CAMUY MUNICIPALITYLocal Government

REQUIREMENT REPORTING TYPE OF FINDING MATERIAL WEAKNESS CONDITION The Single Audit Report for the fiscal year ended June 30, 2023, of the Municipality with due date of March 31, 2024 was submitted after 9 months deadline. The Single Audit related to such a period was completed after 9 month deadline. CRITERIA Public Law 104-156, known as the Single Audit Act, section 7502 (h) (1) and (2)(B) establish that the non-Federal Organization shall transmit the reporting package, which shall include the non-Federal Organization’s financial statements, schedule of expenditures of Federal awards, corrective action plan defined under subsection (i), and auditor’s reports developed pursuant to this section, to a Federal clearinghouse designated by the Director, and make it available for public inspection within the earlier of 30 days after receipt of the auditor’s report; or 9 months after the end of the period audited, or within a longer timeframe authorized by the Federal agency, determined under criteria issued under section 7504, when the 9- month timeframe would place an undue burden on the non-Federal Organization. CAUSE The municipality did not have internal controls and processes to enable compliance with completing and submitting the Single Audit Report of the municipality in the due date established by the Single Audit Act. EFFECT Non-compliance with the above-mentioned requirement could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. QUESTIONED COST None RECOMMENDATION The municipality shall establish controls and procedures to enable compliance with completion and submission of the Single Audit Report to the Federal Clearinghouse before the 9-month deadline. Finding represents a significant problem. The municipality will accelerate the process to contract auditors to carry out the audit and submit the report on time.

REQUIREMENT REPORTING TYPE OF FINDING MATERIAL WEAKNESS FEDERAL PROGRAM 14.871 – SECTION 8 HOUSING CHOICE VOUCHERS CONDITION The Municipality did not submit or file the required FASS-PH financial report for the fiscal year ended June 30, 2023. At the completion of the audit, the report remained outstanding and had not been uploaded to the FASS-PH system, resulting in noncompliance with HUD’s reporting requirements. CRITERIA Entities administering the Section 8 Housing Choice Voucher Program (AL 14.871) must submit annual financial information to the U.S. Department of Housing and Urban Development (HUD) through the Financial Assessment Subsystem – Public Housing (FASS-PH). This requirement is established under:  2 CFR 200.327–200.328 (Uniform Guidance reporting requirements)  HUD Uniform Financial Reporting Standards (UFRS)  HUD Public Housing Assessment System (PHAS) – FASS-PH requirements  Applicable HUD notices and guidance for FY 2023 These regulations require timely submission of complete and accurate financial data to allow HUD to evaluate the financial condition and compliance performance of the Municipality’s Housing Choice Voucher Program. CAUSE The failure to submit the FASS-PH report resulted from insufficient internal controls over the financial reporting process. Contributing factors included:  Lack of a formal monitoring process to track HUD reporting deadlines  Inadequate supervisory review of required submissions  Limited staff knowledge of HUD’s UFRS and FASS-PH reporting procedures EFFECT Non-compliance may result in HUD administrative actions, negative impact on the municipality’s financial assessment score, delays or interruptions in federal funding and potential for increased oversight or monitoring by HUD. QUESTIONED COST None RECOMMENDATION The municipality should establish and document formal internal controls to ensure timely preparation and submission of the FASS-PH report. Assign responsibility to specific personnel and implement a compliance calendar for HUD reporting deadlines. Provide training to financial staff on HUD reporting requirements, UFRS, and the FASS-PH system. Implement a supervisory review process to verify completeness and accuracy before submission. Submit the outstanding FASS-PH report as soon as possible, if HUD still permits late filing.

