Finding 8718 (2022-005)

Material Weakness
Requirement
A
Questioned Costs
$1
Year
2022
Accepted
2024-01-17

AI Summary

  • Core Issue: Premium pay was improperly distributed to employees earning over 150% of the Puerto Rico median wage, violating federal guidelines.
  • Impacted Requirements: Compliance with 31 CFR Subtitle A Part 35 Subpart 35.6 (c)(1) regarding eligibility for premium pay during the COVID-19 emergency.
  • Recommended Follow-up: The Corporation should enhance federal fund management procedures and coordinate with the Puerto Rico Health Department to address compliance issues and questioned costs.

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.

Corrective Action Plan

Finding No. 2022-005 - Activities Allowed or Unallowed, Eligible Uses - Premium Pay Condition During our examination, we noted three (3) instances, which based on the regulation previously indicated, the premium pay was paid to employees whose wages are higher than 150 percent of the Puerto Rico median annual wage of $30,750. Corporation response The Corporation agrees with the finding. Corrective Action Plan Upon receipt of the audit findings, we initiated an immediate review of our premium pay practices and expendih1re related to the American Rescue Plan Act, Public 117-2 ("ARP") We are implementing quick corrective actions to address the identified deficiencies and ensure compliance with allowable uses for future activities as outlined in the ARP Act. The Corporation will establish a communication with the Health Department of Puerto Rico to obtain instructions for the correction of this non-compliance event and questioned cost appointed by external auditors. Names of the contact persons responsible for corrective action plan Jesus A. Rodriguez Aviles - Financial Planning and Analysis Associate Director Cecilia Robles Kakiuchi - Financial Planning and Analysis Director Anticipated Completion Date Fiscal Year 2024

Categories

Questioned Costs Eligibility Subrecipient Monitoring Material Weakness

Other Findings in this Audit

  • 8712 2022-004
    Material Weakness Repeat
  • 8713 2022-006
    Significant Deficiency
  • 8714 2022-008
    Material Weakness
  • 8715 2022-006
    Significant Deficiency
  • 8716 2022-004
    Material Weakness
  • 8717 2022-006
    Significant Deficiency
  • 8719 2022-006
    Significant Deficiency
  • 8720 2022-007
    Material Weakness
  • 585154 2022-004
    Material Weakness Repeat
  • 585155 2022-006
    Significant Deficiency
  • 585156 2022-008
    Material Weakness
  • 585157 2022-006
    Significant Deficiency
  • 585158 2022-004
    Material Weakness
  • 585159 2022-006
    Significant Deficiency
  • 585160 2022-005
    Material Weakness
  • 585161 2022-006
    Significant Deficiency
  • 585162 2022-007
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
21.019 Coronavirus Relief Fund $2.60M
21.027 Coronavirus State and Local Fiscal Recovery Funds $2.46M
93.498 Provider Relief Fund $1.47M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $593,782