CENTRO DE SERVICIO A LA JUVENTUD, INC.Non-Profit

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: Property and Equipment Type of Finding: Equipment and Real Property Management, Financial Statement. Material Weakness Responsible Official: Executive Director Criteria CFR part 75.320 Equipment: Management requirements. Procedures for managing equipment (including replacement equipment), when in whole or in part under a federal award, until disposition takes place will, as a minimum, meet some of the following requirements. (2) A physical inventory of the property must be taken, and the result reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the grantee or sub grantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. (6) Disposition. When original or replacement equipment acquired under a federal award is no longer needed for the original project or program or for other activities currently or previously supported by HHS awarding agency, except as otherwise provided in Federal statues, regulations, or HHS. Condition The Center did not maintain adequate internal control over property and equipment. The Center did not provide a real and personnel property record of all the property and equipment acquired this year with Federal funds and Insurance. Questioned Cost None determined. Cause Center doesn’t have accurate property records of Federal funds to trace the personal and real property activities that should be reported to Federal funds. Effect The Center does not present fairly the financial position of the financial statements. Identification of repeated findings: Repeating findings were found. Recommendation A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property; loss, damage, of theft must be investigated. Adequate maintenance procedures must be developed to keep the property in good condition. The center must identify all properties acquired with Federal funds and maintain adequate accounting records in accordance with Federal regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight. Management Response The Center prepared a Manual of Fiscal and Administrative Matters Procedures to ensure a complete process and that management can make decisions based on it. The documents that we would be used to maintain control of the equipment are the following according to the administrative and fiscal procedures manual: Physical Inventory, Delivery report and property receipt, Maintenance Record, and arrangements (vehicles), Capitalizable Inventory Registry (greater than 5,000), Equipment Transfers and Non-capitalizable Registry. Also, this includes the “Equipment” Property procedures to comply with CFR Part 75.320. This way, we guarantee internal control for registration, physical inventory control, maintenance, and disposal. Through this process, we will avoid the loss, damage, or theft of this by having control of the Center equipment. On the other hand, Center acquired an Inventory Module that allows us to manage your inventory with the help of MIP Module Fund Accounting™ Software. With this module, the Center can track and monitor your inventory in real time and track inventory movement and lists, among others. This acquired software will help us to keep an accounting of the equipment from its registration, location, and depreciation in the Trial Balance and Inventory Ledger. Furthermore, Center performed an inventory count during 2021 for the transition of Head Start Grants, where Center transferred the inventory, land, and equipment to one of the new grantees. During this inventory count, Center identified that during the previous transition of grants received by Center in 2016 and 2017, the former administration of Center did not have an inventory report. Similarly, after Hurricane María 2017, the Center lost several inventories, including documentation. These two major situations affect the Management of Center to estimate an adequate amount of lost inventory, among others. At this point, the Center evaluated the inventory at the market value, instead of the cost since no evidence of the cost before Hurricane María and previous transitions with Head Start was recorded. At the time of the transition with Head Start, Center labeled all the inventory, put the market value to each item, and depreciated according to the time the transition happened and Hurricane María Happened. Accordingly, as of the day of this financial statement, a high amount of inventory has been depreciated and already transferred to a new grantee without any inventory loss, claims, etc.

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: Reporting Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Executive Director Criteria CFR part 75.512, the Uniform Guidance established the audit must be completed nine months after the end of audit period and the Single Audit Reporting package and Data Collection Form (SF-SAC) Federal Audit Clearing House, must be submitted within the earlier 30 calendar days after receipts of the auditor’s report, or nine months after the end audit period, whichever comes first. Condition Financial report and programs financial information were not available on time to prepare the Single Audit Reporting package. Questioned Cost Not determined. Cause Finance personnel do not establish control procedures to provide Single Audit information on time, most checks registers of Federal programs were provided after the audit from financial department. Effect The Center does not comply with the grant programs conditions. The Federal Awards are at risk of being cancelled, not to be renewed or open competition. Identification of repeated findings: Repeating findings were found. Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. The governing body must create an Audit and Finance Committee to revise monthly financial statements. Management Response: On the other hand, a “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 to the Board of Directors and any Another component that requires it.

