Finding Text
Federal Agency: U.S. Department of Health and Human Services (HHS)
Pass-through Agency: N/A
Federal Programs Title: Head Start
CFDA Number: 93.600
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Disbursement not allowed and Material Weakness
Responsible Official: Executive Director
Condition Section 75.441 Fines, penalties costs.
Cost resulting from non-Federal entity violations of alleged violations of, or
failure to comply with, Federal, state, tribal, local or foreign laws and
regulations are unallowable. Federal Tax lien provided by section 6321, 6322
and 6323 of the Internal Revenue Code, include interest and penalties for
Forms 990 and 941.
Criteria
Federal Law require to withhold certain taxes from the employees pay, must
file Form 941 quarterly to report wages, tips, on time. Organization exempt
from Income tax under section 501 (c) of the Internal Revenue Code must
File Form 990 annually on time.
Questioned costs $76,992
Cause
The Centro de Servicios a la Juventud, Inc. did not prepare on time the Form
990 for the Tax Period ended September 30, 2018 and the Form 941 of the
current Period ended June 30, 2020, Period ended September 30, 2020 and
Period ended December 31, 2020. This represent interest and penalties.
Effect
There is a risk that the funds use by the entity may have been debarred and
might not be recovered by the program.
Recommendation.
We recommend the Center to maintain adequate accounting records related to
the federal funds in order to properly prepare the financial statements
accurately and in a timely manner and. In addition, its needs to implement
adequate internal controls procedures in order to assure that the supporting
documentation is available.
Management Response
In 2020, Puerto Rico faced an earthquake and COVID-19 lockdown,
impacting our team's capacity to finalize tax returns, specifically the 941.
Additionally, following the passing of our founder and former executive
director, Nidra Torres, much of our focus centered on ensuring compliance,
encompassing the tax filing and single audit for 2018.
CSJ is pleased to report that, as of today, we have successfully caught up with
all our tax compliance filings, meeting the requirements of both the IRS and
Hacienda.
On the other hand, an "Administrative Accountant" was hired who will
perform the accounting at the Center, review the entries in the mechanized
accounting system, and submit a financial statement to the Executive Director
that will be discussed with the Board of Directors and any Other component
that requires it. With these financial statements, this Accountant will work to
submit any tax filing required by the Internal Revenue Service and Department
of Treasury of Puerto Rico.