Finding 393845 (2023-003)

Federal Programs Assistance Listing Number 21.027 - Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Internal Control/Compliance; Significant Deficiency Criteria According to the 31 CFR Subtitle A Part 35 Subpart 35.6 (c)(1) A recipient may use funds to provide premium pay to eligible workers of the recipient who perform essential work or to provide grants to eligible employers that have eligible workers who perform essential work, eligible workers performing essential work during the COVID-19 public health emergency. A recipient uses premium pay or grants provided to eligible workers performing essential work during the COVID-19 public health emergency if: 1) The eligible worker's total wages and remuneration, including the premium pay, is less than or equal to 150 percent of the greater of such eligible worker's residing State's or county's average annual wage for all occupations as defined by the Bureau of Labor Statistics' Occupational Employment and Wage Statistics. Accordingly, the Puerto Rico Treasury Department created the "Comité de Supervisión de Desembolsos de los fondos del CRF". It established the guidelines under the ARPA Act and determined that an individual will be eligible if he was and employee of an Eligible Employer and meets the following requirements: a. The employee or worker has earned a base salary or annual compensation less than $40,000 for the calendar year 2020 or 2021; and b. When applying, the employee or worker is actively working for an Eligible Employer and has also completed at least five hundred (500) hours of essential work in person since March 1, 2020, carrying out essential work. Condition During our audit procedures on the expenses of the federal program, we found that one payment was made to an employee who did not meet the eligibility requirements. In addition, we identified a payment claimed to the federal program as being made to a specific employee, however, while performing audit procedures on the payment, we noted that the Hospital did not make the payment to the employee and did not return it to the grantor. Cause Involuntary error by an employee who worked with an eligible employee's report used to apply for the funds. The payroll department prepared the report with information from employees' records using specific program eligibility criteria. Then, the report was reviewed and approved by the finance department director. The employee for whom payment was not made resigned in August 2021 after the Hospital determined the eligible employees to be paid but before disbursement of payments. Premium pay funds were received by the Hospital on October 18, 2021 and considered the payment of the employee who resigned. The funds were disbursed to employees on October 29, 2021. Effect As a result of this condition, the U.S. Department of Treasury may request the return of funds, issue warnings and/or impose penalties to the Hospital. Questioned cost Question cost amounted to $4,000. The known questioned cost was calculated by the amount disbursed ($2,000) to the ineligible employee plus the payment not paid ($2,000) to the other employee. Context Of the three hundred fifty-one (351) premium pay payments made, we selected forty (40) payments for testing and noted one (1) instance of noncompliance. When we assessed the entire population, we extended the sample, selected ten (10) additional premium pay payments, and noted the exceptions of the payment not paid to an employee. Identification of a Repeat Finding This is not a repeat finding from the immediate previous audit. Recommendation The management of the Hospital should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Hospital should establish communication with the Health Department of Puerto Rico in order to obtain instructions for the correction of the non-compliance event and the related questioned cost. Views of responsible officials and planned corrective actions The Hospital’s management agrees with this finding. Please refer to the corrective action plan on pages 53-54.