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: Reporting Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Executive Director Criteria Form 990 Return of Organization Exempt from Income Tax under section 501(c) 3 of the Internal Revenue Code. Condition Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under section 501(c)(3). The form must be completed by all filing organizations and requires reporting on the organization’s exempt and other activities, finances, governance, compliance with certain federal tax filing and requirements, and compensation paid to certain persons. Questioned Cost: Not determined Cause Finance personnel do not establish internal control procedures to provide financial information on time to prepare federal form 990 on time. Effect The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of $20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the organization for the year, can be charged when a return is filed late, unless the organization shows that the late filing was due to reasonable cause. Identification of repeated findings: Repeating findings Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. The governing body must create an Audit and Finance Committee to revise monthly financial statements to file the return of organization exempt from Income Tax on time. Management Response: Our new Administrative Accountant was trained to perform the accounting at the Center, review the entries in the new mechanized accounting system and submit a financial statement to the Executive Director that will be discussed and approved by the Board of Directors, CPN and any Another component that requires the form 990 return to be file during the period required.

Federal Agency: U.S. Department of Health and Human Services (HHS) Pass-through Agency: N/A Federal Programs Title: Head Start 02CH01050104, 02CH01050105, 02CH01050106 CFDA Number: 93.600 Compliance Requirement: Reporting Type of Finding: Material Noncompliance and Material Weakness Responsible Official: Executive Director Criteria Section 342 reporting program performance Federal regulations require award recipients’ to submit performance reports at the interval required by the HHS awarding agency or pass-through entity to best inform improvements in program outcomes and productivity and provide accurate, current, and complete disclosure of the financial results of each Federal award (45 CFR § 75.342). The award recipients were required to adequately document costs and submit financial reports to the payment system within the timeframes. Condition The Center did not submit timely Federal Financial Report (FFR). Cause The program of the Center did not submitted Federal Financial Report FFR Semi-annual and Final after the limited date, that is 30 days for Semi-annual and 90 days after the end of each reporting period. The program must report the Federal Financial Report from March 1, 2022, to August 31, 2022, the last date of the reporting period. Effect: The Centro de Servicios a la Juventud, Inc. did not comply with the submission date required for the Financial Federal Reports to the US Department of Health & Human Services Head Start program; this could affect the continuance and new approvals of federal program funds. Questioned cost: Not determined Identification of a repeated finding: None repeating finding were found. Recommendations: We recommend the Center to maintain adequate accounting records related to the federal funds in order to properly prepare the financial statements accurate and in a timely manner. In addition, the Center need to implement adequate internal controls procedures in order to assure that the supporting documentation is available on a timely manner. Also, proper training in the accounting system should be obtained by the personnel in charge of preparing the bank reconciliations and Financial Reports required by Head Start. Management Response: The Center will strengthen our financial management practices through a multifaceted corrective action plan. As mentioned, to maintain adequate accounting records, we will implement enhanced record-keeping practices, assigning the Administrative Accountant to ensure accurate documentation of all transactions related to federal funds. This initiative aligns with industry best practices and compliance standards. Simultaneously, we will conduct comprehensive internal controls review to identify and address procedural weaknesses. Internal control protocols will be documented to uphold the accuracy and completeness of financial data, with a particular emphasis on supporting documentation. Recognizing the importance of expertise, personnel responsible for bank reconciliations and financial reports will undergo specialized training tailored to address specific needs identified during the review. Furthermore, we commit to regular monitoring and review processes, including periodic internal audits, to track the effectiveness of implemented corrective actions and identify areas for continuous improvement. Additionally, we will explore the possibility of engaging external experts or consultants with expertise in federal fund accounting to provide valuable insights and recommendations, augmenting our internal efforts for sustained financial excellence.

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.

