The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Naguabo. 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 made payments of $1.5 million to three contractors for the removal of debris generated by Hurricane María, but did not make the corresponding withholdings, as provided by Act 1-2011, Internal Revenue Code for a New Puerto Rico. This situation caused the Municipality not to remit $103,485 of those withholdings to the Treasury Department and fosters tax evasion.
The audit of three findings points out that the Internal Audit and Comptroller Affairs Commission of the Municipal Legislature of Naguabo has not adequately exercised its oversight function. Over the course of one year, they met on three occasions to evaluate two circular letters, a Financial Report and an Audit Report; however, they did not evaluate 10 reports on the evaluation of federal programs. This situation undermines the purpose of the Commission's function.
The Comptroller's auditors found that the Municipality does not keep complete files of lawsuits. The Finance director and the executive administrators certified the existence of eight lawsuits; however, they only had the file of one. Nor did they have the information from the insurers to know whether the cases were settled and the amount agreed upon.
The Report comments that 71% of the Municipality's employees are temporary employees who have been kept under that classification for up to 16 years. Temporary appointments may not exceed one year, except for persons appointed to special projects of fixed duration funded with federal or state funds whose appointment corresponds to the rules provided by the law under which they are appointed.
As of January 31, 2019, six civil lawsuits against the Municipality amounting to $1.1 million were pending resolution. In addition, two other lawsuits for harassment and for dismissal were filed before the Public Service Appeals Commission, with no specified amount.
The Municipality of Naguabo has not addressed the recommendation for the recovery of $65,214 indicated in audit reports M-12-05 of 2011 and M-16-40 of 2016.
The Report covers the period from July 1, 2015 to June 30, 2018.
See Audit Report M-20-27.
To see other published reports, visit our Audit Reports section.
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