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PUERTO RICO DEPARTMENT OF LABOR & HUMAN RESOURCES - OVER $15 MILLION QUESTIONED BECAUSE OF INADEQUATE FINANCIAL MANAGEMENT SYSTEMS



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This report reflects the findings of the Office of Inspector General at the time that the audit report was issued. More current information may be available as a result of the resolution of this audit by the Department of Labor program agency and the auditee. For further information concerning the resolution of this report's findings, please contact the program agency. 

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At the request of the ETA New York Regional Administrator, we performed an audit of the Puerto Rico Department of Labor and Human Resources (DLHR) covering ETA and OSHA grants for the period from July 1, 1993, to September 30, 1997, to assist in resolving open issues contained in single audit reports. 

We found that DLHR did not maintain effective control over cash or properly account for and report financial activities. These conditions existed because financial management systems were inadequate and management did not implement corrective actions to address recommendations cited in single audits spanning over a decade. As a result, we questioned $15.8 million. The OIG audit made the following findings:" 

  • DLHR maintained excessive cash balances of Federal funds. The balance in the bank account used for Federal funds should have been no more than $2.6 million. However, the average monthly balance of Federal funds rose from $4.6 million in 1986 to$28.5 million in 1997. Interest applicable to Federal funds for the period, July 1, 1986, through June 30, 1998, was $9.5 million." 
  • Financial Status Reports were not accurate and accounting entries were not supported, resulting in questioned costs of $6.3 million($1.9 million in excess costs and drawdowns and $4.4 million in unsupported personal and nonpersonal service costs).
We recommended that ETA and OSHA recover a total of $15.8 million plus an amount equal to interest owed the Federal Government since July1, 1998. We also recommended that DLHR's letter-of-credit ability to draw funds be revoked and payment on a reimbursement basis be instituted. If deficiencies identified in this report are not corrected, we recommended that the two agencies invoke sanctions contained in29 CFR 97.43. DLHR disagreed with the findings and recommendations.
(OA Report No. 02-00-203-03-325, issued December 8, 1999). 


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