The Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Yabucoa. A qualified opinion is issued when the instances of noncompliance, individually or in the aggregate, are significant but not pervasive.
The Report reveals that the Municipality did not require six contractors to pay bonds (payment bond and performance bond) to guarantee the payment of labor, equipment, materials and compliance with the contract. Nor did the Municipality collect construction excise taxes or municipal patents from two contractors on three projects. Municipalities cannot enter into contracts for public works and improvements until the contractors provide evidence of the payment of the bonds as provided by Act 81-1991, on Autonomous Municipalities.
The six-finding audit points out multiple deficiencies with the bank reconciliations and the fiscal reports of Yabucoa. Our auditors identified that 666 bank reconciliations were not prepared, 176 bank reconciliations were prepared incorrectly, 52 bank reconciliations were not certified or signed by the Finance director, 15 checks remained outstanding pending payment for over three years, and the Monthly Report of Revenues and Disbursements has not been prepared since August 2005. These situations make it easier for errors and irregularities to be committed with the Municipality's funds.
The Municipality did not efficiently manage its finances by not remitting, until three years later, the voluntary contributions for the Public Employees Charity Campaign. In addition, from the examination of 50 disbursement vouchers for $1.2 million, quotes without the official's name, payments without supplier invoices or without the detail of hours and dates worked were detected. Other vouchers related to the payment of a construction project and a lawsuit were not found for examination.
The Finance director did not encumber the credits necessary to pay four contracts for $124,046 at the time they were awarded. A similar internal control deficiency had been noted in Audit Report M-15-07 of 2014.
Our auditors found that the Municipality does not keep the files of the 25 lawsuits pending or resolved through 2016, but rather they are under the custody of the contracted attorneys. However, the contracted attorneys were unable to provide the Municipality with the complete documents required by our auditors.
The Report comments that Yabucoa has 11 civil lawsuits for $38.2 million pending resolution in the Courts. The Municipality still owes $94,480 to two contractors for financial advisory and accounting services rendered from 2001 to 2012, following a judgment and order of payment by the Court. In addition, through a settlement agreement, the Municipality paid $48,000 to a former Municipal Police lieutenant for damages after having been expelled in retaliation for reporting to higher authorities about a criminal investigation of municipal officials.
As of March 31, 2017, the Municipality had not recovered $63,770 recommended in audit reports M-10-66 of 2010 and M-15-08 of 2014.
This second and final report of Yabucoa covers the period from January 14, 2013 to March 31, 2017.
See Audit Report M-19-20.
To see other published reports, visit our Audit Reports section.
Some documents on this page are saved in PDF format.
To view these documents, you must have the following free program installed.
