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The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Lares. 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 has kept 124 special funds, with resources amounting to $2,133,219, inactive for up to more than 21 years. The Monthly Report of Revenues and Disbursements reflected, as of April 30, 2020, that 41 of the special funds, totaling $1,526,753, were from legislative appropriations.

The one-finding audit also notes that, as of December 31, 2018, Lares maintained two special-fund bank accounts totaling $107,591 inactive for up to 13 years.

These findings constitute an inadequate administrative policy and limit the use of these resources for the benefit of the Municipality. In Audit Report M-17-34 of May 2, 2017, similar situations had been published regarding funds and bank accounts with balances inactive for prolonged periods.

The Report comments that from 2016 to 2018, Lares has had accumulated deficits in the Operating Fund of 33%, 32%, and 12% respectively, according to the audited financial statements. Operating at a deficit can be detrimental since it could reduce the following year's resources, and would not allow obligations to creditors to be honored nor the necessary services to be provided effectively and responsibly.

Five civil lawsuits against the Municipality for $1,829,000 were pending resolution in the courts as of June 17, 2020.

The audit recommends that the director of the Office of Management and Budget ensure that the Municipality complies with the Corrective Action Plan established by the Office of the Comptroller of Puerto Rico.

This report covers the period from January 1, 2016 to December 31, 2018.

See Audit Report M-21-05.

To view other published reports, visit our Audit Reports section.