Finding 391198 (2023-002)

-
Requirement
F
Questioned Costs
-
Year
2023
Accepted
2024-04-01

AI Summary

  • Core Issue: The current capitalization threshold for property and equipment acquired with CDBG-DR funds is set at $1,000, which does not meet the required $500 threshold established by the Puerto Rico Department of Housing.
  • Impacted Requirements: This discrepancy violates the Finance Policies for administering CDBG-DR funds, leading to improper expensing of eligible property and equipment.
  • Recommended Follow-Up: Management should revise the capitalization policy to align with the $500 threshold and update the finance manual by June 30, 2024.

Finding Text

Criteria: Finance Policies to Administer CDBG-DR established by the Puerto Rico Department of Housing in its Chapter 15 Section 2, requires that-sub recipients must capitalize property and equipment with a cost of $500 or more. Condition: The capitalization threshold used for property and equipment acquired with CDBG funds is not in compliance with Finance Policies to administer CDBG-DR funds, as established by the Puerto Rico Department of Housing. SECTION III –FEDERAL AWARD FINDINGS AND QUESTIONS COSTS Cause: The capitalization policy followed by BGCPR is to capitalize property and equipment with a cost of $1,000 or more. Effect or potential effect: Property and equipment acquired with CDBG-DR funds is being expensed instead of capitalized. Recommendation: We recommend that management updates its capitalization policy to include this specific requirement for property and equipment acquired with CDBG-DR funds. Views of responsible officials: Management will add a capitalization procedure for this program to its finance manual and make the adjustments in the property land equipment subsidiary. Expected completion date is June 30, 2024.

Corrective Action Plan

Finding No. 2023-002 Management Response: Management agrees with the finding. The Organization has spent $20,268.79 in equipment that falls under the capitalization requirements of the program. The amount that has not been capitalized is $9,409.93, consisting of computer equipment. Corrective Action Plan:  A capitalization procedure for CDGB-DR will be added to our Finance Policy and Procedure Manual.  Perform the adjustments in our fixed assets subsidiary Contact Person: Antonio Rosario Manuel Joglar Nerma Albertorio Team: Accounting Manager and program leaders. Anticipated Completion Date: June 30, 2024

Categories

Subrecipient Monitoring Equipment & Real Property Management

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
14.850 Public and Indian Housing $2.08M
84.287 Twenty-First Century Community Learning Centers $1.50M
93.600 Head Start $426,902
17.274 Youthbuild $325,534
14.218 Community Development Block Grants/entitlement Grants $292,934
10.555 National School Lunch Program $179,272
84.282 Charter Schools $172,010
10.536 Cacfp Training Grants $167,589
93.086 Healthy Marriage Promotion and Responsible Fatherhood Grants $158,141
94.006 Americorps $142,661
93.356 Head Start Disaster Recovery $142,395
16.575 Crime Victim Assistance $43,554
93.859 Biomedical Research and Research Training $29,682
21.027 Coronavirus State and Local Fiscal Recovery Funds $23,685
10.553 School Breakfast Program $21,678
93.060 Competitive Abstinence Education (cae) $17,624
16.726 Juvenile Mentoring Program $16,888
14.862 Indian Community Development Block Grant Program $5,148