The Comptroller of Puerto Rico issued a qualified opinion of the fiscal operations of the Municipality of Santa Isabel. 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 did not hold a public bid to acquire gasoline and diesel in fiscal year 2020-21. Instead, 17 purchase orders for $170,792 were issued to a supplier. This situation prevented free competition.
On the other hand, the acting Finance directors processed payments with multiple deficiencies, such as: issuing purchase orders without the signature of the mayor or of the Finance director, and up to 54 days after receiving the gasoline-dispatch service. In addition, 14 disbursement vouchers for $84,141 were processed, without authorized or certified signatures. Similar situations had been noted in Audit Report M-19-43 of June 9, 2019.
The 12-finding audit notes that, as of June 30, 2021, the Municipality owed $2,344,955 to the following entities: Department of Labor and Human Resources (DTRH), the Retirement Systems Administration, LUMA Energy, Department of the Treasury, Federal Internal Revenue Service and the General Services Administration. In particular, the debt with the DTRH increased by $267,733 unnecessarily, due to interest and surcharges. This situation has the effect that the resources owed to the aforementioned entities were affected, among others.
The auditors found that for the 2020 electoral period, $117,912 were disbursed and obligated in excess of the 50% of the budget permitted. This situation, contrary to the Municipal Code of 2020, reduced the funds for the second semester of the new administration.
As of September 2021, the acting Finance directors had not prepared the bank reconciliations of the Current and Payroll accounts, or the Monthly Report of Revenues and Disbursements. The interim Finance director had also not recorded in the accounting system expenses approved by the Municipal Legislature.
The Municipality did not maintain adequate control of the collection process of the Santa Isabel Medical Center or of the Hotel Hacienda Santa Isabel. The Report details that they did not maintain a perpetual inventory of the blank manual receipts, did not record the date of seven receipt booklets, and the collections were deposited up to a month after the collection, among other deficiencies.
The patients who came to the Medical Center who could not pay the deductible were granted a payment commitment. However, the Municipality had not established a regulation in this regard and could not provide the auditors with information on the commitments granted and paid.
The Report indicates that the then mayor did not submit to the Municipal Legislature the appointments of the members of the Bidding Board for their confirmation. In addition, the secretary of the Board did not arrange the binding of the minutes of the fiscal years, from 2019 to 2021, contrary to the current municipal regulation.
Other findings reveal that the then mayor had not made the official appointment of the special paymaster designated to administer the petty-cash fund, the property officer did not conduct the annual physical inventory of movable property from 2017 to 2020, and as of June 15, 2021 a perpetual inventory of medical-surgical supplies was not maintained, among other materials.
The auditors evaluated that there is no adequate control of the public documents, whose condition fosters the loss, deterioration, or destruction of important and valuable documents. The designated area had termites, leaks in the roof and the documents were not organized. (See photos in Exhibit 1)
Contrary to the current regulation, the contract to perform the audit of the financial statements for 2020 was granted a year after the established date. This audit in turn was delivered to the Municipality nine months later than the date provided by the federal regulation. This situation prevents the Municipality from having updated information on the financial situation and from evaluating the result of its operations.
As of May 4, 2021, the Municipality had not submitted to the Office of the Comptroller 34 monthly reports of payrolls and positions from June 2018 to March 2021. These delays of up to more than two years deprive the Government and the citizens of updated information.
The Report notes that Santa Isabel has an operational deficit of $5,138,810, 49% of its total budget of $10,527,726 for 2019; and of $4,550,499, 43% of its total budget of $10,661,367. In addition, as of June 30, 2021, it had not recovered $348,025 indicated in the findings of five audit reports since 2009.
The audit recommends that the director of the Office of Management and Budget ensure that the Municipality of Santa Isabel complies with the Corrective Action Plan established by the Office of the Comptroller.
The General Fund budget of the Municipality rose from $10,125,158 for 2018, $10,527,726 for 2019, $10,661,367 for 2020 and $11,089,633 for 2021. The audited financial statements reflected accumulated deficits in the General Fund of $6,824,806 in fiscal year 2018, $5,138,810 in 2019 and $4,550,499 in 2020. This first report on Santa Isabel covers the period from June 1, 2018 to June 30, 2021.
See Audit Report OC-24-25.
To see other published reports, visit our Audit Reports section.
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