The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Patillas. A qualified opinion is issued when noncompliance, individually or as a whole, is significant but not pervasive.
The Report reveals that the Municipality did not comply with the applicable law and regulation requiring it to submit the Monthly Payroll and Position Report to the Office of the Comptroller no later than 30 consecutive days after the end of each month. In Patillas, that Report was processed up to 17 months late, a situation that prevented the Office of the Comptroller from having complete, timely and updated information on the Municipality available.
The seven-finding audit notes that, as of June 30, 2017, 20 funds with economic resources of $68,206 had remained inactive for up to five years. This situation deprives the Municipality of economic resources, and a similar situation had already been commented on in Audit Report M-16-37 of 2016.
In Patillas, 87 credit transfers totaling $1,604,762 were made without the Finance director issuing the surplus certifications as required by the Regulation for Municipal Administration of 2016. In addition, 17,543 blank checks in 14 bank accounts remained uncanceled, contrary to what that Regulation provides. This situation fosters the commission of errors and irregularities with the Municipality's funds.
Our auditors verified that, from 2014 to 2017, the Internal Audit Unit of Patillas had not performed periodic audits that included the materiality and risk areas in collections, disbursements, bids and payrolls. The internal auditors in office departed from the provisions of current law, and the mayor did not exercise adequate supervision over their functions.
The Report evidences the lack of controls in the operations of the Municipal Garage, since perpetual inventories were not maintained nor were periodic inspections of the parts, equipment and supplies performed. The Municipality's property custodian had also not performed the physical inventories of the movable property for the audited period.
The audit comments that Patillas had accumulated deficits in the Operational Fund of $3.6 million for 2015, $2.8 million for 2016 and $3.7 million for 2017. This last figure represented 34% of the total budget deficit for that year. In this regard, it is recommended, among other things, that funds be appropriated to amortize the deficit as established by current law.
The Municipality disbursed $80,000 in transactional agreements with three employees who sued the administration in 2009 for having suspended them from employment and pay without holding a valid hearing. In addition, it has three civil lawsuits pending resolution by the courts for $1.1 million. As of August 31, 2017, $128,654 had not been recovered from the collection recommendations indicated in two audit reports from 2010 and 2013.
Patillas declared a state of fiscal emergency in 2017 and established measures to maintain economic stability and address the fiscal crisis, such as: a 10% reduction in the base salary of the mayor and trust employees, a 25% reduction in the appropriations for professional services, and a reduction of the workday to 5.5 hours per day.
This is the first report on Patillas and covers the period from July 1, 2014 to August 31, 2017.
See Audit Report M-20-03.
To see other published reports, visit our Audit Reports section.
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