The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Ponce. A qualified opinion is issued when the instances of noncompliance, individually or in the aggregate, are significant but not pervasive.
The Report reveals that from 2015 to 2018 the Municipality of Ponce and the Municipal Legislature had a total of 69 approved positions in the confidential service, 19 in excess of the limit established by law. The maximum number of confidential positions for municipalities with more than 50,000 inhabitants is 30; which may be expanded by ordinance to 50 according to the functional complexity or size of the municipality.
The five-finding audit notes that $308,569 was paid for excess vacation without having documented the service need for the payment of the excess from 2015 to 2016. Act 81-1991 on Autonomous Municipalities empowers mayors to authorize the payment of the excess over 60 days of vacation leave by exception. However, the Human Resources director certified that there is no evidence of the need in the files.
The Municipality of Ponce paid $53,131 in air conditioning maintenance services for the Fairgrounds Complex, which the entity managing the Complex was responsible for paying, according to the contract formalized in 2013 between the Corporation of Enterprises of the Autonomous Municipality of Ponce (Municipal Corporation) and the managing entity.
In fact, the Report comments that the managing entity contracted by the Municipal Corporation to manage the Fairgrounds Complex generated income of $2,180,469 from 2013 to 2016, of which the Corporation has not received economic benefits. The first contract with the managing entity established that the Municipal Corporation would receive, as rent payment, 25% of the entity's net profit. The second contract of July 2013, with a 10-year term, determined that the Corporation would receive 37.5% of the gross income generated in excess of $1.8 million, as rent payment.
In addition, the construction of the Fairgrounds Complex was carried out with a federal loan from the Community Development Block Grant (CDBG) for $17,600,000. The loan contract had established that the Municipality committed to comply with the repayment guarantees, derived, among others, from the income generated from the use or rental of the property built with the CDBG funds.
This possible deficiency was referred to the Inspector General of the United States Department of Housing and Urban Development (HUD) on August 20, 2019 for its evaluation and corresponding action.
On the other hand, the Comptroller's auditors identified that the two property custodians who ceased their functions in 2014 and 2017 did not conduct an inventory of the movable property, nor did the Finance directors request it. Similar situations were commented on in Audit Report M-13-07 of 2012. As of August 2, 2017, the Municipality had an inventory of 72,219 units of movable property valued at $70,503,805.
A service agreement formalized with the Office for the Improvement of Public Schools of Puerto Rico in 2014, for $242,135, was not submitted for the approval of the Municipal Legislature, a situation that prevented the Legislature from evaluating the need and reasonableness of the agreement.
The audit comments that the Municipality has 50 civil cases pending resolution in the Courts for $9,711,347 as of December 31, 2018.
The Report recommends that 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 second and final Report of Ponce covers the period from July 1, 2014 to December 30, 2017.
See the Audit Report M-21-24.
To view other published reports, visit our Audit Reports section.
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