The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Guayanilla. 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 granted contracts from 2018 to 2020 for surveillance services, debris removal, and the purchase of concrete barriers, among others, without obligating the budgetary appropriations at the time they were granted, but only up to seven months later. In this way, the Municipality cannot maintain effective control of the budgetary allocations and may incur overdrafts and unnecessary litigation.
The seven-finding audit points out multiple internal control deficiencies such as the acquisition and payment of goods without issuing purchase orders, payment of vouchers without the certification of the official who received the goods, or purchase orders without the required information. For example, the payment of 15% of the disbursement vouchers was authorized without the suppliers' invoices and 18% without the supplier's signature. These situations make it possible for errors and irregularities to be committed and undermine confidence in the processes. From 2018 to 2020 the Municipality issued 20,222 disbursement vouchers for $43,412,805.
Contrary to the law and current regulation, 16 executive orders related to 78 credit transfers for $2,687,337 were not sent to the Municipal Legislature, eight of which reduced budgetary appropriations for personal services payments. In addition, the then-mayor authorized in 2019 a credit transfer of $40,000 that affected the payment of the amortization of the Municipality's accumulated deficit.
The Report publishes that the Municipality sent up to three months late to the Office of the Comptroller 80% of the monthly payroll and position reports, contrary to Act 103-2006, Government Fiscal Reform, and Regulation 53, Position Registry. A similar situation had been commented on in Audit Report M-19-28.
The absence of a public documents administrator since July 29, 2020, and the fact that the Document Retention Plan was not prepared in fiscal years 2019 and 2020, had the effect of not maintaining control of public documents, a fact that may lead to their deterioration or destruction. In addition, the annual physical property inventory of 2020 lacked information, and the Property officials did not provide evidence of the changes made in the "Fixed Assets" Module of the Integrated Solution for Advanced Municipalities (SIMA) system.
The audit detected that the Treasury, Audit, and Comptroller Affairs committee of the Municipal Legislature did not exercise its oversight function. From 2018 to 2019, it did not evaluate Audit Report M-19-28 of the Office of the Comptroller, nor six reports of the Internal Audit Unit, nor the audited financial statements.
The Guayanilla Report also reveals multiple deficiencies in the administration and operation of the Municipal Enterprise Castillo del Niño. The Municipality did not regulate the process for the creation of the Municipal Enterprise, did not present the financial situation of the Enterprise in its audited financial statements, and did not receive $21,271 corresponding to 75% of the profits generated at Castillo del Niño in 2018.
In addition, the Board of Castillo del Niño did not regulate the operations of collections, purchases, or payroll management. The Board likewise did not grant a written appointment to the administrator and authorized the settlement of $7,089 for 81 days of accumulated balance upon her resignation, an amount that she herself determined and for which Human Resources kept no documentary evidence.
The audit comments that the Municipality had accumulated deficits in the Operational Fund of up to 23% for 2020. No amount may be spent or obligated in a fiscal year that exceeds the appropriations and authorized funds.
The Internal Audit Office detected that six checks issued in the name of five persons were forged and altered in order to appropriate $5,760 from the Municipality's payroll account between May 5 and 7, 2020. In addition, 16 unauthorized electronic transfers against that account were detected in favor of seven private companies, in order to appropriate $8,652. These situations were reported to the Office of the Comptroller of Puerto Rico, the Office of Government Ethics, the Department of Justice, and two banking institutions. The investigation did not detect those responsible for the appropriation of the funds.
As of December 31, 2020, the Municipality had three lawsuits pending resolution in the courts for $540,213. In addition, it had five cases pending resolution before the Public Service Appellate Commission for dismissal, position classification, and transfer.
The Municipality had not addressed the recovery recommendation of $15,309, published in Audit Report M-18-09 of November 6, 2017 of the Office of the Comptroller of Puerto Rico.
The Report recommends to the director of the Office of Management and Budget to ensure that the Municipality of Guayanilla complies with the Corrective Action Plan.
This first report on Guayanilla covers the period from July 1, 2018 to June 30, 2021
Audit Report M-23-10 can be obtained on our website: www.ocpr.gov.pr.
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