Puerto Rico Emergency Management and Disasters Bureau

Condition: The Bureau lacks adequate financial management processes to produce timely, accurate, and complete financial information required for the Statement, SEFA, and federal reporting, including incomplete subsidiary records, delayed reconciliations, and insufficient program-level reporting. Criteria: 2 CFR 200.302 and 200.328 require accurate, current, and complete financial reporting and timely submission of required reports. Cause: Insufficient internal controls, lack of monitoring, and inadequate coordination between fiscal and program staff. Effect: Delays in required federal reporting, errors in financial information, and noncompliance with Uniform Guidance deadlines, increasing the risk of unreliable reporting. Questioned Costs: None. Context: The condition has affected multiple audit cycles but was not reported as a finding in the prior year’s final audit. Recommendation: Strengthen internal controls over financial management, improve subsidiary records and reconciliations, implement a formal reporting calendar, enhance coordination among staff, and provide training on PRIFAS, UG requirements, and reporting procedures to ensure accurate and timely reporting.

Condition: The Bureau did not submit its Single Audit reporting package for the year ended June 30, 2021 to the Federal Audit Clearinghouse within the timeframe required by 2 CFR 200.512(a), submitting well after the nine-month deadline. Criteria: 2 CFR 200.512 requires recipients to submit the complete reporting package—including the financial statements and SEFA (200.510), summary schedule of prior audit findings (200.511), auditor’s reports (200.515), and corrective action plan (200.511(c))—to the FAC within 30 days of the auditor’s report or nine months after year-end. Context: While the Bureau filed timely for FY 2014–2015, it has repeatedly failed to meet filing deadlines since FY 2016; FY 2016 was submitted nearly two years late, FY 2017 was delayed but covered by FEMA administrative relief, and the reporting packages for FY 2018, FY 2019, and FY 2020 were submitted significantly past statutory limits. FY 2021 continued this pattern of late submission, indicating ineffective controls over the audit reporting timeline. Cause: The delay is related to systemic weaknesses in financial management and reporting processes described in Finding 2021-001, including the absence of an integrated financial system and excessive reliance on Excel spreadsheets, which hinder timely reconciliation, compilation, and audit preparation. Effect: Failure to comply with reporting deadlines may subject the Bureau to federal sanctions, including withholding or disallowance of indirect costs, suspension of funding until audit submission is complete, or termination of federal awards; repeated delinquency also undermines the Bureau’s credibility with federal agencies. Questioned Costs: None. Recommendation: Implement a formalized audit and reporting calendar to ensure required documents are compiled and ready for audit by March 31 each year, establish an integrated system supporting timely reporting, assign responsibility for monitoring the Single Audit submission timeline, and conduct periodic status reviews to ensure timely submission to the FAC under Uniform Guidance requirements. Management Response: See corrective action plan.

Condition: The Bureau did not provide evidence of having prepared or submitted the required quarterly Federal Financial Reports (SF-425) or equivalent COR3 financial status reports for FEMA Public Assistance Program ALN 97.036; despite repeated audit requests, no SF-425s or alternative reports demonstrating cumulative expenditures, federal share, or matching funds were made available, and therefore compliance with federal and pass-through reporting requirements could not be verified. Criteria: Under 2 CFR 200.328(a) and 200.302(b)(5), recipients and subrecipients must submit accurate, complete, and timely financial reports as prescribed by the awarding agency, including quarterly SF-425 (or COR3) reports; reporting deadlines for SF-425s are generally January 30, April 30, July 30, and October 30. Context: During the audit, the Bureau did not provide SF-425 reports for FEMA grants, preventing the auditors from verifying whether reports were prepared, submitted timely, or reconciled to PRIFAS accounting records; similar deficiencies were identified in prior audits (Findings 2016-03, 2019-06, and 2020-05), indicating the condition remains uncorrected and systemic. Cause: The Bureau lacks effective internal controls assigning responsibility for preparing, reviewing, and submitting SF-425 or COR3 financial reports, and there is no monitoring mechanism to ensure reports are completed and submitted by required due dates. Effect: Failure to prepare and submit required financial reports constitutes noncompliance with Uniform Guidance and FEMA/COR3 grant conditions, impedes grantor oversight of project progress and expenditure status, increases the risk of questioned costs or delayed reimbursements, and may result in sanctions such as suspension of funding or withholding of future obligations until reports are submitted and accepted. Recommendation: The Bureau should establish and enforce written procedures to ensure SF-425 or COR3 financial reports are prepared, reviewed, and submitted within prescribed deadlines, assign reporting responsibilities to specific personnel, implement a monitoring calendar to track compliance, and ensure reports are supported by reconciled accounting data from PRIFAS and other reporting systems. Questioned Costs: None. Management Response: See corrective action plan.

