Finding Text
Federal Program ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Internal Control/Compliance Compliance Requirement Reporting Criteria The resolution 2022-52 states the following: “WHEREAS, besides the compliance requirements of a federal award Sociedad para Asistencia Legal de Puerto Rico, Inc. (SAL) must: (1) submit biweekly financial reports in which eligible use of funds is shown until the full expense is evidenced; (2) submit monthly reports in which evidence-based metrics demonstrate the effectiveness of the projects; and (3) include in a distribution agreement a provision that if the project fails to qualify for reimbursement because negligence or failure to meet applicable standards or requirements on the part of SAL, Government of Puerto Rico (GPR) has the option to recoup such funds from SAL.” Part III – Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2025-001 Bi-weekly Reporting – (continued) Criteria – (continued) In addition, as stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), § 200.303 Internal controls, “the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.” Condition During our reporting test, we detected reports that were submitted after the corresponding biweekly period. In addition, the expenditures in the reports contained errors of reporting related to the amounts for employee retentions for payroll taxes, which were included in the reports but are not expenditures incurred by the Organization. Cause Weak internal controls over the reporting process, including a lack of formalized oversight and monitoring mechanisms to ensure timely and accurate submission. Effect As a result of this condition, the grantor may issue warnings and/or impose penalties to the Organization. Also, the grantor was deprived of timely taking any action that it understood to be pertinent in the program. The analysis, evaluations, and decision-making of the grantee could be affected. Part III – Findings and Questioned Costs Relating to Federal Awards – (continued) Finding No. 2025-001 – Bi-weekly Reporting – (continued) Context Of a total of twelve (12) bi-weekly reports required for ALN 21.027, three (3) of the bi-weekly reports submitted were sent after their due date. In addition, all the reports sent to the oversight agency included the FICA and Medicare retention made by the Organization to employees participating on the program, which do not constitute expenditures made by the Organization. Identification of Repeat Finding This is a repeat finding from the immediate previous audit, Finding No. 2024-001. Questioned Cost None. The FICA and Medicare retentions were wrongly reported on the bi-weekly reports but they were not claimed as federal expenditures by the Organization nor are included in the SEFA. Recommendation We strongly recommend the Organization to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Organization is filing the reports by their respective due dates and with the correct amounts. It is critically important that timely and accurate reports be produced to ensure that the goals and purposes of the grant have been achieved and accounted for properly.