Finding 546938 (2024-001)

Condition During our reporting test, we detected reports that were submitted after the corresponding biweekly period. In addition, the expenditures in the reports contained errors of reporting related to the amounts for employee retentions for payroll taxes, which were included in the reports but are not expenditures incurred by the Organization. Views of Responsible Officials and Corrective Actions Justification: The organization acknowledges that four (4) out of twenty-four (24) bi-weekly reports for ALN 21.027 were submitted late. The report due September 1, 2023, was submitted on September 6, 2023. This delay was due to an unintentional error involving a mismatch of dates, as explained in an email to the grantor on the same day as the submission. The grantor acknowledged receipt of the report. Furthermore, the organization maintains continuous communication with the grantor to validate eligible expenses. The grantor has not verbalized any major discrepancies related to late submissions in the monthly stakeholder meetings due to our continuous communication with the grantor. While the organization recognizes the late submission, it asserts that the delay was minor and promptly addressed. Root Cause Analysis and Immediate Corrective Actions: • Objective: Identify underlying causes of late submissions and report errors. o Conduct interviews with staff involved in reporting processes. o Review workflow for report preparation, approval, and submission. o Analyze gaps in understanding compliance requirements (e.g., misclassification of FICA/Medicare retentions). Corrective Actions: The organization has taken steps to improve internal controls and prevent future late submissions. To address and prevent the issues identified in Finding No. 2024-001, the following corrective actions are the following: Establish Formalized Oversight and Monitoring: ● Implement a system of checks and balances for report preparation and submission. ● Designate specific personnel responsible for reviewing reports before submission to ensure accuracy and timeliness. ● Develop a tracking mechanism (e.g., a checklist or calendar) to monitor report deadlines and submission status. Enhance Internal Controls: ● Develop and document written policies and procedures for the bi-weekly reporting process. This documentation should clearly outline: ○ Report preparation guidelines, following 2 CFR 200.302. ○ Data sources and required supporting documentation, following 2 CFR 200.300. ○ Review and approval processes, following 2 CFR 200.303. ○ Submission deadlines and methods, following grantor requirements and 2 CFR 200.343. ● Provide training for staff responsible for preparing and submitting reports, emphasizing the importance of accuracy and adherence to deadlines, following 2 CFR 200.303. ● Implement a process for regular reconciliation of report data with underlying financial records to ensure accuracy, following 2 CFR 200.302. Improve Report Accuracy: ● Clearly define what constitutes an allowable expenditure for the federal program, in accordance with 2 CFR Part 200 Subpart E. ● Provide specific guidance and examples to staff to prevent the inclusion of non-expenditure items (like employee payroll tax retentions) in reports. ● Implement automated checks or validation rules in the reporting process to detect and prevent errors. ● Conduct pre-submission audits by a compliance officer to review expenditures against federal guidelines, including OMB Circular A-133. ● Develop a retroactive correction protocol to address past errors, including communication with the grantor if amendments are Timely Submission of Reports: ● Implement a system of reminders for report deadlines. ● Establish clear consequences for failing to submit reports on time. ● Evaluate the current reporting timeline and assess if adjustments are needed to ensure timely submission. Communication with Grantor: ● Proactively communicate with the grantor regarding the corrective actions being taken to address the findings. ● Provide the grantor with a timeline for implementation of these actions. By implementing these corrective actions, Sociedad para Asistencia Legal de Puerto Rico, Inc. can improve the accuracy and timeliness of its bi-weekly reporting, ensure compliance with federal requirements, and mitigate the risk of penalties or other adverse actions. Name(s) of the Contact Person(s) Responsible for Corrective Action Héctor A. Díaz Pomales - Director de Finanzas Anticipated Completion Date: March 26, 2025