The Office of the Comptroller of Puerto Rico issues a qualified opinion on the fiscal operations of the Municipality of Naranjito. A qualified opinion is issued when the noncompliances individually or together are significant but not pervasive.
The Report reveals that the Municipality, by splitting the cost of two projects, bypassed the public bidding requirement that must be carried out when the cost exceeds $200,000. The contract for the remodeling of floors 1 and 2 of the city hall was formalized for $193,184 and after five purchase orders the project increased to $251,097. The same happened with the construction of the second phase of the Fine Arts Center, which was contracted for $199,698 and after two amendments increased to $259,499. This situation prevents free competition among the greatest number of bidders and may give the impression of favoritism in the awarding of contracts.
The Municipality also did not require from the contractor the bond for the performance of the contracts (performance bond), nor the bond to guarantee the payment of wages (payment bond) for the city hall remodeling.
The six-finding audit notes that $368,405 was ordered and paid for mechanical services for municipal vehicles without purchase orders. These were prepared months after the services were received and invoiced. In addition, contrary to Act 81-1991 on Autonomous Municipalities, the quotes obtained for the construction projects and the acquisition of goods and services did not identify the name, title, or signature of the official who requested, received, accepted, and awarded them. A similar situation had already been commented on in Audit Report M-16-04 of June 23, 2015.
Our auditors found that the Municipality contracted a regular corporation for $119,000 for engineering services. According to the legal framework, only a professional services corporation could provide the contracted services. To that effect, the situation was referred to the president of the College of Engineers and Surveyors of Puerto Rico on May 31, 2017 so that he takes the corresponding measures.
The Report uncovers multiple deficiencies such as the subcontracting of a corporation barred from providing the technical refrigeration and air conditioning services. In addition, the construction excise taxes and municipal license fees corresponding to two contractors were not collected, nor were the withholdings that should have been made by law applied to two other contractors. This situation was referred to the Secretary of the Treasury so that she takes the pertinent actions.
The audit comments that Naranjito has six civil lawsuits totaling $8 million pending resolution by the courts. In addition, the Municipality did not address the recommendations to recover $142,082 from audit reports M-16-04 and M-16-05, both from 2015.
The Report covers the period from July 1, 2013 to June 30, 2017.
See Audit Report M-19-10.
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