Finding Text
Finding No. 2022-003 Internal Controls Over Expenditures of Federal Awards Federal Program ALN 93.556 Promoting Safe and Stable Families ALN 93.297 Adolescent Health Programs Name of Federal Agency U.S. Department of Health and Human Services Pass-through Entity The Families and Children Administration of the Department of Family of the Commonwealth of Puerto Rico Category Significant deficiency of internal controls over compliance Criteria As per the Code of Federal Regulations (CFR) ? 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). The University?s purchasing policy (as amended by Procedimiento de Autorizacion de Compra de Bienes y Servicios, normative letter No. 2021-04) is created with the purpose of establishing procedures governing the initiation, authorization, and review of all expenditures. To facilitate this process the accounting department developed a checklist that promotes the compliance with this policy. The normative letter No. 2021-04 establishes that the purchases of goods and services continue to be executed through the generation of purchase requisitions in the Webadvisor electronic platform, which also serves as reference to verify the availability of funds before the creation of the purchase requisition. Condition found During our audit procedures on the expenses of `?Promoting Safe and Stable Families - Family First Prevention Act Transition Grant? (Family First), we examined forty-three (43) transactions. We found that one purchase requisition was created after the expense was incurred. Cause This finding is for a transaction date that occurred before the corrective action plan implemented by the University to address this issue. The University, through Instituto de Tercera Mision (the Institute), gave a training to their staff to ensure that disbursements included all the required documentation. This training was given to all personnel involved in the purchasing process. In addition, the University hired consulting services from a public accounting firm to carry out an internal audit process, which included actions that were aimed to resolving this finding. Effect By not following the Institutional Purchasing Policy, the Institute is not complying with the CFR (CFR) ? 200.303 Internal controls. Not having the complete documentation at the time of recognition of an expenditure or when executing a payment may lead to inadequate recording, duplicity in recording or in payment, recording invalid transactions or unauthorized purchases. Also, the practice of creating the purchase requisition after the expense was incurred can lead to incurring in expenditures when funds are unavailable. Questioned cost N/A Context For the Family First program, we examined forty-three (43) transactions amounting to $760,673 out of a total population of one thousand one hundred twenty-three (1,123) items amounting to a total of $4,106,764. Identification of a repeat finding This is a repeat finding from the immediate previous audit, Finding No. 2021-002. Recommendation Corrective actions implemented during the year ended June 30, 2022 proved to have an effect on this repeat finding. We recommend management of the University, to continue assuring that all disbursements include all the required documentation in accordance with the University?s policy prior to executing and paying the purchases. Override of the pre-established internal controls may lead to fraudulent purchases, misstatements on the financial statements and/or unallowable costs incurred by the federal program. Views of responsible officials and planned corrective actions The University?s management agrees with this finding. Please refer to the corrective action plan on pages 58-61.