The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Yauco. A qualified opinion is issued when noncompliances, individually or together, are significant but not pervasive.
The Report reveals that the Municipality submitted to the Office of the Comptroller contracts for the disposal of debris generated by Hurricane María, with delays of up to four months. In addition, it made payments of $121,617 to the contractors without having registered the contracts with the Office, and without having established in writing the expiration date of the services. This situation prevented the Municipality from maintaining control of the services and prevented the public from having the information within the required time.
The Municipality also failed to comply with Act 273-2003, on Contractual Standards regarding Independence in the Audits of Governmental Entities, since in fiscal years 2016 and 2017 it submitted the certifications required by the Office of the Comptroller of Puerto Rico up to two months late. This situation prevented such information from being available on time to exercise the Office's oversight function.
The four-finding audit notes that the Municipality did not deposit the legislative funds in a separate bank account as required by the Regulation for Municipal Administration of 2016. From 2016 to 2018, the Municipality made disbursements amounting to $3,561,736, charged to a special account in which legislative funds, state appropriations, municipal special funds, and loans were deposited.
The auditors found that there were no written rules or procedures for the receipt, preservation, and disposal of documents in Yauco. In fact, during a visit to the public documents area, it was evidenced that there were leaks, boxes with moths, no air conditioning, no alarm system, and no security. This deficiency caused the loss of documents and prevented them from being kept in good condition (see photos in Appendix 1 of the Report).
The Report comments that Yauco had accumulated deficits of $11,848,702 for 2016, $12,533,826 for 2017, and $12,109,609 for 2018. This deficit represents 89%, 94%, and 103% of the total budget approved for its operating expenses. In the 2018 and 2019 budgets, the Municipality did not allocate the credits necessary to cover the deficits.
The Municipality of Yauco had to reimburse $272,112 to the federal programs Neighbohood Stabilization Program and Section 8, after their use to cover operational expenses was questioned. These costs were questioned in an audit report prepared by external auditors.
In addition, Yauco disbursed $316,108 to pay 22 lawsuits resolved in the courts for cases of debt collection, damages, and attorney's fees. In 2016 it also paid $22,000 for two administrative orders from the Environmental Quality Board, for violations in the handling of non-hazardous solid waste in the sanitary landfill system. As of May 31, 2019, the Municipality had three lawsuits pending resolution in the courts for $657,304, and had not recovered $4,494 recommended in Audit Report M-15-04 of September 4, 2014.
The audit comments that the municipality claimed excess money from the Federal Emergency Management Agency (FEMA) for the collection, hauling, and disposal of debris generated by Hurricane María. The Municipality claimed $59,598 in excess of the amount determined in the daily reports certified by the director of Public Works and $12,316 in excess of what was invoiced by three contractors.
Yauco implemented expense control measures to address the fiscal crisis such as: a 10% salary reduction for trust positions, a reduction of the workday to 20 hours per week, and a 50% reduction in professional services contracts, among others.
The Report recommends to the Office of Management and Budget that it ensure that the Municipality complies with the Corrective Action Plan established by the Office of the Comptroller.
This first report on Yauco covers the period from January 1, 2016 to May 31, 2019.
See Audit Report M-21-18.
To see other published reports, visit our Audit Reports section.
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