Finding Text
REQUIREMENT REPORTING TYPE OF FINDING MATERIAL WEAKNESS FEDERAL PROGRAM 21.027 - Coronavirus State and Local Fiscal Recovery Fund CONDITION For our tests, we requested copies of the Monthly Reports of Municipal Strengthening Fund Program (CSLFRF Funds) for the fiscal year ended on June 30, 2023. After our examination of the monthly reports, we noted that there are significant discrepancies between the dates submitted versus the required submission date. The differences are the following: CRITERIA Municipalities that receive and manage funds related to COVID-19 relief programs are required to submit financial and compliance reports to the Puerto Rico Financial Advisory and Fiscal Agency (AAFAF) within the dates set by that entity as a requirement for monitoring, transparency, and accountability. According to the guidelines issued by AAFAF for managing COVID-19 funds, quarterly reports must be filed on or before the 15th of the month following the end of the corresponding period. Likewise, entities receiving federal funds are responsible for maintaining adequate internal control systems and complying with all reporting requirements established by the granting entity and its administrators. Also, 2 CFR §200.303 requires federal recipients to establish and maintain effective Internal controls to ensure compliance with federal grant laws, regulations, and conditions. CAUSE The situation seems to be due to weaknesses in internal controls related to monitoring expiration dates, preparing reports on time, and managerial oversight of the process for meeting federal and state reporting requirements. EFFECT The late submission of reports limits AAFAF's ability to timely monitor the use of federal funds and increases the risk of not meeting program conditions, audit findings, and potential flags from state or federal agencies. Plus, it can affect the accuracy and timeliness of the information used for transparency and accountability processes required for COVID-19 recovery funds. QUESTIONED COST None RECOMMENDATION We recommend that the Municipal Administration strengthen internal controls related to the preparation, review, and submission of reports required by AAFAF. Establish a formal compliance schedule that includes all federal and state reporting deadlines. Assign staff responsible for monitoring and following up on the program's reporting requirements. Implement pre-review procedures to ensure that reports are complete and ready to be submitted by the 15th of the month following the end of the period and keep documented evidence of the preparation, review, and submission of each report for audit and monitoring purposes.