Criteria CFR part 75.320 Equipment: Management requirements. Procedures for managing equipment (including replacement equipment), when in whole or in part under a federal award, until disposition takes place will, as a minimum, meet some of the following requirements. (2) A physical inventory of the property must be taken, and the result reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the grantee or sub grantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. (6) Disposition. When original or replacement equipment acquired under a federal award is no longer needed for the original project or program or for other activities currently or previously supported by HHS awarding agency, except as otherwise provided in Federal statues, regulations, or HHS. Condition The Center did not maintain adequate internal control over property and equipment. The Center did not provide a real and personnel property record of all the property and equipment acquired this year with Federal funds and Insurance. Questioned Cost None determined. Cause Center doesn?t have accurate property records of Federal funds to trace the personal and real property activities that should be reported to Federal funds. Effect The Center does not present fairly the financial position of the financial statements. Identification of repeated findings: Repeating findings were found. Recommendation A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property; loss, damage, of theft must be investigated. Adequate maintenance procedures must be developed to keep the property in good condition. The center must identify all properties acquired with Federal funds and maintain adequate accounting records in accordance with Federal regulations. The program must maintain an automated accounting and recordkeeping system adequate for effective oversight. Management Response The Center prepared a Manual of Fiscal and Administrative Matters Procedures to ensure a complete process and that management can make decisions based on it. The documents that we would be used to maintain control of the equipment are the following according to the administrative and fiscal procedures manual: Physical Inventory, Delivery report and property receipt, Maintenance Record, and arrangements (vehicles), Capitalizable Inventory Registry (greater than 5,000), Equipment Transfers and Non-capitalizable Registry. Also, this includes the ?Equipment? Property procedures to comply with CFR Part 75.320. This way, we guarantee internal control for registration, physical inventory control, maintenance, and disposal. Through this process, we will avoid the loss, damage, or theft of this by having control of the Center equipment. On the other hand, Center acquired an Inventory Module that allows us to manage your inventory with the help of MIP Module Fund Accounting? Software. With this module, the Center can track and monitor your inventory in real time and track inventory movement and lists, among others. This acquired software will help us to keep an accounting of the equipment from its registration, location, and depreciation in the Trial Balance and Inventory Ledger. Furthermore, Center performed an inventory count during 2021 for the transition of Head Start Grants, where Center transferred the inventory, land, and equipment to one of the new grantees. During this inventory count, Center identified that during the previous transition of grants received by Center in 2016 and 2017, the former administration of Center did not have an inventory report. Similarly, after Hurricane Maria 2017, the Center lost several inventories, including documentation. These two major situations affect the Management of Center to estimate an adequate amount of lost inventory, among others. At this point, the Center evaluated the inventory at the market value, instead of the cost since no evidence of the cost before Hurricane Maria and previous transitions with Head Start was recorded. At the time of the transition with Head Start, Center labeled all the inventory, put the market value to each item, and depreciated according to the time the transition happened and Hurricane Maria Happened. Accordingly, as of the day of this financial statement, a high amount of inventory has been depreciated and already transferred to a new grantee without any inventory loss, claims, etc.

Criteria CFR part 75.512, the Uniform Guidance established the audit must be completed nine months after the end of audit period and the Single Audit Reporting package and Data Collection Form (SF-SAC) Federal Audit Clearing House, must be submitted within the earlier 30 calendar days after receipts of the auditor?s report, or nine months after the end audit period, whichever comes first. Condition Financial report and programs financial information were not available on time to prepare the Single Audit Reporting package. Questioned Cost Not determined. Cause Finance personnel do not establish control procedures to provide Single Audit information on time, most checks registers of Federal programs were provided after the audit from financial department. Effect The Center does not comply with the grant programs conditions. The Federal Awards are at risk of being cancelled, not to be renewed or open competition. Identification of repeated findings: Repeating findings were found. Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. The governing body must create an Audit and Finance Committee to revise monthly financial statements. Management Response: On the other hand, a ?Senior 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 Director of Finance that will be discussed to the Board of Directors, CPN and any Another component that requires it.

