The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Ceiba. 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 of Ceiba had 154 accounts receivable for licenses and excise taxes in the amount of $1,932,583. As of June 30, 2021, the finance directors in office had not undertaken affirmative collection efforts, nor had they evaluated 81 accounts more than five years past due to determine whether they were uncollectible.
A similar situation had been commented on in Audit Report M-20-21 of February 22, 2020. Failing to collect in the corresponding fiscal year may result in the Municipality lacking the resources to meet its obligations and causes the accounts to become uncollectible.
The five-finding audit points out that Ceiba paid fines of $5,543 to the Internal Revenue Service-IRS for late remittance of Federal Social Security withholdings and contributions in various periods between 2018 and 2019.
On the other hand, the Municipality paid $78,000, following a settlement agreement, for equipment and licenses of an accounting system that has never been used. In 2012 the then-mayor contracted the acquisition of the mechanized accounting system Monet GFS, which he rescinded in 2013. The company sued for $551,641 and the litigation was settled for the cost of the equipment and licenses acquired and installed. This situation, contrary to Act 81-1991 of Autonomous Municipalities and the Municipal Regulation, could have affected the Municipality's resources, and after 10 years it is likely that the equipment no longer works.
For the audited period the property custodian did not maintain adequate control of municipal property. The auditors found laptops with the same property number, incorrect sequences, and the absence of property receipts from the laptop custodians, among other deficiencies. In addition, five property units worth $6,750 were not located.
The auditors identified that two property custodians, upon ceasing their duties in 2017 and 2018, did not conduct a property inventory as provided by the Regulation for Municipal Administration of 2016. When the new custodian began in 2018, he likewise did not prepare an inventory. These situations may make it impossible to detect, in time, the improper use of property in order to assign responsibility.
In a sample of disbursement vouchers it was detected that 50% were not certified with the signature of the employee in charge. The certification validates that the voucher complies with the current regulation. In addition, 25% of the vouchers did not include the supplier's invoice and 16% did not have the signature of the mayor or his authorized representative. These deficiencies make it possible for irregularities to be committed in the disbursements.
The report comments that Ceiba had accumulated deficits in the Operational Fund of 24% of the budget in 2018, 40% of the budget in 2019, and 43% of the budget in 2020. Operating with a deficit reduces the resources available for the following year. Similar situations had been commented on in Audit Report M-20-21.
The then-mayor granted a $3,000 donation to a nonprofit organization without the approval of the Municipal Legislature. The purchase order in the amount of $14,000 to pay for the Christmas lighting contract was altered in ink by the Finance director to change the amount to $17,000. The Christmas lighting promoter issued a check for $3,000 to the nonprofit entity.
The Department of Justice referred this situation to the Panel on the Independent Special Prosecutor on September 29, 2020, which investigated and corroborated the situation. The Office of Government Ethics requested that the then-mayor and the Finance director restore the $3,000 and imposed on them a fine of up to $20,000 for each infraction. As of this date the complaint is active.
This first report on Ceiba covers the period from January 1, 2019 to October 31, 2021
Audit Report M-23-11 can be obtained on our website: www.ocpr.gov.pr.
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