The Office of the Comptroller of Puerto Rico issued a qualified opinion of the fiscal operations of the Puerto Rico Industrial Development Company (Company). A qualified opinion is issued when the noncompliances, individually or in the aggregate, are significant but not pervasive.
The Report reveals that the Company lost $1,192,175 on the sale of 20 properties, from 2017 to 2021, for $28,668,281. According to the chief financial officer, these properties had a book value of $29,860,456.
In addition, the examination of two sale transactions evidenced that the properties were sold with appraisals outside their 12-month validity period. In Cayey, for example, a property was sold in 2018 for $48,750, with a 2012 appraisal. In San Germán, three lots were sold in 2020 for $12,136,000 with an appraisal, on two of the properties, from 2019.
The two-finding audit notes that, in the deed of sale of the Cayey property, the Board of Directors authorized releasing the buyer from the payment of the final balance for $37,287, in consideration of the expenses incurred in maintenance and security. However, the Company did not have evidence of such expenses, and the auditors confirmed with the buyer's personnel that, prior to the sale, they did maintain the lot and had a security guard to protect the equipment and materials they stored on the property.
On the other hand, the officials who hold the positions of chief Real Estate officer, director of Strategic Development, and the senior specialists do not meet the educational requirements established by the Company to hold such positions. This situation could cause the portfolio of properties not to be managed correctly by qualified officials.
This specific-scope audit of the Industrial Development Company
covers the period from July 1, 2017 to November 15, 2021.
Audit Report CP-23-01 can be obtained on our website: www.ocpr.gov.pr.
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