The Comptroller of Puerto Rico issued a qualified opinion of the fiscal operations of the Office of the Insurance Commissioner. A qualified opinion is issued when the noncompliances individually or together are significant, but not pervasive.
The Report reveals that the Office of the Insurance Commissioner made in 2019 improper payments for $6,625 for services that were rendered before the amendment of a contract was registered with the Office of the Comptroller of Puerto Rico. Act No. 18 of 1975, the Contract Registry Act, establishes that no performance or consideration may be demanded until the contract is registered with the Office of the Comptroller. The services of the contracted corporation were to develop an implementation plan of expense-reduction measures.
In addition, the indicated contract included a clause that allows the entity to demand that the services begun during the term of the contract be completed, even though its term has ended. This situation, not in accordance with law, promotes the existence of an implicit agreement for work to be performed outside the term of a contract, or for billing above the maximum amount, or for retroactive amendments to be granted.
The two-finding audit notes, in another contract examined, that $44,250 was advanced to a financial analysis services contractor without having requested authorization from the Department of the Treasury. This situation deprived the Office of the Insurance Commissioner of having a remedy in case the contractor did not comply with what was agreed.
The auditors detected that the report of the external audits of 2019 and 2020 was submitted to the governor and to the Legislative Assembly up to 10 months after the period established by the Insurance Code. This situation is attributed to the delay in the contracting to work the audits, to the resignation of the Commissioner in January 2020 and to the government shutdown in March 2020 due to the COVID-19 pandemic.
The Report comments that the National Association of Insurance Commissioners (NAIC) suspended the accreditation of the Office of the Insurance Commissioner in 2020. The NAIC is the organization that standardizes the insurance industry of the United States and protects consumers by establishing basic standards and regulations for insurance companies. The Office of the Insurance Commissioner achieved the reaccreditation of the NAIC on December 22, 2022.
This report covers the period from January 1, 2016 to December 31, 2021
Audit Report OC-24-08 can be obtained on our Internet page: www.ocpr.gov.pr.
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