Finding Text
Finding Reference 2023-004
Federal Agency: U.S. Department of Health and Human Services
Pass-through Agency: Puerto Rico Department of Family
Program: Child Care and Development Block Grant (Assistance Listing No. 93.575)
Compliance Requirement: Earmarking (G)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Earmarking Test, we found that the Program did not comply with the quality
earmark limitation that requires the program to spend at least nine percent (9%) of
the funds on quality activities and at least an additional three percent (3%) on quality
improvement for infants and toddlers on the program. Also, we found that the
Program did not comply with the direct spending earmark limitation that requires the
program to spend not less than seventy percent (70%) to fund direct services.
Criteria 45 CFR, Subpart F, Section 98.50 (b) (1) states that of the aggregate amount of funds
expended by a State or Territory, no less than seven percent in fiscal years 2016 and
2017, eight percent in fiscal years 2018 and 2019, and nine percent in fiscal year
2020 and each succeeding fiscal year shall be used for activities designed to improve
the quality of child care services and increase parental options for, and access to,
high-quality child care as described at 45 CFR Subpart F, Section 98.53. Section
98.50 (b) (2) states that no less than three percent in fiscal year 2017 and each
succeeding fiscal year shall be used to carry out activities as such activities relate to
the quality of care for infants and toddlers. Also, section 98.50 (b) (3) states that
nothing in this section shall preclude the State or Territory from reserving a larger
percentage of funds to carry out activities described in paragraphs (b) (1) and (2) of
Section 98.50.
45 CFR, Subpart F, Section 95.50 (d) states of the aggregate amount of funds
expended, no more than five percent may be used for administrative activities as
described in 45 CFR 98.54.
45 CFR, Subpart F, Section 95.50 (f) (2) states that from Discretionary amounts
provided for a fiscal year, the Lead Agency shall use not less than 70 percent to fund
direct services (provided by the Lead Agency).
Cause of Condition The program’s budget, approved by the pass-through entity, was not distributed
according to the cost limitations required for the administrative, quality and direct
costs. Therefore, the amounts spent per category of expenditure did not meet the
minimum amounts.
Effect of Condition The program is not in compliance with 45 CFR, Subpart F, Section 98.50.
Recommendation We recommend the Program’s Management to request to the pass-through entity a
revision of the approved budgeted amounts in order to make all the required
adjustments to comply with the program cost limitations.
Questioned Cost None.
Prior Year Finding No.
Views of Responsible Officials and Planned Corrective Action We do not concur with the finding. This finding is not applicable because what is
stated about the description in the approved budget is not stipulated by the
Municipality of Cataño, which is the one being audited. This description is
designated from ACUDEN.
Implementation date: Fiscal year 2023-2024
Responsible official: Mrs. Lymara Salgado, Child Care Program Director