FINDING REFERENCE NUMBER 2023-035 (See Finding Reference Number 2023-007)
FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE
(ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT CASH MANAGEMENT
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA Uniform Guidance at 2 CFR 200.302, requires recipient's and subrecipient's financial management system must provide for the following: (3) maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation; (4) effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303; and (6) written procedures to implement the requirements of § 200.305.
2 CFR 200.305, Federal Payments, establishes that: (a) payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”; (b) for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment.
STATEMENT OF CONDITION As part of our understanding of internal controls and compliance regarding cash management, we obtained a procedures manual. We found the following deficiencies:
1.
The effective date is April 2024.
2.
In the section describing the LIHEAP process, the US Department of Agriculture is mentioned instead of the US Department of Health and Human Services.
3.
It does not identify the personnel responsible for the processes to establish segregation of duties.
4.
In our interviews it was noted that only one person is in charge of all drawdowns, and no proper supervision or review of the documentation is performed.
In addition, a detail of the requests related to the program was obtained; however, this request information does not reconcile with the revenue recognized in PRIFAS. The following deficiencies were identified:
1.
The document includes amounts identified as LIHEAP, which belong to another Federal program, the Low-Income Household Water Assistance Program (ALN 93.499), in the amount of $4,590,528.
2.
The amount of $306,483.12 is presented twice and is only recognized in PRIFAS once.
3.
PRIFAS includes revenue of $3,900,000 related to the COVID-19 portion of funds, which is not included in the breakdown.
From a population of fifty-seven (57) revenue transactions, six (6) transactions were selected to ensure that the correct amounts were requested from the Federal program and that the documents indicated in the manual were included with each petition. The following deficiencies were observed:
1.
The documents included do not contain signatures from the personnel who perform each process.
2.
The documentation included in the manual does not match the documentation included in the documents submitted with each petition.
3.
In an emission of ARPA funding through LUMA, part of the documentation provided was document EMISM210, which stated that the authorized amount was $16,014,374. In a recap made in the document (not signed), the amount of $4,181 was adjusted in the petition, indicating that this amount was rejected by LUMA. In a letter from LUMA, they certified that the total cases reported were 327,499 for a total amount of $16,010,193. A detail of participants was provided, and the total was 327,498, although the benefits were $16,010,193.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample.
STATEMENT OF CAUSE ADSEF does not have a procedures manual that clearly establishes a segregation of duties, demonstrating compliance with the required internal control components.
POSSIBLE ASSERTED EFFECT This is a systematic deficiency.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend that management establish a written internal controls process that demonstrates compliance with cash management requirements and appropriate segregation of duties.