The Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Arroyo. A qualified opinion is issued when noncompliance, individually or in the aggregate, is significant but not pervasive.
The Report reveals that the municipality used $2,957,426 in license taxes paid in advance or held in suspense for operational and special expenses of prior fiscal years. This improper use of funds resulted in the budgets for 2017 through 2020 not being presented correctly, and in incurring operational deficits. A similar situation had been noted in the audited financial statements (Single Audits Reports) for 2017 through 2019.
The six-finding audit notes that the Municipality had not prepared 31 bank reconciliations from 2018 to 2019. In addition, in 2017 an unauthorized clerk collected the revenues for the pool and the parking lot at the Punta Guilarte Beach and Vacation Area. These situations make it possible for errors and irregularities to be committed.
The Municipality purchased, outside Puerto Rico, a used 2007 bucket truck for $55,600, without obtaining at least three quotes from local suppliers and without the warranty certificate and records of repairs performed. These situations, contrary to the Regulation for Municipal Administration of 2016, are attributed to the mayor and the Finance director not protecting the best interests of the Municipality.
The Comptroller's auditors found 14 unserviceable motor vehicles abandoned and covered in weeds without completing their disposal process in accordance with the established regulations (see photos in Appendix 1 of the Report). In addition, in the public document archives located at the city hall and at the former José de Choudens School, boxes were observed with mold, termites, or broken, and the facilities without lighting, smoke detectors, or an alarm system (see photos in Appendix 2 of the Report).
The Report indicates that the Municipality has not updated the Regulation of the Bidding Board nor the Regulation of the Punta Guilarte Beach and Vacation Area, in accordance with the provisions established in Act 81-1991, the Autonomous Municipalities Act and in the Regulation for Municipal Administration of 2016. In this regard, it recommends preparing draft ordinances and presenting them to the Legislature to update them.
The audit notes that Arroyo has accumulated deficits of $2,331,904, $3,859,558, $2,761,537, and $2,076,107 from 2016 to 2019 respectively. These figures represent deficits ranging from 22% to 31% of the total budget. In operations with a deficit, the Municipality must include in the following year's budget sufficient resources to cover the prior year's credit.
The Municipality has 66 of 80 employees classified as transitory, even though up to 14 years have elapsed since their appointments. This situation, contrary to current law and regulations, had been noted in Audit Report M-18-20.
As of June 30, 2019, the Municipality had not recovered $31,819 for various items as recommended in audit reports M-14-48 of 2014 and M-16-45 of 2016.
This first report on Arroyo covers the period from January 1, 2016 to December 31, 2019.
See Audit Report M-22-02.
To see other published reports, visit our Audit Reports section.
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