Finding Text
Finding No. 2022–005 – Activities Allowed or Unallowed, Eligible Uses – Premium Pay
Federal Program Name
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 Requirements
Activities Allowed or Unallowed, Eligible Uses
Criteria
According to the 31 CFR Subtitle A Part 35 Subpart 35.6 (c)(1) A recipient may use funds to provide premium pay to eligible workers of the recipient who perform essential work or to provide grants to eligible employers that have eligible workers who perform essential work, eligible workers performing essential work during the COVID-19 public health emergency. A recipient uses premium pay or grants provided to eligible workers performing essential work during the COVID-19 public health emergency if:
(1) The eligible worker's total wages and remuneration, including the premium pay, is less than or equal to 150 percent of the greater of such eligible worker's residing State's or county's average annual wage for all occupations as defined by the Bureau of Labor Statistics' Occupational Employment and Wage Statistics.
Condition
During our examination, we noted three (3) instances, which based on the regulation previously indicated, the premium pay was paid to employees whom wages are higher than the 150 percent of the Puerto Rico median annual wage of $30,750.
Cause
As part of the eligibility criteria to provide Premium Pay, the Corporation did not consider the eligible worker’s wages criteria as eligibility requirement in the Premium Pay distribution to employees. The Corporation indicates they did not consider these criteria because the Puerto Rico Health Department was exempt of this requirement and as part of this agency, they believe to be exempt too.
Effect
As a result of this condition, the U.S. Department of Treasury may request the return of funds, issue warnings and/or impose penalties to the Corporation.
Questioned Cost
The known questioned cost was calculated by the amount disbursed ($2,000) to the total ineligible employees (77), including the three (3) exceptions noted, is equal to $154,000.
Context
Of the 1,271 premium pay payments made, we selected 40 payments for testing and noted three (3) instances of noncompliance. When we assessed the entire population the total number of cases amounted to seventy-seven (77) employees that exceed the allowed salary to receive the Premium Pay.
Identification of a Repeat Finding
This is not a repeat finding from the immediate previous audit.
Recommendation
The management of the Corporation should reinforce its procedures of the administration of federal funds to ensure the compliance with the requirements with each program. Also, the Corporation should establish communication with the Health Department of Puerto Rico in order to obtain instructions for the correction of the non-compliance event and the related questioned cost.
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.