Criteria CFR part Section 75.305 Payments Cash management requirements under the advance payment method must minimize the time elapsing between the transfer of fund from the U.S. Treasury and the disbursement of funds by grantee. Condition Written approved procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of fund. During the audit of the cash management compliance ? disbursement of funds for the programs were made before the funds were received in petitions on two of the four petitions tested on the year ended September 30, 2021. Also, during the audit, the Center maintains the cash account with an extremely high cash balance. Questioned Cost: Not determined Cause Disbursements of funds were made before federal funds were received and all supporting documents were completed and transfer to the federal accounts received, presented and excess of funds more than $5,000 for more than 30 days and bank overdraft in all account tested. The afore-mentioned condition is mainly due to the lack of internal control in the procedure that takes place from the moment the documentation is generated until the checks are issued. Such procedures require so many approvals and documents that it prevents payments being made on time and causes the money received by the federal government to remain in the bank accounts for an extended period of time before is being disbursed. Effect: The finance personnel are not in compliance with cash management procedures, CFR 75:305 payments, if the recipient fails to expend those Federal assistance funds within a reasonable period or fails to establish procedures to minimize the time between the transfer and payout of funds, the Center could be subject to penalties from the Federal Government and be adversely affected in the benefits they are entitled to receive in the future. Identification of repeated findings: Repeating findings were found. Recommendation: The Center should implement adequate internal control procedures which allow the prompt use of federal funds received. This could be attained by evaluating the procedures followed regarding payments to participants and Program?s providers. Management Response: The Fiscal and Administrative Procedure includes a process when requesting and disbursing federal money through the PMS (Payment Management Systems) platform in which the money is completed a new document that must be consistent with the amount requested in PMS. In this way, it is guaranteed that the requested money is paid in accordance with the obligations established in the document and we avoid cash management by paying it as soon as it enters the bank account. This implementation will prevent bank balances from exceeding $5,000 as the maximum balance.

Criteria Form 990 Return of Organization Exempt from Income Tax under section 501(c) 3 of the Internal Revenue Code. Condition Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under section 501(c)(3). The form must be completed by all filing organizations and requires reporting on the organization?s exempt and other activities, finances, governance, compliance with certain federal tax filing and requirements, and compensation paid to certain persons. Questioned Cost: Not determined Cause Finance personnel do not establish internal control procedures to provide financial information on time to prepare federal form 990 on time. Effect The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of $20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the organization for the year, can be charged when a return is filed late, unless the organization shows that the late filing was due to reasonable cause. Identification of repeated findings: Repeating findings Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. The governing body must create an Audit and Finance Committee to revise monthly financial statements to file the return of organization exempt from Income Tax on time. Management Response: Our new accountant was trained to perform the accounting at the center, review the entries in the new mechanized accounting system and submit a financial statement to the Director of Finance that will be discussed and approved by the Board of Directors, CPN and any Another component that requires the form 990 return to be file during the period required.

Criteria CFR part 75.320 Equipment: Management requirements. Procedures for managing equipment (including replacement equipment), when in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet some of the following required. (2) A physical inventory of the property must be taken, and the result reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the grantee or sub grantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. (6) Disposition. When original or replacement equipment acquired under a Federal award is no longer needed for the original project or program or for other activities currently or previously supported by HHS awarding agency, except as otherwise provided in Federal statues, regulations or HHS. Condition The Center did not maintain adequate internal control over property and equipment. The Center did not provide a real and personnel property record of all the property and equipment acquired this year with Federal funds and Insurance. Questioned Cost None determined Cause Center doesn?t have accurate property records of Federal funds to trace the personal and real property activities that should be reported to Federal funds. Effect The Centro de Servicios a la Juventud, Inc. does not present fairly the financial position of the financial statements. Identification of repeated findings: Repeating findings were found. Recommendation A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property, loss, damage, of theft must be investigated. Adequate maintenance procedures must be developed to keep the property in good condition. The center must identify all properties acquired with Federal funds and maintain adequate accounting records in accordance with Federal regulations. The program must maintain an automated accounting and record keeping system adequate for effective oversight. Management Response The Centro de Servicios a la Juventud, Inc. prepared a Manual of Fiscal and Administrative Matters Procedures in order to ensure a complete process and that management can make decisions based on it. This includes the ?Equipment? Property procedures to comply with the CFR Part 75.320. In this way, we guarantee an internal control for the registration, control of physical inventory, maintenance and disposal of this. Through this process, we will avoid the loss, damage or theft of this by having a control of the equipment that the CSJ has. On the other hand, a mechanized accounting Software was acquired in which we can keep an accounting of the equipment from its registration, location and depreciation that will be reflected in the Trial Balance. The documents that we would be using to maintain control of the equipment are the following according to the administrative and fiscal procedures manual: Physical Inventory, Delivery report and property receipt, Maintenance Record and arrangements (vehicles), Capitalizable Inventory Registry (greater than 5,000), Equipment Transfers and Non-capitalizable Registry.

