The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Mayagüez. A qualified opinion is issued when the instances of non-compliance, individually or in the aggregate, are significant but not pervasive.
The Report reveals multiple incorrect entries in the bank reconciliations of two checking accounts from November 2019 to June 2020. The Municipality did not ensure that the contractor compared the bank balance with the accounting records of the Integrated Solution for Advanced Municipalities (SIMA) system. In addition, 158 transactions totaling $12,551,332 were not recorded and 11 deposits totaling $3,318,427 were deposited in a bank account that did not correspond to them. The Municipality also did not investigate the difference of $64,687 in the bank reconciliations to determine the need to make adjustments in the accounting.
These situations reflect that the Municipality does not maintain complete and reliable information about the financial situation and the result of its operations. In addition, irregularities could be committed and it could be difficult to detect them in time to assign responsibilities.
The four-finding audit notes the disappearance in 2019 of a hydraulic excavator and a track tractor, valued at $150,000, lent to a private property, without a contract, for the construction of an airstrip for ultralight and remote-control aircraft. The auditors also found that the Municipality had not collected the $46,095 fee for the lease of the heavy equipment and did not claim the loss of the two pieces of equipment from the insurer.
An investigation by the Municipality determined that the then interim manager of Public Works and the interim supervisor of Transportation were negligent and did not comply with the applicable regulations. As of February 25, 2022, the Municipality had not notified the Secretary of Justice of this investigation. The Office of the Comptroller recommends that the Secretary of Justice consider this situation and take the appropriate measures.
For fiscal years 2018 and 2019, the Municipality of Mayagüez did not carry out the annual physical inventories of the movable property as provided by the Municipal Regulation of 2016. This lack of control makes possible the improper use or loss of the property.
As of June 30, 2020, the Municipality maintained 28 special funds totaling $1,228,019 inactive for up to 14 years; 34% of these were legislative appropriations. In addition, it maintained five bank accounts of special funds totaling $107,279, inactive for up to seven years. This inadequate administrative policy makes accounting difficult and limits the use of these resources for the benefit of the Municipality. A similar situation had been commented on in Audit Report M-19-44 of 2019.
The Report comments on and summarizes the judicial process and suspension of the mayor and of the manager of Finance and Budget of the Municipality. In addition, it details the judicial process against the former executive director of Mayagüez Economic Development, Inc, (MEDI), of three former financial advisors, a former legal advisor, and two other persons, for committing fraud.
Another of the special comments refers to the budget deficit of the Operational Fund of Mayagüez, of $25,724,680 in 2018, $22,042,801 in 2019, and $24,190,398 in 2020. The mayor and the president of the Municipal Legislature are responsible for supervising the execution of the budget and ensuring that no amount is spent or obligated that exceeds the appropriations and authorized funds.
The audit recommends to the Office of Management and Budget to ensure that the Municipality of Cabo Rojo complies with the Corrective Action Plan established by the Office of the Comptroller.
This first report of Mayagüez covers the period from July 1, 2017, to June 30, 2021.
Audit Report OC-24-05 can be obtained on our website: www.ocpr.gov.pr.
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