The Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Industrial Development Company of Puerto Rico (Company). A qualified opinion is issued when the individual or combined noncompliances are significant, but not pervasive.
The Report reveals that the Company had 949 overdue accounts receivable pending, from an equal number of lessees, for $34,685,722 as of April 30, 2019. From the examination carried out on a sample, efforts to send first collection letters with up to 10 months of delays and second collection letters with up to a month and a half of delay were identified. In addition, the overdue accounts were referred to the Legal Office with delays of up to four years for the corresponding collection procedures, and this office, in turn, filed collection lawsuits in the courts with delays of up to nine months, contrary to the Collection Procedure. These situations cause the accounts to become delinquent and uncollectible.
The four-finding audit notes that the debt for a lease to company B of vessels in Fajardo was included in the lease of company A, also of vessels. This situation causes management not to have reliable records. In fact, the contract with lessee B was not registered nor submitted to the Office of the Comptroller as provided by Regulation 33.
The Comptroller's auditors found that the Company allowed the use of a property without a contract since 2011, and that in 2019 it had accumulated a debt of $432,644. In addition, another property was identified, occupied since 2016 and in operation without a contract and without having paid the rent, since the Company had not invoiced it. These situations foster the commission of irregularities to the detriment of the best interests of the Industrial Development Company.
The Report reveals multiple deficiencies related to the administration of public documents. The Treasury officer indicated that she established the digitization process instead of following the Standards for the Conservation and Disposal of Public Documents (Standard NO-SAD-003) of 2013. This official decided, among others, to verify the files, select and digitize the most important documents according to her criteria. In addition, she digitized the non-voluminous files and shredded them; while she did not digitize the voluminous files, but instead archived them.
The audit indicates that the Company's Board of Directors did not comply with the regulation that governs it since 2006. The examination of 46 minutes revealed that they were not approved by their members at the following meeting, but until more than a year later.
The Report comments on the legislative measures approved to restructure the Company and transfer part of its functions to the Department of Economic Development and Commerce. In this regard, the Comptroller recommends that the Governor and the Legislative Assembly amend Act Num. 188 so that the comptroller or his representative examines the transactions of the Company for a period longer than that established by law, which is no less than once a year.
This Report covers the period from July 1, 2015 to August 31, 2019.
See the Audit Report CP-21-07.
To see other published reports, visit our Audit Reports section.
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