The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Ponce. A qualified opinion is issued when noncompliances, individually or in the aggregate, are significant but not pervasive.
The Report reveals delays of $32.6 million in the payment of obligations and withholdings, among others, to the Retirement Systems Administration, the Aqueducts and Sewers Authority, the Electric Power Authority, and the Internal Revenue Services, as of December 31, 2016. This figure includes $1.1 million in interest, surcharges, and penalties for the delays. A similar situation had already been commented on in the Audit Report M-16-49 of 2016.
The three-finding audit notes that the mayor authorized 284 credit transfers for $18.4 million that had the effect of reducing the budget in 14 statutory obligation items. The transfers that caused the increase in operational expenses were made without the certification of surpluses by the Finance directors.
In fact, this situation caused overdrafts in the budget items that, together with other factors, has caused accumulated deficits of up to almost 50% of Ponce's budget from 2015 to 2017. During that period the deficits totaled $38.9, $37.8, and $44.8 million of a budget of $94.6, $92.8, and $88.9 million. Similar situations had also been commented on in Reports M-13-07 of 2013 and M-16-02 of 2015.
Our auditors identified checks for $31,593 uncashed for more than six months from their issuance, and 249 bank reconciliations of 14 accounts for the period from July 2014 to December 2016 were not provided for examination. These situations may foster irregularities with the funds and prevented us from verifying the detail of the charges made by the banks.
The Report comments that three loans were made with the Government Development Bank, from 2013 to 2014 for $21.3 million, one of them to cover cash deficiencies and the payment of debts incurred with governmental entities for $10 million. The Office of the Comptroller considers that it is not a good administrative practice to request loans for the payment of debts and obligations. For that period, the Municipality also did not take effective measures to increase revenue capacity, nor to cover the deficiencies in the operational funds.
As of June 30, 2017, the Municipality had not recovered $310,209 that was recommended in the Audit Report M-16-49 of 2016.
The Report covers the period from July 1, 2014 to June 30, 2017
See the Audit Report M-19-30.
To see other published reports, visit our Audit Reports section.
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