Finding Text
Departure from Generally Accepted Accounting Principles – Failure to Consolidate Related Entity Category Internal Control Over Financial Statements Criteria U.S. generally accepted accounting principles (U.S. GAAP), as set forth in ASC 958-810 Not-for-Profit Entities—Consolidation, require a not-for-profit organization to evaluate its relationship with another entity and to consolidate that entity when the applicable consolidation criteria are met, including situations in which the organization has a controlling financial interest. Condition The Organization has a controlling financial interest in a legally separate entity (the “Related Entity”) through common ownership and participation. The Organization did not consolidate the financial statements of the Related Entity with its financial statements for the year ended December 31, 2025. As a result, the Organization’s financial statements do not include the assets, liabilities, net assets, revenues, expenses, and cash flows of the Related Entity, nor do they reflect the elimination of intercompany balances and transactions between the Organization and the Related Entity. Cause Management determined that the Related Entity was a legally separate organization and, based on that determination, concluded that separate financial statement presentation was appropriate. Management did not appropriately evaluate the consolidation requirements under ASC 958-810 based on the nature of the Organization’s controlling financial interest. Effect The Organization’s financial statements are not presented in accordance with U.S. GAAP because the financial statements omit the financial position, results of operations, and cash flows of the Related Entity and do not reflect the required elimination of intercompany balances and transactions. The effect of this departure from U.S. GAAP has not been determined and is not reasonably practicable to quantify. Consequently, the amounts presented in the financial statements may be materially different from the amounts that would have been reported had the Related Entity been consolidated in accordance with U.S. GAAP. Additionally, because the Organization receives and administers federal awards, management should evaluate whether the no consolidation results in any impact on amounts, activities, or disclosures relevant to federal award reporting and the applicable compliance requirements identified in the OMB Compliance Supplement. Views of Responsible Officials Management of the Organization agrees with this finding. For details of the actions to be taken, refer to the Corrective Action Plan (CAP) section in this report. Responsible Person José Carrasquillo Delgado Finance DirectoR