The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Toa Alta. A qualified opinion is issued when noncompliance, individually or in the aggregate, is significant but not pervasive.
The Report revealed that the Municipality had delays of up to two years in the preparation of the reconciliations of the Payroll account and in 40 special accounts. In addition, the reconciliations in several accounts reflected differences of up to $5 million because the acting Finance directors did not make the accounting adjustments in the fiscal reports.
In addition, neither was found nor did the Municipality provide evidence of the preparation of the monthly Income and Disbursement reports from July 2014 to January 2018. A similar situation had been noted in Audit Report M-15-38 of 2015.
The nine-finding audit notes that collection receipts were issued with delays of up to six months. In addition, 21 receipt books were neither found nor could the Municipality provide them, and the blank checks were not kept under lock and key. These situations do not allow adequate control to be maintained and foster the commission of irregularities.
Contrary to the Regulations for Municipal Administration of 2016, the mayor authorized credit transfers for $5.5 million without the required surplus certifications. In addition, the acting finance directors kept $3.2 million of uncollectible accounts in the accounting books since 1992, without having made the corresponding adjustments. Failing to collect the accounts in their fiscal year can cause a lack of economic resources to meet other budgetary obligations.
The Office's auditors detected that the Municipality did not notify the Department of Justice, as provided by Act 1-2003, the Civil Lawsuits Registry Act, of 21 lawsuits against Toa Alta. Nor did it request the consent of the Municipal Legislature for a settlement offer in a lawsuit filed for damages.
In Toa Alta multiple lapses of control over property were detected. For example, from 2014 to 2016 the annual inventories of movable property were not completed. In addition, neither in the materials warehouse nor in the Municipal Garage was a perpetual inventory kept. Furthermore, the Municipality did not conduct administrative investigations into 80 accidents involving municipal vehicles, nor did it notify the Office of the Comptroller of five thefts of property for $9,949.
The audit found that the Internal Audit Unit did not conduct periodic audits and that the Audit Commission of the Municipal Legislature did not evaluate the audited financial statements from 2014 to 2017. In addition, contrary to Act 81-1991 on Autonomous Municipalities, Toa Alta does not have regulations for the operations of the One-Stop Integrated Services Center.
The Report also reveals that the Municipality kept 98 funds of $5.5 million in economic resources that had remained inactive for up to three years. In this regard, the Finance director certified that she does not have information to explain the reasons for the inactivity of the funds.
The Toa Alta audit also notes that the Municipality has accumulated deficits in the Operational Fund for the years 2014 to 2016 amounting to $2 million, $4.4 million and $5.8 million respectively. During that period expenses exceeded income by $4.4 million. Operating with deficits affects services to citizens and overspending fosters the accumulation of debts.
The Municipality had 18 civil lawsuits for $22.5 million pending resolution by the courts as of May 1, 2018.
This first report of Toa Alta covers the period from January 1, 2014 to August 31, 2017.
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