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The Office of the Comptroller of Puerto Rico issued a qualified opinion of the fiscal operations of the Central Office for Recovery and Reconstruction of Puerto Rico (COR3), of the Public-Private Partnerships Authority of Puerto Rico (Authority). A qualified opinion is issued when the noncompliance, individually or as a whole, is significant but not pervasive.

The Report reveals that COR3 does not have an integrated computerized accounting system that allows the recording of all operational and financial transactions. The transactions are processed in three different systems. In 2020 a request-for-proposal process was begun to acquire an accounting system, but it was not finalized. In 2021 there was an effort to use the Authority's Lawson system, but there were no results either.

From October 2017 to March 2022, COR3 had disbursed $4,794,253,879 to 779 subrecipients of the Assistance and Grant programs. The Fiscal Agency and Financial Advisory Authority of Puerto Rico (AAFAF), for its part, had disbursed $543,967,297 for the administrative expenses of COR3.

The fact of not having an integrated accounting system prevents having a complete and reliable perspective of COR3's financial operations. Because of this situation, the Authority cannot exercise adequate control over the accounting records.

The six-finding audit notes that COR3 did not have regulation on accounting and account procedures, nor on bank reconciliation processes. This situation, contrary to COR3's Charter, has the effect that there are no uniform procedures for the operations of the accounting transactions.

In fact, one of the findings highlights that, as of November 9, 2021, the bank reconciliations of two of the 12 accounts opened in January 2020 had not been prepared: the Terremoto account and the State Recovery Fund account.  In addition, the bank reconciliations of the other ten accounts were prepared up to two years after receiving the bank statement and were not reviewed by the associate director of Finance. These situations foster errors being committed with the federal funds, and prevent having updated and reliable information.

Contrary to Act 273-2003, Contractual Standards on Independence in the Audits of Governmental Entities, the contracts to carry out the financial audits from 2018 to 2020 were granted up to 15 months after the 30-day term established by law. In addition, the auditors found that the audited financial statements of 2019 and 2020 were not submitted to the Federal Audit Clearinghouse (FAC), because several supplementary reports were not prepared. The fact that the Federal Emergency Management Agency (FEMA) and the FAC do not have the result of the audit on time may cause the withholding or suspension of the federal funds, 

On the other hand, COR3, which has a staff of 138 transitory employees, 62 confidential employees, and one career employee, does not have formal descriptions for the confidential and career service. The employees do not know the duties and responsibilities of the positions they hold.

The auditors detected that COR3 does not maintain adequate control over the filing of the bank reconciliation records. On the visit to the area on two different dates four months apart, it was observed that these documents were located in an open file in the work area of the accounting manager.

The Report comments that, as of January 9, 2022, the minutes of 21 of the 78 meetings held from 2017 to 2021 had not been drafted. After up to more than four years had elapsed, the minutes had not been presented to the Board for its approval and signature.

In addition, from 2017 to 2021, a physical inventory of the personal property had not been performed. This situation fosters an environment for property to be lost or used for non-official purposes. COR3's report covers the period from October 23, 2017, to May 31, 2022.

See Audit Report CP-23-06.

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