Finding Text
Finding Reference: 2022-003 Federal Agency: U.S. Department of the Treasury Pass-through Agency: Puerto Rico Fiscal Agency and Financial Advisory Authority Program: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing No. 21.027) Compliance Requirement: Reporting ? Special Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition: During the fiscal year, the Municipality administered funds from the Coronavirus State and Local Fiscal Recovery Funds, this allocation was granted directly from the Federal government and through Puerto Rico Fiscal Agency and Financial Advisory Authority, respectively. In our Reporting Test, we found that the Municipality did not comply with the monthly compliance reporting requirements established by the Puerto Rico Fiscal Agency and Financial Advisory Authority. Also, the Municipality reported as expense the amounts obligated, instead of the amounts accrued. Criteria: The Municipal Strengthening Fund Transfer Agreement, Clause 5.1, states that the Transferee shall submit reports as the Transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the Transfer, and such reports shall be in such form, with such content, as specified by the Transferor in the Transfer Plan and future program instructions directed to all Recipients. The Transfer Plan, on Exhibit A, establishes that starting on the 15th day of the month following receipt of the funds, and by the 15th day of each month, the Transferee will submit a Use of Funds Report for the prior month?s expenses. Also, on the Municipal Strengthening Fund Program Guidelines, the Puerto Rico Fiscal Agency and Financial Advisory Authority specified on the Reporting Requirements Section that the recipients are required to submit monthly financial reports using the reporting template provided by the program. During the fiscal year 2021-2022, in addition to the contract agreement with the Puerto Rico Fiscal Agency and Financial Advisory Authority, the Municipality signed an agreement with the US Department of Treasury to receive funds direct funds as a Non-entitlement and County Unit. Those transfer agreements also established reporting requirements that we determined that the Municipality was in compliance. Cause of Condition: There is a lack of knowledge and training to personnel assigned. Additionally, the Municipality does not have an adequate monitoring for the activity and the reports. Effect of Condition: The program is not in compliance with the Reporting Requirements as established in agreement. Recommendation: We recommend training for the authorized personnel who administer the program, to better understand the reporting requirements and develop complete and accurate reports. The Municipality should establish a monitoring system to ensure compliance with requirements established by the pass-through agency such as: submitting the reports during the 15th day of each month, where the fund expenses of the previous month will be reported as incurred. This will ensure better control for the program. Questioned Cost: None. Views of Responsible Officials and Planned Corrective Action: We concur with the finding. The Municipality has taken corrective measures for faithful compliance with the established reporting dates. Training and supervision of compliance personnel for this program or any other required funds will be reinforced.