Condition: During our review of Federal Financial Reports (SF-425) for the Emergency Management Performance Grant (EMPG) covering program years 2018, 2019, and 2020, we noted multiple reporting deficiencies across all four reports reviewed, including late submissions (in some cases more than one year late), undated reports with no evidence of submission timeliness, incomplete financial data where federal cash receipts or disbursements were reported as zero despite active grant activity, inconsistent or missing expenditure information, incorrect or missing recipient share (matching funds), unreconciled balances between SF-425 reports and PRIFAS or the SEFA, lack of supporting documentation or reconciliation schedules, and no evidence of internal review or approval controls. Criteria: Under 2 CFR 200.327–200.329 and 2 CFR 200.302(b)(6), non-Federal entities must submit accurate, complete, timely performance and financial reports supported by accounting records; SF-425 reports must reflect financial results of each award, be supported by the accounting records, include federal and recipient share, and be submitted no later than 30 days after the end of the reporting period. Context: All four EMPG SF-425 reports reviewed exhibited at least one of the identified deficiencies, indicating systemic noncompliance with federal reporting requirements and insufficient monitoring over the reporting process. Cause: The Bureau lacks effective internal controls and supervisory review over the preparation, reconciliation, and submission of SF-425 reports, including inadequate coordination between accounting and grants management areas and no formal process to ensure reconciliation to PRIFAS accounting data prior to submission. Effect: The absence of timely, accurate, and reconciled financial reporting increases the risk of misstated federal program expenditures, may result in grantor sanctions such as withholding or suspension of federal funds, and impairs the Bureau’s ability to demonstrate compliance with Uniform Guidance reporting requirements. Recommendation: Establish and document formal procedures to ensure timely preparation, review, and submission of SF-425 reports; implement a reconciliation checklist requiring agreement of reported data to PRIFAS and SEFA records; ensure each report includes federal and recipient share, drawdown activity, and unliquidated obligations; designate an official responsible for review and approval prior to filing with retained evidence of submission; and provide staff training on federal reporting requirements under 2 CFR 200.327–200.329. Questioned Costs: None. Management Response: See corrective action plan.

The Bureau did not submit the single audit and reporting package, for the year ended June 30, 2020, to the Federal Audit Clearinghouse (FAC) during the required submission deadline period.

Form SF-425 named "Federal Financial Report", which serves as documentation of the financial status of grants according to the official accounting records of the recipient, and discloses amounts reported for cash disbursements, federal share of expenditures and federal share of unliquidated expenditures, were not available for examination for FEMA Disaster Grant - Public Assistance.

Form SF-425 named "Federal Financial Report", which serves as documentation of the financial status of grants according to the official accounting records of the recipient, and discloses amounts reported for cash disbursements, federal share of expenditures and federal share of unliquidated expenditures, were filed late.

F-425 "Federal Financial Report" form, for the quarter ended on June 30, 2020, of the 2019 EMPG Grant Award, was filed without including any matching information as of that date.

Late Submission of Single Audit Reporting Package

SF-425 Reports Not Available for Examination

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