Criteria CFR part 75.512, the Uniform Guidance established the audit must be completed nine months after the end of audit period and the Single Audit Reporting package and Data Collection Form (SF-SAC) Federal Audit Clearing House, must be submitted within the earlier 30 calendar days after receipts of the auditor?s report, or nine months after the end audit period, whichever comes first. Condition Financial report and programs financial information were not available on time to prepare the Single Audit Reporting package. Questioned cost Not determined. Cause Finance personnel do not establish control procedures to provide Single Audit information on time, most checks registers of Federal programs were provided after the audit from financial department. Effect The Center does not comply with grant?s programs conditions. Federal Awards are in risk to be cancelled, not to be renewed or open competition. Identification of repeated findings: Repeating findings were found. Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. Governing body must create an Audit and Finance Committee to revise monthly financial statements. On the other hand, a ?Senior 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 Director of Finance that will be discussed to the Board of Directors, CPN and any Another component that requires it.

Criteria CFR part Section 75.305 Payments Cash management requirements under the advance payment method must minimize the time elapsing between the transfer of fund from the U.S. Treasury and the disbursement of funds by grantee. Condition Written approved procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of fund. During the audit of the cash management compliance ? disbursement of funds for the programs were made before the funds were received in petitions on four of the ten petitions tested on the year ended September 2020. Also, during the audit, the Center maintain the cash account with a very high cash balance. Questioned Cost: Not determined Cause Disbursements of funds were made before federal funds were received and all supporting documents were completed and transfer to the federal accounts received, presented and excess of funds more than $5,000 for more than 30 days and bank overdraft in all account tested. The afore mentioned condition is mainly due to the lack of internal control in the procedure that takes place from the moment the documentation is generated until the checks are issued. Such procedures require so many approvals and documents that it prevents payments being made on time and causes the money received by the federal government to remain in the bank accounts for long period of time before is being disbursed. Effect: The finance personnel are not in compliance with cash management procedures, CFR 75:305 payments, if the recipient fails to expend those Federal assistance funds within a reasonable period or fails to establish procedures to minimize the time between the transfer and payout of funds, the Center could be subject to penalties from the Federal Government and be adversely affected in the benefits they are entitled to receive in the future. Identification of repeated findings: Repeating findings were found. Recommendation: The Center should implement adequate internal control procedures which allow the promptly use of federal funds received. This could be attained by evaluating the procedures followed regarding payments to participants and Program?s providers. Management Response: The Fiscal and Administrative Procedure includes a process when requesting and disbursing federal money through the PMS (Payment Management Systems) platform in which the money is completed a new document that must be consistent with the amount requested in PMS. In this way, it is guaranteed that the requested money is paid in accordance with the obligations established in the document and we avoid cash management by paying it as soon as it enters the bank account. This implementation will prevent bank balances from exceeding $ 5,000 as the maximum balance.

Criteria Form 990 Return of Organization Exempt From Income Tax under section 501(c) 3 of the Internal Revenue Code. Condition Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under section 501(c)(3). The form must be completed by all filing organizations and require reporting on the organization?s exempt and other activities, finances, governance, compliance with certain federal tax filing and requirements, and compensation paid to certain persons. Questioned Cost: Not determined Cause Finance personnel do not establish internal control procedures to provide financial information on time to prepare federal form 990 on time. Effect The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of $20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the organization for the year, can be charged when a return is filed late, unless the organization shows that the late filing was due to reasonable cause. Identification of repeated findings: No Repeating findings Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. Governing body must create an Audit and Finance Committee to revise monthly financial statements to file return of organization exempt from Income Tax on time. Management Response: Our new accountant was trained to perform the accounting at the center, review the entries in the new mechanized accounting system and submit a financial statement to the Director of Finance that will be discussed and approved by the Board of Directors, CPN and any Another component that requires the form 990 return to be file during the period of time required.

Criteria CFR part 75.510 Financial Statement The auditee must prepare interim financial statements that reflect its interim financial position, results of operations. The financial statements must be for the same organizational unit and fiscal year that is chosen to meet the requirement of this part. Condition The Center did not maintain adequate internal control over interim financial reporting. The Center did not provide a interim financial statements do not present all internal transactions during this year with Federal funds and other programs. Questioned Cost: Not determined Cause Center doesn?t have accurate interim financial statements of the federal funds to trace the internal activities that may be reported to federal funds. Effect The Centro de Servicios a la Juventud, Inc. does not presented fairly the interim financial results. Identification of repeated findings: No Repeating findings Recommendation: The Center should improve the operation and procedures of their Computerized Accounting System and their internal control structure to provide reasonable assurance that: ? Transactions are properly recorded and accounted for permit the preparation of reliable interim financial statements and federal reports, main accountability over assets; and demonstrate compliance with laws, regulations, and other compliance requirement. ? Funds properly safeguarded against loss from unauthorized use of disposition. Management Response: The Centro de Servicios a la Juventud, Inc. will complete the process of the control over the computerized accounting system to ensure that the interim financial information is accurate.

