The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Economic Development Bank for Puerto Rico (BDE). A qualified opinion is issued when the instances of non-compliance, individually or in the aggregate, are significant but not pervasive.
The audit had as its objectives to determine whether the operations related to the microenterprise grants of the CDBG-DR-SBF Program and whether the application for and receipt from the Department of Housing of the approved grants complied with the Guidelines of the CDBG-DR Program, Small Business Financing Program. From the audit objectives, no findings are commented on.
The Report publishes a Special Comment on the accumulated deficits from 2018 to 2022 as reflected in the audited financial statements. For that period the BDE had revenues of $145,790,130, expenses of $159,069,802, capital transfer of ($866,671), and net change of ($14,146,343).
The notes in the financial statements indicate that the BDE faces significant risks and uncertainties. At present, it does not have sufficient financial resources to meet its obligations.
On the other hand, the BDE began to monetize most of its loan portfolio starting in 2017. These sales provided temporary liquidity relief but reduced the loan portfolio. This situation jeopardized the operational viability of the BDE.
The Report recommends to the Governor and the Legislative Assembly to ensure that the Board of Directors continues the plan established to address the BDE's fiscal and operational situation. The president of the BDE is recommended to continue the development of strategies to avoid net losses in its operations and to maintain control of its expenses.
This report of the Economic Development Bank covers the period from July 1, 2018, to July 31, 2023.
Audit Report OC-24-33 can be obtained on our website: www.ocpr.gov.pr.
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