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$1.3 million investment without benefit to the public interest in the Municipality of Corozal

The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Corozal. 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 acquired, for $790,000, a 25-cuerda farm in the Cibuco ward in 2019 for agricultural and educational projects that is in a state of abandonment. In addition, the then-mayor in 2017 bought a building annexed to City Hall for $105,000 that was not used and is abandoned. These situations foster, among other things, the need to invest additional resources to repair the damage.

In addition, the Municipality bought, in 2019, five school buses for $438,885 that are in good condition but were not used. However, from 2020 to 2021, the Municipality formalized 22 contracts and 11 amendments to provide school transportation services for $1,801,779.

The nine-finding audit notes that the former Finance director of Corozal did not encumber the budgetary credits at the time of granting three contracts and five amendments for $2,042,498 from 2017 to 2019. In addition, the Municipality allowed several contractors to provide debris removal and road cleaning services, even though the contracts did not have sufficient funds, and in other cases, without formalizing amendments to increase the amounts. For these situations, $154,602 was paid improperly.

The auditors of the Comptroller identified that the Municipality paid a $2,156 differential to a payroll officer to perform tasks of an attendance and leave officer, of a lower pay scale. In addition, the then-mayor granted an accountant II a merit salary increase of five steps on the pay scale, which exceeded the maximum allowed of three steps. These situations undermine the merit principle.

In Corozal, employees were paid the excess accumulated hours instead of granting compensatory time. At the close of fiscal year 2018, 11 employees had up to 1,758 hours accumulated in excess; and $8,481 was disbursed to four employees for 813 hours of compensatory time.

In addition, in 2017 the then-mayor nominated and the Municipal Legislature confirmed an official to the position of director of Human Resources, who did not meet the minimum academic requirement of the position. After 55 days had elapsed since the appointment, the trust-position Classification Plan was amended to include having experience related to the functions as an alternate requirement. This has the effect that the decisions made by the director of Human Resources during that time may be challenged.

On the other hand, from 2017 to 2021, the attendance and leave officer was also appointed as payroll officer. These functions were conflicting, since while she made adjustments to the payrolls, she approved the attendance and leave records. This deficiency can foster the commission of errors and irregularities, and makes it difficult to detect them in time. In addition, contrary to the 2020 Municipal Code, the position of internal auditor of Corozal was vacant for more than two years.

The Municipality of Corozal did not maintain adequate control over property. The auditors validated that the acting property officer had not performed the annual physical inventory for 2017, 2018, or 2019. In addition, units were found without a property number and lands acquired without appraisals. From 2017 to 2022, the Municipality acquired 2,966 units of movable and immovable property for $8,001,368.

For the audited period, 1,302 units of unusable property were decommissioned for $1,361,499. In the property decommissioning operations, deficiencies were detected such as the absence of the director's signature, that of the acting internal auditor, or that of the employee on the certifications, as well as properties that were not written off in the fixed-assets module.

The Report comments that the Municipality made salary payments of $7,671 improperly. In addition, following an agreement with the US Department of Labor, Wage and Hour Division, it disbursed $164,771 to 38 employees for overtime pay to comply with the provisions of the Fair Labor Standards Act.

The audit also comments on the payment of $24,500 following a settlement agreement in 2022, for personnel actions. This payment was made without receiving any benefit in return. As of December 2, 2022, five cases were pending resolution before the Public Service Appeals Commission related to personnel administration.

The budget from 2018 to 2023 was $11,481,781, $10,405,515, $10,592,848, $10,214,996, $9,535,437, and $9,303,218, respectively. The Municipality had its financial statements for 2017-18 through 2020-21 prepared and they reflected accumulated surpluses of $767,889, $2,336,555, $889,870, and $133,045, respectively.
The Report recommends that the director of the Office of Management and Budget ensure that the Municipality of Corozal complies with the Corrective Action Plan established by the Office of the Comptroller of Puerto Rico.

This second and final report on Corozal covers the period from July 6, 2017 to July 31, 2022, and is available at www.ocpr.gov.pr.

Audit Report OC-24-51 is available on our website: www.ocpr.gov.pr.