Criteria CFR part 75.320 Equipment: Management requirements. Procedures for managing equipment (including replacement equipment), when in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet some of the following required. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost property, percentage of Federal participation in the project costs for the Federal award under which the property location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of property. (2) A physical inventory of the property must be taken and the result reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft shall be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. (5) If the grantee or sub grantee is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return. (6) Disposition. When original or replacement equipment acquired under a Federal award is no longer needed for the original project or program or for other activities currently or previously supported by HHS awarding agency, except as otherwise provided in Federal statues, regulations or HHS. Condition The Center did not maintain adequate internal control over property and equipment. The Center did not provide a real and personnel property record of all the property and equipment acquired this year with Federal funds and Insurance. Questioned Cost None determined Cause Center doesn?t have accurate property records of Federal funds to trace the personal and real property activities that should be reported to Federal funds. Effect The Centro de Servicios a la Juventud, Inc. does not present fairly the financial position of the financial statements. Identification of repeated findings: Repeating findings were found. Recommendation A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property, loss, damage, of theft must be investigated. Adequate maintenance procedures must be developed to keep the property in good condition. The center must identify all properties acquired with Federal funds and maintain adequate accounting records in accordance with Federal regulations. The program must maintain an automated accounting and record keeping system adequate for effective oversight. Management Response The Centro de Servicios a la Juventud, Inc. prepared a Manual of Fiscal and Administrative Matters Procedures in order to ensure a complete process and that management can make decisions based on it. This includes the ?Equipment? Property procedures to comply with the CFR Part 75.320. In this way, we guarantee an internal control for the registration, control of physical inventory, maintenance and disposal of this. Through this process, we will avoid the loss, damage or theft of this by having a control of the equipment that the CSJ has. On the other hand, a mechanized accounting Software was acquired in which we can keep an accounting of the equipment from its registration, location and depreciation that will be reflected in the Trial Balance. The documents that we would be using to maintain control of the equipment are the following according to the administrative and fiscal procedures manual: Physical Inventory, Delivery report and property receipt, Maintenance Record and arrangements (vehicles), Capitalizable Inventory Registry (greater than 5,000), Equipment Transfers and Non-capitalizable Registry.

Criteria CFR part 75.512, the Uniform Guidance established the audit must be completed nine months after the end of audit period and the Single Audit Reporting package and Data Collection Form (SF-SAC) Federal Audit Clearing House, must be submitted within the earlier 30 calendar days after receipts of the auditor?s report, or nine months after the end audit period, whichever comes first. Condition Financial report and programs financial information were not available on time to prepare the Single Audit Reporting package. Questioned cost Not determined. Cause Finance personnel do not establish control procedures to provide Single Audit information on time, most checks registers of Federal programs were provided after the audit from financial department. Effect The Center does not comply with grant?s programs conditions. Federal Awards are in risk to be cancelled, not to be renewed or open competition. Identification of repeated findings: Repeating findings were found. Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. Governing body must create an Audit and Finance Committee to revise monthly financial statements. Management Response: On the other hand, a ?Senior Accountant? is hired who will perform the accounting at the center, review the entries in the mechanized accounting system and submit a financial statement to the Director of Finance that will be discussed to the Board of Directors, CPN and any Another component that requires it.

