Review of the Puerto Rico Treasury Department Expired Uncashed Checks

EXECUTIVE SUMMARY:

This final report points out the same deficiencies as three previous audits. In three previous audits covering a 17-year period, July 1976 through June 1993, we identified serious control deficiencies at Puerto Rico's Treasury Department (PRTD) and its State agencies with respect to identifying, reporting, and crediting the Federal Government for its share of expired uncashed checks that were originally charged to Federal programs when the checks were issued. Because the checks were not cashed and voided, the State did not incur these expenses. During our current audit, which covered the period July 1, 1993, to June 30, 1998, we found that PRTD had made no significant progress in ensuring that the Federal Government received proper credit for expired uncashed checks. In addition to a comprehensive corrective action plan, we recommended that Puerto Rico refund the estimated $2 million due the Federal Government for Fiscal Year (FY) 1994 and compute the actual credit due the Federal Government for FYs 1995 to present or reach a negotiated settlement with the Department. The Commonwealth accepted our recommendations and stated that since PRTD is under a new administration, it would take the opportunity to compute the actual credit due the Federal Government for subsequent years.