REQUIREMENT REPORTING TYPE OF FINDING MATERIAL WEAKNESS FEDERAL PROGRAM 21.027 - Coronavirus State and Local Fiscal Recovery Fund CONDITION For our tests, we requested copies of the Monthly Reports of Municipal Strengthening Fund Program (CSLFRF Funds) for the fiscal year ended on June 30, 2023. After our examination of the monthly reports, we noted that there are significant discrepancies between the dates submitted versus the required submission date. The differences are the following: CRITERIA Municipalities that receive and manage funds related to COVID-19 relief programs are required to submit financial and compliance reports to the Puerto Rico Financial Advisory and Fiscal Agency (AAFAF) within the dates set by that entity as a requirement for monitoring, transparency, and accountability. According to the guidelines issued by AAFAF for managing COVID-19 funds, quarterly reports must be filed on or before the 15th of the month following the end of the corresponding period. Likewise, entities receiving federal funds are responsible for maintaining adequate internal control systems and complying with all reporting requirements established by the granting entity and its administrators. Also, 2 CFR §200.303 requires federal recipients to establish and maintain effective Internal controls to ensure compliance with federal grant laws, regulations, and conditions. CAUSE The situation seems to be due to weaknesses in internal controls related to monitoring expiration dates, preparing reports on time, and managerial oversight of the process for meeting federal and state reporting requirements. EFFECT The late submission of reports limits AAFAF's ability to timely monitor the use of federal funds and increases the risk of not meeting program conditions, audit findings, and potential flags from state or federal agencies. Plus, it can affect the accuracy and timeliness of the information used for transparency and accountability processes required for COVID-19 recovery funds. QUESTIONED COST None RECOMMENDATION We recommend that the Municipal Administration strengthen internal controls related to the preparation, review, and submission of reports required by AAFAF. Establish a formal compliance schedule that includes all federal and state reporting deadlines. Assign staff responsible for monitoring and following up on the program's reporting requirements. Implement pre-review procedures to ensure that reports are complete and ready to be submitted by the 15th of the month following the end of the period and keep documented evidence of the preparation, review, and submission of each report for audit and monitoring purposes.

Finding Number: 2022-003 Federal Program: All major programs Assistance Listing: 21.027, 21.019 and 97.036 Compliance Requirement: Reporting Category: Material Weakness Criteria OMB Uniform Guidance subpart B 200(a) establishes that Non-Federal entities that expend $500,000 ($750,000 for fiscal year ending after December 25, 2015) or more in year in Federal awards shall have a single or program-specific audit conducted for that year in accordance with the provisions of this part. OMB Uniform Guidance sub part B. 220 establishes that except for the provision for biennial audit provided in paragraphs (a) and (b) of this section audits required by this part shall be per-formed annually. Public Law 104-156, known as the Single Audit Act, section 7502 (h) (1) and (2)(B) establish that the non-Federal Organization shall transmit the reporting package, which shall include the non-Federal Organization’s financial statements, schedule of expenditures of Federal awards, corrective action plan defined under subsection (i), and auditor’s reports developed pursuant to this section, to a Federal clearinghouse designated by the Director, and make it available for public inspection within the earlier of 30 days after receipt of the auditor’s report; or 9 months after the end of the period audited, or within a longer timeframe authorized by the Federal agency, determined under criteria issued under section 7504, when the 9-month timeframe would place an undue burden on the non-Federal Organization. Condition The Single Audit Report for the fiscal year ended June 30, 2022, of the Municipality with due date of March 31, 2023 was submitted after the 12 months deadline. The Single Audit related to such a period was completed after 12-month deadline. Cause The municipality did not have internal controls and processes to enable compliance with com-pleting and submitting the Single Audit Report of the municipality in the due date established by the Single Audit Act. Effect Non-compliance with the above-mentioned requirement could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compli-ance with laws, regulations, and provisions of contracts and grant agreements. Questioned Costs None Perspective Information Finding represents a significant problem. The municipality must plan the submission process in time. Prior Year Audit Finding 2021-002 Recommendation The municipality shall establish controls and procedures to enable compliance with completion and submission of the Single Audit Report to the Federal Clearinghouse before the 9 months deadline. Finding represents a significant problem. The municipality will accelerate the process to contract auditors to carry out the audit and submit the report on time. Views of Responsible Officials Management concurs with the finding. We will monitor our internal control activities directly related to the financial accounting of state funds and federal funds. We will implement procedures for improving information communication between the accounting finance office and the office of compliance so rec-ords are reconciled and are available on time for audit financial statements, including Single Audit. Responsible Officials Daiana González Hernández- Finance Director Estimated Completion Date Implementation is expected to be completed on or before July 31, 2025.

