The Office of the Comptroller of Puerto Rico issued a qualified opinion of the fiscal operations of the Municipality of Toa Baja. A qualified opinion is issued when noncompliances, individually or together, are significant but not pervasive.
The Report reveals that from April 7, 2015 to August 11, 2016 the Municipality of Toa Baja invested $588,026 in the construction of an animal shelter and a community center that are currently deteriorated and abandoned. In addition, the Municipality acquired eight homes for $645,450 under the Neighborhood Stabilization Program (NSP) and one of them, valued at $48,600, was abandoned, and they use it as a clandestine dump. These situations fostered an investment with no benefit, a possible lawsuit from the contractor for breach of contract, and the possibility that the Municipality may be affected in future budgetary allocations of federal funds (see Exhibit 1 and 2 of the Report).
The nine-finding audit notes that the mayors in office approved credit transfers for $5,106,914 without the required certifications regarding budgetary allocations, disbursements drawn and the unobligated amount, among others. A similar situation had been published in Audit Report M-16-22 of April 7, 2016.
As of March 31, 2019, the Municipality had a debt of $22,468,685 with the Retirement Systems Administration, with the Department of the Treasury, with the Aqueduct and Sewer Authority, and with the Department of Labor and Human Resources. This situation of arrears, and payments of interest, penalties and surcharges is attributed to the directors of Finance in office not efficiently managing the Municipality's finances.
Our auditors identified that the fiscal reports were not signed by the official who prepared them, nor by the director of finance, and the adjustments recommended by the contractor had also not been recorded in the mechanized system. In addition, the examination performed on 13 bank reconciliations, from a sample of 2017 and 2018, of the payroll, current and special accounts, revealed that the balances of the bank statements did not reconcile with the Municipality's accounting records. These situations prevent maintaining adequate control of the finances and having reliable information.
Since 2007, the Municipality accumulated $5,288,806 in accounts receivable for municipal licenses and rent of niches in the cemetery. 70% of said amount was from accounts more than five years past due and had not been evaluated to be declared uncollectible.
Contrary to current law and regulations, the Municipality did not remit to the Secretary of Justice the information and documents required in 72 resolved and active lawsuits. As of December 31, 2018, 140 lawsuits for $49,609,714 had been filed against the Municipality. This situation prevented the Department of Justice from being informed of the existence of the lawsuits and the Registry of Civil Lawsuits from being up to date.
The Report reveals that from 2015 to 2018, the person in charge of the Municipality's property did not perform the annual physical inventories of the movable property. In addition, the theft of 18 units of property valued at $208,247 was notified to the Office of the Comptroller with delays of up to three years, and the investigations required to fix responsibilities were not performed.
The audit publishes other deficiencies such as the payment of $2,015 for 69 fines issued to 20 municipal vehicles for passing through the tolls without balance and the purchase of license stickers for $444 for 12 vehicles out of use. In addition, in 10 cash on delivery disbursement vouchers, the Municipality did not obtain the invoices or the supporting documents of the goods and services acquired.
The Toa Baja Report also comments that the Municipality had an accumulated deficit in the Operational Fund of $20,289,704, $27,360,299, $21,219,415 and $21,068,108 for the years 2015 to 2018. The percentage of accumulated deficit for 2018 reached 69% of the total budget.
The Municipality's director of Human Resources certified that 335 employees were appointed to transitory positions as of November 30, 2018; of these, 311 were paid from the Operational Fund. 95% of the transitory personnel had been there up to 25 years since their appointment.
The Municipality had 30 civil lawsuits pending resolution in the courts for $9,648,836 as of September 30, 2020. From 2014 to 2019, Toa Baja had paid $398,916 for 22 lawsuits resolved in the courts. This first report of Toa Baja covers the period from January 1, 2015 to December 31, 2018.
See Audit Report M-22-20.
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