMPLIANCE CRITERIA 2 CFR Section 200.313, establishes that procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. STATEMENT OF CONDITION As part of our procedures on equipment requirements, we requested an inventory of equipment from the PRDE as of June 30, 2025. No inventory was taken since 2019. The PRDE provided a list of all additions made during the fiscal year. In the list of additions provided to us, we found that a total amount of $10,356,037.76, classified as programs and licenses, should not be capitalized as equipment because they have a useful life of less than one year. We selected a sample of forty (40) units for the IDEA Cluster, to determine that the items were properly safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Eight (8) items do not have the assigned person updated. 2. One (1) was not physically observed because is a program license software. 3. Two (2) items don’t have the location updated and no transfer documentation was provided. 4. Two (2) items the description does not agree with the property observed. We selected a sample of forty (40) items for the Education Stabilization Fund Programs, to determine that the items were properly recorded, identified, safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Seven (7) items do not have the assigned person updated. 2 One (1) item does not have the location updated and no transfer documentation was provided. 3 One (1) item does not have the assigned person and location updated and no transfer documentation was provided. 4 One (1) item does not have the assigned person updated, in addition the property is not in use because it is damaged and no updated in the records was performed to reflect the condition of the property. 5 One (1) of the selected items represents the acquisition of eighty-two (82) air conditioning units for several classrooms and only one (1) property number was assigned to the purchase, therefore all units have the same property number. 6 One (1) of the selected items could not be shown at the location because the custodian is on sick leave. As an alternative procedure, a photograph of the computer/laptop was sent to us as evidence, but it does not show the tag or serial number for validation. We were able to observe that the equipment exists and is in good condition. We selected a sample of forty (40) items for the Restart Program, to determine that the items were properly recorded, identified, safeguarded and the usage was in accordance with the regulations. We found the following deficiencies: 1. Seven (7) items do not have the assigned person updated. 2. Twelve (12) items included in the assigned person the name of the public or private school as the custodian. 3. Five (5) items do not have the location updated and no transfer documentation was provided. From these items, four (4) were servers and backup batteries that were purchased through a memorandum of understanding between the PRDE and the Puerto Rico Police Department. The equipment was not in school or in custody of a person from the PRDE, instead it is in custody of a Sargeant of the Puerto Rico Police Department. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This is a systemic deficiency. Each school Principal conducted an equipment count, but it was not reviewed, and not all schools did so. No inventory has been conducted since 2019. The identified deficiencies constitute a systemic problem. Items purchased during fiscal year under audit did not properly identify the custodian, location, description, and no proper tracking of transfer of equipment is maintained in the PRDE. The sampling was a statistically valid sample. STATEMENT OF CAUSE PRDE has not been able to work with the inventory and update it as of June 30, 2025. In addition, the Property Department does not have procedures in place in order to identify incomplete records, unidentified dispositions, or transferred equipment. POSSIBLE ASSERTED EFFECT It was not possible to validate that the PRDE complies with the requirements established by the Federal regulation related to the maintenance of records of equipment acquired with Federal funds. In addition, deficiencies were noted in the usage and proper safeguard of the equipment purchased. IDENTIFICATION OF REPEAT FINDING This is a repeat finding (Finding Reference Number 2024-006). RECOMMENDATIONS We recommend that the PRDE carry out an inventory and reconcile it with the records maintained by the PRDE. In addition, internal controls must be implemented to ensure that only equipment that is necessary for the operation of the programs is purchased. In addition, the use of this equipment must be monitored, so that its installation and use are followed up, as well as the transfer of equipment and changes to the property records.