Finding Number: 2022-004 Federal Program: American Rescue Plan Act Assistance Listing: 21.027 Compliance Requirement: Reporting Category: Material Weakness in Internal Control- Financial Reporting Criteria On January 6, 2022, the U.S. Department of the Treasury (“Treasury”) adopted the 2022 final rule implementing the SLFRF program. The 2022 final rule became effective on April 1, 2022. This Compliance and Reporting guidance establishes that recipients must submit one initial Interim Report, quarterly or annual Project and Expenditure reports which include subaward reporting, and in some cases annual Recovery Plan reports. Organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropri-ate, the organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. The initial Project and Expenditure Report covered from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports cover one calendar year and must be submitted to Treasury by April 30. Condition For our tests, we requested copies of ARPA annual report (Project and Expenditure Report) for the fiscal year ending on June 30, 2022. After our examination of the ARPA annual report (Pro-ject and Expenditure Report), we noted that is a significant discrepancy between what is report-ed in the annual report versus what is registered on general ledger. The difference is the follow-ing:Cause These situations occurred because program management has not established effective proce-dures to ensure the timely performed reconciliations between the expenditures reported in the Annual Report versus the expenditures registered on the accounting system. Effect Because there is no timely and accurate reconciliation, the program may be providing incorrect financial reports to federal granting agency. In addition, the maintenance of alternate account-ing records (or program) that are not reconciled may result in inaccurate financial reporting. Questioned Costs None Prior Year Audit Finding None Recommendations The program should establish enhanced policies and procedures that must maintain an adequate communication with the Finance Office in order to assure the proper reconciliation between what is reported in the annual report with what is registered on the accounting system. Views of responsible officials Management concurs with the finding. We will enforce and continue strengthening control over financial reporting and enforce procedures to reconcile information of accounting balances, trans-actions, and ARPA annual report (Project and Expenditure Report), in order to prevent future dif-ferences. Responsible Officials Daiana González Hernández- Finance Director Estimated Completion Date Implementation is expected to be completed on or before July 31, 2025.

Finding Number: 2021-002 Compliance Requirement: Reporting Category: Financial, Internal Control Weakness and Noncom-pliance Criteria OMB Uniform Guidance subpart B 200(a) establishes that Non-Federal entities that expend $500,000 ($750,000 for fiscal years ending after December 25, 2015) or more in a year in Federal awards shall have a single or program-specific audit conducted for that year in ac-cordance with the provisions of this part. OMB Uniform Guidance subpart B .220 establishes that except for the provisions for biennial audits provided in paragraphs (a) and (b) of this section, audits required by this part shall be performed annually. Public Law 104-156, known as the Single Audit Act, sections 7502 (h) (1) and (2)(B) estab-lish that the non-Federal Organization shall transmit the reporting package, which shall in-clude the non-Federal Organization's financial statements, schedule of expenditures of Fed-eral awards, corrective action plan defined under subsection (i), and auditor's reports devel-oped pursuant to this section, to a Federal clearinghouse designated by the Director, and make it available for public inspection within the earlier of 30 days after receipt of the audi-tor's report; or 9 months after the end of the period audited, or within a longer timeframe au-thorized by the Federal agency, determined under criteria issued under section 7504, when the 9-month timeframe would place an undue burden on the non-Federal Organization. Condition The Single Audit Report for the fiscal year ended June 30, 2021 of the Municipality with due date of March 31, 2022 was submitted after the 9 months deadline. The Single Audit related to such a period was completed after the 9 months deadline. Also, on September 18, 2022, Puerto Rico was declared a major disaster area under the Stafford Act. Consistent with this declaration and the complications created by hurricane Fiona, OMB has granted a six-month extension for all single audits that cover recipients in Puerto Rico and have due dates between September 18, 2022 and December 31, 2022.Cause The municipality did not have internal controls and processes to enable compliance with completing and submitting the Single Audit Report of the municipality in the due date estab-lished by the Single Audit Act. Effect Non-compliance with the above-mentioned requirement could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compli-ance with laws, regulations, and provisions of contracts and grant agreements. Questioned Costs None Perspective Information Finding represents a significant problem. The municipality will accelerate the process to con-tract auditors to carry out the audit and submit the report on time. Prior Year Audit Finding None Recommendation The municipality shall establish controls and procedures to enable compliance with completion and submission of the Single Audit Report to the Federal Clearinghouse before the 9 months deadline. Views of responsible officials Management concurs with the finding. We will monitor our internal control activities directly related to the financial accounting of state funds and federal funds. We will implement proce-dures for improving information communication between the accounting finance office and the office of compliance to records are reconciled and have available on time for the audit of fi-nancial statements, including Single Audit. Responsible Officials Mrs. Daiana Gonzalez Hernandez, Finance Office Director Estimated Completion Date Implementation is expected to be completed on or before the end of the fiscal year June 30, 2024.