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The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipal Financing Corporation (COFIM). A qualified opinion is issued when the instances of noncompliance, individually or in the aggregate, are significant but not pervasive.

The Report reveals that, as of March 10, 2021, the Board of the Municipal Financing Corporation had not approved regulations for the operations related to the processing of merchants' Monthly Municipal Sales and Use Tax Return, the reconciliation of the revenues received from the municipal SUT, or the disbursements through electronic transfers to the municipalities, among others. This situation, contrary to Act 107-2020, Municipal Code of Puerto Rico, leads to a failure to observe uniform procedures for COFIM's operations, with the consequent adverse effects.

The two-finding audit notes that, as of July 10, 2020, COFIM had not created the Redemption Fund, which should have been established since 2014. This fact was confirmed by COFIM's general legal advisor. This situation prevented the municipalities from having a source of financing to pay and guarantee the debt issued by COFIM.

The Report comments that the Department of the Treasury did not provide COFIM with the information for the distribution of the $33,062,828 in revenues obtained from the tax on the use of tangible personal property imported from abroad. This situation caused COFIM to have to approve two resolutions for the purpose of establishing a formula to distribute and authorize the transfer of the revenues, which were not identified by municipality. In addition, those revenues were distributed to the municipalities up to three years after having received them, a situation that could affect the provision of essential services.

This Report covers the period from January 24, 2014 to December 31, 2020.

See Audit Report CP-22-09.

To see other published reports, visit our Audit Reports section.