Finding Text
Finding Reference 2023-002
Federal Agency: U.S. Department of the Treasury
Pass-through
Agency: Puerto Rico Fiscal Agency and Financial Advisory Authority
Program: Coronavirus State and Local Fiscal Recovery Funds
(Assistance Listing No. 21.027)
Compliance
Requirement: Reporting – Special Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance
(NC)
Statement of
Condition During the fiscal year, the Municipality administered funds from the Coronavirus
State and Local Fiscal Recovery Funds, this allocation was granted directly from the
Federal government and through Puerto Rico Fiscal Agency and Financial Advisory
Authority, respectively. In our Reporting Test, we evaluated three monthly reports
submitted to the Puerto Rico Fiscal Agency and Financial Advisory Authority. We
found that the Municipality submitted two of the three reports late. Also, we evaluated
the annual Project and Expenditure Report submitted to the U.S. Department of
Treasury. We found that the Municipality reported as current expenditures expenses
that were reported incurred in the report from the prior period.
Criteria The Municipal Strengthening Fund Transfer Agreement, Clause 5.1, states that the
Transferee shall submit reports as the Transferor determines are needed to verify use
of the funds and compliance with conditions that are imposed on the Transfer, and
such reports shall be in such form, with such content, as specified by the Transferor
in the Transfer Plan and future program instructions directed to all Recipients.
The Transfer Plan, on Exhibit A, establishes that starting on the 15th day of the month
following receipt of the funds, and by the 15th day of each month, the Transferee will
submit a Use of Funds Report for the prior month’s expenses.
Also, on the Municipal Strengthening Fund Program Guidelines, the Puerto Rico
Fiscal Agency and Financial Advisory Authority specified on the Reporting
Requirements Section that the recipients are required to submit monthly financial
reports using the reporting template provided by the program.
In addition to the contract agreement with the Puerto Rico Fiscal Agency and
Financial Advisory Authority, the Municipality had an agreement with the U.S.
Department of Treasury to receive funds direct funds as a Non-entitlement and
County Unit. We determined that the Municipality submitted the required annual
report in time.
The Coronavirus State and Local Fiscal Recovery Funds - Compliance and
Reporting Guidance, Part I, Section 10 (d), states that all recipients of federal funds
must complete financial, performance, and compliance reporting as required and
outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual
basis, as long as the methodology is disclosed and consistently applied. Reporting
must be consistent with the definition of expenditures pursuant to 2 CFR 200.1.
Appropriate accounting records must be maintained for compiling and reporting
accurate, compliant financial data, in accordance with appropriate accounting
standards and principles.
In addition, where appropriate, controls need to be established to ensure the
completion and timely submission of all mandatory performance and/or compliance
reporting.
Cause of Condition There is a lack of knowledge and training for the personnel assigned. Additionally,
the Municipality does not have adequate monitoring for the activity and the reports.
Effect of Condition The program is not in compliance with the Reporting Requirements as established in
the contract agreement and guidelines.
Recommendation We recommend training for the authorized personnel who administer the program,
to better understand the reporting requirements and develop complete and accurate
reports. The Municipality should establish a monitoring system to ensure compliance
with requirements established by the pass-through agency such as: (1) submitting the
reports during the 15th day of each month, where the fund expenses of the previous
month will be reported as incurred. Also, the Municipality should establish a process
to validate that the amounts reported agree with the accounting records of the
corresponding period reported. This will ensure better control of the program.
Questioned Cost None.
Prior Year Finding This finding is similar to prior year finding 2022-003.
Views of Responsible Officials and Planned Corrective Action We concur with the finding. The Municipality of Cataño (Federal Programs
Office), as a corrective action, will use the calendar tool for notifications and
reminders for the established dates so that we can submit compliance reports for
ARPA Funds on time.
Implementation Date: Fiscal year 2023-2024
Responsible Person: Carlos Flores Rivera, Federal Program Subdirector