Finding Text
FINDING REFERENCE NUMBER 2023-047 (See Finding Reference Number 2023-019)
FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AWARD NUMBER ALL AWARDS
COMPLIANCE REQUIREMENT REPORTING – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS
CRITERIA 2 CFR §200.510 Financial Statements, (b) states that the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended. At a minimum, the schedule must: (1) list individual Federal Programs by Federal agency, (2) for Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included, (3) provide total Federal awards expended for each individual Federal program and the ALN number or other identifying number when the ALN information is not available, (4) Include the total amount provided to subrecipients from each Federal program, (5) for loan or loan guarantee programs identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule.
STATEMENT OF CONDITION During our audit procedures of the Schedule of Expenditures of Federal Awards (SEFA) prepared by the PRDF, we noted significant misstatements pertaining to the program and expenses listed in the PRDF's SEFA throughout our audit procedures.
•
The expenditures for some Federal programs were not accurately reported. To reconcile the correct amounts contained in the SEFA with the audited financial accounts, the PRDF suggested and posted adjustments.
•
The PRDF Management does not have an adequate internal control system in place to quickly detect and accurately document the expenditures incurred under each Federal award programs. This led to delays and errors in the amounts initially submitted for the SEFA.
•
Internal controls over the Federal award data entered the Financial Statement through the PRIFAS, which provided the PRDF’s SEFA and other financial reports, had not been put in place by the PRDF.
The SEFA that was submitted for audit procedures contained the following mistakes because of inadequate internal controls:
•
There are no safeguards in place to keep an accurate and comprehensive list of Notice of Agreements (NOAs). As a result, the different versions received of the SEFA amounts and identification of the programs were reported in an incomplete or erroneous manner.
•
Expenditures related to COVID-19 appropriations for different Federal programs were not separately disclosed in the SEFA.
•
Initially, $27,371,670 in expenditures for the Payment to Territories – Adult program (ALN 93.560) was recorded under the Temporary Assistance for Needy Families (TANF) (ALN 93.558).
•
Due to transactions that were not recorded in PRIFAS, the Social Services Block Grant (ALN 93.667) program expenditures were understated by $7,132,636. Without an appropriate review procedure in place to identify and permit the rectification of errors prior to submission, the ADFAN Finance Department recorded this transactions as encumbrances.
PERSPECTIVE INFORMATION The PRDF failed to identify properly in its records and/or accounting records the Federal grants that they received and expended during the fiscal year, this cause that when the PRDF prepared the SEFA with the financial statement and for audit purposes the SEFA was incomplete and misstated.
STATEMENT OF CAUSE The PRDF failed to identify the Federal grants expended during the fiscal year and to keep records of the transactions related to the Federal programs in order to properly identify the Federal programs and transactions when the SEFA is prepared causing the preparation of an incomplete and misstated SEFA.
POSSIBLE ASSERTED EFFECT The PRDF may fail to include all Federal programs and total expenditures in the SEFA causing misstatements in the SEFA submitted to Auditors. It also leads to an inaccurate Major Program Determination multiple times made by the auditors, affecting the execution of the Single Audit in a reasonable time.
IDENTIFICATION OF
REPEAT FINDING No reported as prior audit finding.
RECOMMENDATIONS We recommend the PRDF to maintain adequate records related to the Federal programs in order to properly identify the Federal programs/transactions when the SEFA is prepared. Once a Federal award is granted or received, the information must be shared with all personnel involved in the financial statement and SEFA preparation to provide assurance that all required program activities / expenditures are included on the SEFA. In addition, the PRDF must perform a regular fiscal monitoring over the Federal programs transactions in order to provide reasonable assurance that all Federal programs/transactions are properly recorded and included on the SEFA.