Finding 585158 (2022-004)

Finding No. 2022-004 - Monthly Reporting Federal Program ALN 21.019 Coronavirus Relief Fund – COVID – 19 ALN 21.027 Coronavirus State and Local Fiscal Recovery Fund - ARP Act Name of Federal Agency U.S. Department of Treasury Pass-through Entity Puerto Rico Department of Treasury Category Non-compliance / Material weakness in internal controls over compliance Compliance Requirement Reporting Criteria As stated in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), § 200.303 Internal controls, “the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards.” In addition, the grant agreement establishes in its Exhibit A of the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF, its Spanish acronym) guidelines, Grant Plan, Reporting, the following: Coronavirus Relief Fund – COVID – 19: “By the 15th day of each month, the Grantee will submit a Use of Funds Grant Report for the prior month’s expenses. The financial report will provide a detailed explanation of how the Grant funds were spent.” Coronavirus State and Local Fiscal Recovery Fund - ARP Act: To ensure timely reporting, the Government of Puerto Rico requires the entity to adhere to the following reporting frequency: • All Grantees receiving Premium Pay for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Premium Pay Award detailing use of funds and evidencing that all premium payments were made. • All Grantees receiving Recruitment Incentive for their personnel, must submit a report within 30 days of the date the Applicant/Grantee received its Recruitment incentive Award detailing use of funds. Thereafter, Applicant / Grantee will be required to submit a monthly report on the 15th day of each month, detailing new incentives awarded until all Recruitment Incentives are completed. • If the Essential Worker was recruited from a Third-Party Contractor or if the Essential Worker is an Independent Contractor, Grantee will include in the report the Name of the Contractor and its EIN Number, where applicable. • On a quarterly basis, the Puerto Rico Department of Treasury may provide a summary of all program disbursements to date. Condition During our audit procedures regarding the compliance requirement related to reporting, we noted that, during the fiscal year ended June 30, 2022: • The Corporation was not able to provide audit evidence for the submission of fifteen (15) monthly reports, three (3) for Coronavirus Relief Fund and twelve (12) for Coronavirus State and Local Fiscal Recovery Fund. • Five (5) monthly reports were submitted later than their dues date as follows: Fund Required date Reported date Past due days Cause Lack of internal controls properly established and monitored to assure the documenting and timely submission of compliance reports. Effect As a result of this condition, the grantor may issue warnings and/or impose penalties to the Corporation. Also, the grantor was deprived of timely taking any action that it understood to be pertinent in the program. The analysis, evaluations, and decision-making of the grantee could be affected. Questioned Cost None. Context • Of a total of twenty-eight (28) monthly reports required for ALN 21.019 and ALN 21.027, the Corporation was not able to provide evidence of submission for fifteen (15) monthly reports. • Five (5) of thirteen (13) monthly reports that were submitted were sent after their due date. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2021-003 Recommendation We strongly recommend the Corporation to institute policies and procedures that stipulate the specific tasks and the personnel in charge of filing the required reports. Also, the policies and procedures should designate the member of management in charge of monitoring the compliance with the reporting requirements in order to make sure that the Corporation is filing the reports by their respective due dates. It is critically important that timely and accurate reports be produced to ensure that the goals and purposes of the grant have been achieved and accounted for properly. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 89 to 98.