Finding Text
FINDING REFERENCE NUMBER 2023-042 (See Finding Reference Number 2023-014)
FEDERAL PROGRAM (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
AWARD NUMBER 2022G996117 (Federal Award Year: 2022)
ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM)
COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA In accordance with the Compliance Supplement every fiscal year, a state must maintain an amount of “qualified state expenditures” (as defined in 42 USC 609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the state’s historic state expenditures.
In addition, it states that the applicable percentage for each fiscal year is 80 percent of the amount of non-Federal funds the state spent in FY 1994 on AFDC or 75 percent if the state meets the TANF work participation rate requirements (42 USC 607(a)) for the fiscal year. This is termed “basic MOE”, and the requirement is based on the Federal fiscal year. Any MOE expenditures above this required amount are referred to as “excess MOE”. In accordance with the regulation, the amount of MOE required for Puerto Rico is $21,185,453.
STATEMENT OF CONDITION As part of our internal controls and compliance procedures for compliance with the MOE requirement, we requested the Grant Award report for 2022, covering the period from October 1, 2021, to September 30, 2022, to verify compliance with the MOE.
The report covering this period reflects an MOE of $17,686,285, a deficiency of $3,499,168. Additionally, the reported expense amounts could not be validated against the PRIFAS database, except for line 5(a) for Basic Assistance, reported in column B.
QUESTIONED COSTS No questioned costs identified.
PERSPECTIVE INFORMATION This deficiency is systematic. Puerto Rico government agencies fail to demonstrate that they maintain constant communication and follow up on information requests to ensure that all required documentation is available to complete reports.
Additionally, procedures and internal controls manuals should provide for and ensure the segregation of duties and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare the financial statement and SEFA. ADSEF's failure to support reported amounts with verifiable documentation and the absence of independent review increase the risk of inaccurate or misstated financial data being reported to the Federal awarding agency.
STATEMENT OF CAUSE According to discussions with ADSEF personnel, since 2018, another agency of the Government of Puerto Rico, the Health Insurance Administration (ASES, by its Spanish Acronym), has not provided information to comply with the spending levels of other state programs.
In addition, during our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the required reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records.
POSSIBLE ASSERTED EFFECT ADSEF is not in compliance with reporting state program expenditure levels, as required by program regulations.
Additionally, ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend ADSEF establish written internal controls and specific procedures to ensure that all reported amounts are fully supported and reconciled with the PRIFAS accounting system and to assign responsibility to a designated official to review and approve all reports prior to submission to the Federal agency. Implement internal controls to maintain adequate documentation supporting all financial data reported. Puerto Rico government agencies must maintain constant communication and follow-up on information requests to ensure that all required documentation is available to complete reports