The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of San Lorenzo. A qualified opinion is issued when noncompliance, individually or as a whole, is significant but not pervasive.
The Report reveals that the Municipality paid, through a verbal agreement, $185,630 in advance to a supplier of equipment and accessories for an electrical substation at the Multi-Use Coliseum. The Finance director could not explain to our auditors the reasons for the advance payments. In addition, the purchase file does not contain the mayor's authorization, nor the bond required of the supplier as a guarantee of its compliance. This situation, contrary to current law and regulation, may prove harmful in the event that the services are not rendered or the goods are not received.
The Municipality also did not formalize a contract with that supplier, and the documents certifying that the goods were received in accordance with the specifications were not located. The lack of a contract does not protect the interests of San Lorenzo in the event of noncompliance, due to the absence of a legal document.
The three-finding audit notes the lack of adequate controls over the supplies, spare parts, equipment and tools of the Municipal Garage. The Municipality did not perform periodic or perpetual physical inventories of the supplies, nor periodic inspections to verify their existence. A similar situation had been commented on in Audit Report M-16-30 of 2016.
Our auditors identified that, in San Lorenzo, the annual physical inventories of the movable property for the years 2015 and 2016 were not prepared. This situation prevents maintaining adequate control of the property and fosters its loss or improper use. As of March 1, 2018, the Municipality had an inventory value of $69 million.
The Report comments that San Lorenzo had accumulated deficits totaling $1.4 and $1.7 million in the Operational Fund for the years 2015 and 2016 respectively. Operating with a deficit is harmful to the Municipality and does not promote a policy of savings and expense reduction. In addition, it has 130 employees classified as temporary who exceed the regulatory one-year period, for periods of up to more than 10 years.
As of April 30, 2018, the Municipality had pending resolution by the courts 12 civil lawsuits totaling $4,082,396 for cases of damages, collection of money, civil action and employment retaliation. In addition, it had three cases filed before the Public Service Appeals Commission for $360,208.
This is the first report on San Lorenzo and covers the period from January 1, 2015 to April 30, 2018.
See Audit Report M-20-02.
To see other published reports, visit our Audit Reports section.
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