Finding Text
Finding Reference 2023-003
Federal Agency: U.S. Department of Health and Human Services
Pass-through Agency: Puerto Rico Department of Family
Program: Head Start Program Cluster (ALN 93.600 & 93.365)
Compliance Requirement: Reporting - Financial Administration (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
This finding is similar to prior-year finding(s) 2022-003, 2021-003 and 2020-004.
Statement of Condition In our Reporting Test, we did not find evidence of the submission of the Federal Financial Report SF-425 to the pass-through agency and the trial balance. Also, the financial reports do not agree with the program accounting records. Alternate procedures were used to report the expense.
Criteria The OMB Common Rules, Subpart C, Section .20 (b) (1), states that the grantee must maintain internal control procedures that permit proper tracing of funds to the accounting records. Also, it requires accurate, current and complete disclosure of financial results.
The agreement with the pass-through entity, the Commonwealth of Puerto Rico – Department of Family (ACUDEN), Clause eight (8), Section 11, states that the utilization of the official accounting system of the program, Abila MIP Fund Accounting Software, is required. Other accounting systems will not be considered as the official accounting systems of the program for the purpose of federal, state, or local audits. All journal entries of the project should be registered in the system. Disbursement not registered in the Abila MIP Fund Accounting Software will not be processed. It is the responsibility of the grantee to keep the information up to date for it to reflect an accurate financial position of the institution.
Also, the agreement with the pass-through entity states in the twentieth (20) Clause that all the files related to the federal funds received under the contract must be available to all authorized representatives of the Department of Health and Federal Human Services, the Office of General Accounting of the United States, the Commonwealth of Puerto Rico – Contralor Office, the Commonwealth of Puerto Rico - General Inspector Office and the Commonwealth of Puerto Rico – Department of Family (ACUDEN). The files must be available for ten (10) years after the end of program year, unless the Secretary of the Department of Health and Federal Human Services authorizes the destruction of documents and the Act for the Administration of Public Documents of Puerto Rico (Act No. 5, from December 8, 1995, as amended), is no violated.
Cause of Condition The required accounting system is not used as a reporting source. Adequate internal controls do not exist to assure that the required accounting system is used, and the information is reconciled with the closing reports submitted to the federal agencies. Also, appropriate files are not kept documenting the compliance with the reporting requirement.
Effect of Condition The program is not in compliance with the Common Rules, Subpart C, Section .20 (b) (1).
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the closing reports. The Program fiscal area ensures that accounting records are updated at the end of each month in order to prepare accurate reports for the federal agency. In addition, the accountant must ensure that the Abila MIP Fund Accounting Software is used to present the financial position of the Program and as the reporting source as established by the pass-through entity. The Program must establish a file system to ensure that all the documents related to the program are filed and available for inspection.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action At the beginning of the fiscal year 2023-2024, ACUDEN authorized the use of Rock Solid’s Streamline Accounting System as the official accounting system for the Head Start Program. (Contract 2023-001904). This action corrects this finding. Regarding the delivery of the Federal Financial Report SF-425, the report was delivered to ACUDEN, although at the time of the audit evidence of its delivery could not be shown. ACUDEN was asked to send us a copy of the process sheet for the delivery of the report. Internal controls will be implemented to ensure this type of situation does not occur.
Implementation Date: During fiscal year 2024-2025.
Responsible Person: Mrs. Idenisse Díaz
Head Start Program Director