Sociedad Española de Auxilio Mutuo y Beneficencia de Puerto RicoNon-Profit

Finding No. 2019-001 Allowable Costs/Cost Principles ? Insurance and Other Recoveries Federal Program CFDA 97.036 Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Program Name of Federal Agency U.S. Department of Homeland Security Pass-through Entity Central Office of Recovery, Reconstruction and Resilience (COR3) of the Commonwealth of Puerto Rico Category Compliance Compliance Requirements Allowable Costs/Cost Principles ? Insurance and Other Recoveries Criteria As stated in Title 42 U.S. Code S 5155 ? Duplication of Benefits, ?The President, in consultation with the head of each Federal agency administering any program providing financial assistance to persons, business concerns, or other entities suffering losses as a result of a major disaster or emergency, shall assure that no such person, business concern, or other entity will receive such assistance with respect to any part of such loss as to which he has received financial assistance under any other program or from insurance or any other source?. Condition Found As part of our testing, we examined seven (7) project worksheets (PWs) of federal award program funds granted to the Entity and we noted two (2) project worksheets in which the Entity received funds from the federal award program which were later reimbursed to the Entity from the private insurance. Cause The reimbursement from the private insurance was received after the federal awards were assessed and granted to the Entity. The awarding pass-through agency , the Central Office for Recovery, Reconstruction and Resiliency of the Commonwealth of Puerto Rico (COR3), instructed the Entity not to return funds until the close out of the projects and reconciliation of the grant and expenditures to be performed by the Federal Emergency Management Agency (FEMA). As stated in the subaward agreement, the subrecipient (the Entity) shall refund to COR3 any sum of the grant funds that has been determined by COR3 or the Department of Homeland Security or FEMA, to be an overpayment to the subrecipient or that COR3 determines has not been spent by the subrecipient in accordance with the grant. When COR3 or FEMA identifies an overpayment, subject to the exhaustion of appeals, FEMA will deobligate the funds and the subrecipient will have fifteen (15) days to reimburse COR3. Effect The duplication of benefits may be considered by the grantor as a noncompliance with the above-mentioned criteria and could lead to administrative sanctions. Questioned Cost $26,228 Context Of the seven (7) project worksheets for which direct costs were charged to federal awards, we selected all project worksheets for testing and noted two (2) instances, or 28.5% of the sample selected, in which the Entity is not in compliance with the allowable costs/cost principles requirements. Identification of a repeat finding This is not repeat finding from the immediate previous audit. Views of responsible officials and planned corrective actions The Entity?s management does not agree with this finding. Please refer to the corrective action plan section for the Entity?s response on page 60. Recommendation The Entity should document in writing communications with the pass-through agency regarding compliance matters such as duplication of benefits. Also, the Entity should perform an independent assessment of funds that are likely to be a duplication of benefits, as defined by the regulations, in order to determine if it should accrue a contingent liability for funds granted by FEMA.