Criteria CFR part Section 75.305 Payments Cash management requirements under the advance payment method must minimize the time elapsing between the transfer of fund from the U.S. Treasury and the disbursement of funds by grantee. Condition Written approved procedures to minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of fund. During the audit of the cash management compliance ? disbursement of funds for the programs were made before the funds were received in seven of the ten petitions tested on September 2019. Questioned Cost: Not determined Cause Disbursements of funds were made before federal funds were received and all supporting documents were completed and transfer to the federal accounts received, presented and excess of funds more than $5,000 for more than 30 days and bank overdraft in all account tested. The afore mentioned condition is mainly due to the lack of internal control in the procedure that takes place from the moment the documentation is generated until the checks are issued. Such procedures require so many approvals and documents that it prevents payments being made on time and causes the money received by the federal government to remain in the bank accounts for long period of time before is being disbursed. Effect: The finance personnel are not in compliance with cash management procedures, CFR 75:305 payments, if the recipient fails to expend those Federal assistance funds within a reasonable period or fails to establish procedures to minimize the time between the transfer and payout of funds, the Center could be subject to penalties from the Federal Government and be adversely affected in the benefits they are entitled to receive in the future. Identification of repeated findings: Repeating findings were found. Recommendation: The Center should implement adequate internal control procedures which allow the promptly use of federal funds received. This could be attained by evaluating the procedures followed regarding payments to participants and Program?s providers. Management Response: The Fiscal and Administrative Procedure includes a process when requesting and disbursing federal money through the PMS (Payment Management Systems) platform in which the money is completed a new document that must be consistent with the amount requested in PMS. In this way, it is guaranteed that the requested money is paid in accordance with the obligations established in the document and we avoid cash management by paying it as soon as it enters the bank account. This implementation will prevent bank balances from exceeding $ 5,000 as the maximum balance.

Criteria Form 990 Return of Organization Exempt From Income Tax under section 501(c) 3 of the Internal Revenue Code. Condition Form 990 is an annual information return required to be filed with the IRS by most organizations exempt from income tax under section 501(c)(3). The form must be completed by all filing organizations and require reporting on the organization?s exempt and other activities, finances, governance, compliance with certain federal tax filing and requirements, and compensation paid to certain persons. Questioned Cost: Not determined Cause Finance personnel do not establish internal control procedures to provide financial information on time to prepare federal form 990 on time. Effect The Center does not file form 990 under section 6652 (c)(1)(A), a penalty of $20 day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the organization for the year, can be charged when a return is filed late, unless the organization shows that the late filing was due to reasonable cause. Identification of repeated findings: No Repeating findings Recommendation: To prepare a calendar responsibilities of Federal funds due dates financial statements to be prepared on time. Adequate training must be provided to finance personnel. Governing body must create an Audit and Finance Committee to revise monthly financial statements to file return of organization exempt from Income Tax on time. Management Response: Our new accountant was trained to perform the accounting at the center, review the entries in the new mechanized accounting system and submit a financial statement to the Director of Finance that will be discussed and approved by the Board of Directors, CPN and any Another component that requires the form 990 return to be file during the period of time required.

Criteria Section 642? (1) (E) (i) through (XI) of the Act. The governing body shall: (i) have legal and fiscal responsibility for administering and overseeing programs under this subchapter, including the safeguarding of Federal Funds; (ii) adopt practices that assure active, independent, and informed governance of the Head Start agency, including practices consistent with subsection (d)(1), and fully participate in the development, planning, and evaluation of the Head Start programs involved; . Condition The Governing body must document legal and fiscal decisions in the safe- guarding of the federal funds; presented only five meeting evidence of Governing body during the audit period. Questioned cost Not determined Cause No evidence of monthly financial reports were presented and approved by Governing body, financial decisions were not evaluated with current information. Effect Monthly financial reports were not presented. Governing body does not evaluate financial information results of the Centro Servicios a la Juventud, Inc. Identification of repeated findings: Repeating finding were found. Recommendation: Governing body must present evidence of legal and fiscal responsibilities. Create Audit and Finance Committee, review accounting and record keeping for accuracy and adequacy. Ensure fiscal system effectively provide tools necessary for oversight of fiduciary responsibilities. Management Response: The Centro de Servicios a la Juventud, Inc. on July 2019 changed its structure, where a new president was appointed, and several board members were replaced. This new component of the Board of Directors has been proactive in changing the "By Law", Regulations and holding regular meetings to make administrative and financial changes. On the other hand, we have been active in decision making from this period, bearing in mind that we have the legal and fiscal responsibility to administer and supervise the programs and protect federal funds. It is our mission to have an independent active board of directors to enforce applicable state, tribal and local laws, including regulations. This includes up to the ?match? of the unsubsidized funds of 20%. Public policies such as the newly approved Human Resources Procedures Manual and the Fiscal Procedures Manual are also being reviewed as control measures to ensure compliance with the board of directors.

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