Finding Text
Finding Reference 2024-003
Federal Agency: U.S. Department of Homeland Security
Pass-through
Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3)
Federal Emergency Management Agency (FEMA)
Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster
(ALN 97.036)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of
Noncompliance (NC)
Statement of Condition: In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eight (8) projects for two quarters of fiscal year 2023-2024. During our audit procedures, we noted that the reports did not agree with the accounting and project records.
Criteria: 2 CFR 200.302 (a) states that the states’ and other non-Federal entities’ financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.
Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329.
Cause of Condition: The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities.
Effect of Condition: The expenses reported in the Quarterly Progress Reports do not agree with the accounting records.
Recommendation: We recommend the Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission to the pass-through entity.
Questioned Cost: None.
Prior Year Findings: Yes. This finding is similar to prior-year finding 2023-003.
Views of Responsible
Officials and Planned
Corrective Actions: We concur with the finding. In the quarterly reports (QPR), accumulated expenses are reported up to the closing date of each quarter. These expenses are assigned to the quarter in which the contractor invoices the completed work. However, in some cases, the payment is made in the quarter following the one in which the invoice was issued. This discrepancy may cause the expenses to not be accurately reflected in the quarter they were reported during the audit process. This situation will be addressed prospectively, and expenses will be assigned to the quarter in which the payment is made.
Implementation Date: Fiscal Year 2025-2026.
Responsible Person: José A. Torres Otero
Program Accountant