FAC Explorer

Finding 519378 (2023-001)

Material Weakness
Requirement
B
Questioned Costs
-
Year
2023
Accepted
2025-01-15
Audit: 338266
Organization: Centro Maria Mazzarello Alespi (PR)
Auditor: Psv & CO Psc

AI Summary

  • Issue: CMMA mistakenly paid the PRTD for taxes on contractor services that are exempt under Puerto Rico's tax laws.
  • Requirement: CMMA must retain 10% of each contractor invoice until the building is completed, inspected, and accepted.
  • Follow-up: Review payment processes to prevent future errors and ensure compliance with tax withholding regulations.

Finding Text

Centro María Mazzarello Alespi (CMMA) issued two payments to the Puerto Rico Treasury Department (PRTD) for professional services tax withheld to the building contractor by error. Puerto Rico's Internal Revenue Code exempts payments made to building contractors from income tax withholding. However, CMMA was required to retain a 10% of each invoice (Certification) until the building has been finished, inspected, and accepted.

Corrective Action Plan

We agree with the findings. As our corrective action plan to be implemented during the course of the fiscal year 2023-2024, we will require to the accounting staff to take continuing education courses at least 1 every 6 months to stay current and comply with this action plan. In addition, we will hire an external accounting firm to support any technical questions for the accounting staff. Therefore, CMMA will strengthen its supervision and review procedures to assure that every payment is made to the proper payee in accordance with applicable laws, regulations, contracts, and industry practices. CMMA has requested the PRTD to reimburse the funds erroneously paid. PRTD approved the reimbursement to CMMA, therefore, the Institution will be able to pay the required amount to the building contractor.

Categories

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Other Findings in this Audit

  • 1095820 2023-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $909,415