The Office of the Comptroller of Puerto Rico issued a qualified opinion of the fiscal operations of the Municipality of Villalba. A qualified opinion is issued when the noncompliances, individually or together, are significant but not pervasive.
The Report reveals that the Municipality did not report to the Department of the Treasury the payments of $500 or more that it made to the volunteers of the Villalba Volunteer Program. From 2015 to 2018, the Municipality had issued payments of $2,527,975 to 458 volunteers of the Program established by ordinance in 2007.
This situation was referred to the Secretary of the Treasury, who confirmed by letter that, in effect, the payments over $500 made to the volunteers must be reported to the Department through the Informative Declaration required by Act 1-2011. This finding has the effect of fostering tax evasion to the detriment of the public treasury.
The three-finding audit notes that the Municipality granted contracts with the characteristics of employees to six pensioners for a total of $264,665 during the period examined. This situation undermines the merit principle.
In fact, three of the pensioners did not report their reentry into active service to the Teachers' Retirement System (SRM). The Executive Director of the SRM indicated to the Office of the Comptroller that they will process a collection action against them, since Act 160-2013 establishes that when a pensioner occupies a paid position in the Government, the payment of the pension is suspended.
In addition, the Municipality paid $19,900 in excess to the pensioner who served as director of the Department of Public Works, since, contrary to the regulations in force, the compensation cannot exceed half of the salary assigned to the same full-time job. For the position, a maximum payment of $2,144 per month was applicable during the term of the contract from 2016 to 2018. For these actions, the officials who authorized these transactions and payments may be subject to penalties contemplated in Act 81-1991, on Autonomous Municipalities.
The Report reveals that 16 payments were made improperly to four employees while they were on leave without pay, for $6,774. The Municipality did not provide the auditors with evidence on the internal controls, training for the employees, or the payment plans granted to prevent this situation from recurring.
The audit comments on the accumulated deficits in the Villalba Operating Fund of 66% in 2015, 74% in 2016, 91% in 2017, 67% in 2018, and 61% in 2019. In the budgets from 2017 to 2019, the Municipality did not allocate the credits necessary to settle the current deficits.
As of June 3, 2019, the Municipality had not recovered $62,596 for various concepts indicated in the recommendations of audit reports M-16-27 of 2016 and M-18-16 of 2018.
The audit 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. This second and final report on Villalba covers the period from July 1, 2014 to December 31, 2019.
See Audit Report M-23-14.
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