Finding 485648 (2023-006)

Significant Deficiency Repeat Finding
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2024-09-04

AI Summary

  • Core Issue: The Corporation failed to submit the required audit report and data collection form on time, violating federal guidelines.
  • Impacted Requirements: This non-compliance affects the Corporation's standing with federal agencies and may lead to warnings or penalties.
  • Recommended Follow-up: Implement clear policies and assign personnel to ensure timely submission of reports, with management oversight for compliance.

Finding Text

Finding No. 2023–006 – Audit requirements for auditees – report submission Federal Program ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act ALN 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disaster) Program Name of Federal Agency U.S. Department of Treasury U.S Department of Homeland Security Pass-through Entity Puerto Rico Department of Treasury Central Office of Recovery Reconstruction and Resiliency (COR3) Category Non-compliance / Significant deficiency in internal controls over compliance Compliance Requirements Other Criteria As required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), § 200.512 Report submission (a) (1), “ the audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditors’ report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day”. Condition The data collection form and the reporting package for the year ended on June 30, 2023 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Cause Accounting and reporting processes are being significantly delayed and thus, the information necessary to complete the financial statement audit procedures was not available within the timeframe prescribed by the Uniform Guidance. Effect As a result of this condition, the federal agencies that has granted funds to the Corporation may issue warnings and/or impose penalties to the Corporation. Also, the federal agencies were prevented from the use of accurate reporting data, which is critical for the effective administration of the federal program and for federal agencies’ budgetary policy analysis. Questioned cost None. Context The Corporation did not comply with the timeframe required to file it’s Uniform Guidance Single Audit Report for the fiscal year ended on June 30, 2023. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2022-006 Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 87 to 92.

Corrective Action Plan

Finding No. 2023-005 – Biweekly and quarterly reporting and finding No. 2023–006 – Audit requirements for auditees – report submission Conditions 1) For finding No. 2023-005: During our audit procedures regarding the compliance requirement related to reporting, we noted that, during the fiscal year ended June 30, 2023: • For ALN 21.027 - Coronavirus State and Local Fiscal Recovery Fund - ARP Act ✓ The Corporation was not able to provide audit evidence for the submission of four (4) biweekly reports, out of a sample of eight (8) reporting dates. ✓ One (1) monthly report, out of a sample of eight (8) reporting dates, was submitted later than its due date as follows: • For ALN 97.036 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Program The Corporation was required to submit four (4) quarterly reports during the year ended June 30, 2023. The Corporation provided incomplete reports for quarters 3 and 4. The report of quarter 3 does not include the correct amounts already expensed by the Corporation, while the report of quarter 4 was not completed and signed by the preparer. 2) For finding No. 2023-006: The data collection form and the reporting package for the year ended on June 30, 2023 was not submitted to the Federal Audit Clearinghouse within the timeframe prescribed by the Uniform Guidance. Corporation response The Corporation agrees with the findings Corrective Action Plan Upon receipt of the audit findings, we initiated an immediate review of our monthly reporting procedures. We have identified specific areas that require attention and are implementing immediate corrective actions to address the identified deficiencies. • Policies and Procedures Review - Simultaneously, we are reviewing our existing policies and procedures related to monthly reporting. This includes a reassessing reporting timeline, data validation processes, and the overall framework for ensuring accuracy and completeness in our monthly reports. • Staff Training and Development - Recognizing the critical role of our personnel in the reporting process, we are providing additional training to the individuals involved. This training will emphasize the importance of adherence to reporting guidelines, accurate data entry, and the significance of meeting established deadlines. • Communication Protocol Enhancement - We recognize the importance of effective communication regarding reporting processes. To address this, we are enhancing us communication protocols to ensure that all relevant stakeholders are informed of reporting requirements, timelines, and any changes to procedures. • Finance Team - The Corporation has changed its management staff structure in the finance and budget department, with the mission of improving the monitoring process and compliance with federal and local regulations. A new Finance and Budget Director and the Associate Director of Finance and Budget have been appointed. Name of the contact person responsible for corrective action plan Jesús A. Rodríguez Avilés – Financial Planning and Analysis Director Anticipated Completion date June 30, 2025

Categories

Subrecipient Monitoring Internal Control / Segregation of Duties Allowable Costs / Cost Principles Reporting Significant Deficiency

Other Findings in this Audit

  • 485647 2023-005
    Material Weakness Repeat
  • 485649 2023-005
    Material Weakness
  • 485650 2023-006
    Significant Deficiency Repeat
  • 1062089 2023-005
    Material Weakness Repeat
  • 1062090 2023-006
    Significant Deficiency Repeat
  • 1062091 2023-005
    Material Weakness
  • 1062092 2023-006
    Significant Deficiency Repeat

Programs in Audit

ALN Program Name Expenditures
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $2.54M
21.027 Coronavirus State and Local Fiscal Recovery Funds $2.02M
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $126,078
21.019 Coronavirus Relief Fund $48,601