Comptroller reveals that Treasury invested $32 million in information systems without obtaining the expected benefits
The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Department of Treasury related to computerized information systems. A qualified opinion is issued when the noncompliances, individually or as a whole, are significant but not pervasive.
The Report reveals that the Department of Treasury has not obtained the expected benefits after investing $32,369,127 to implement a standardized accounting system in accordance with the Fiscal Plan for Puerto Rico. This plan, certified by the Fiscal Control Board on March 13, 2017, established that the Government's financial data must be centralized in a single account and database. To this end, the Department selected the PeopleSoft 9.2 system to reimplement the Enterprise Resource Planning (ERP) system.
In this regard, the Department formalized two contracts and amendments starting July 25, 2018, with effect through June 30, 2020, for $55,999,000, interrupted in November 2019, six weeks before completing the first phase of the ERP system reimplementation. Up to the interrupted services, $32,369,127 had been disbursed to the company.
The Fiscal Control Board warned on February 26, 2021, about the importance of this system facilitating the preparation of the comprehensive annual financial reports, the Comprehensive Annual Financial Report. In addition, it noted that, despite the authorized funds, the project had not been completed. To this end, a Steering Committee was created in 2021, to implement a new financial and accounting system of the Government of Puerto Rico. This Committee, after evaluating proposals, decided to contract the same company.
On November 2, 2022, the Department awarded a new contract to continue the project, but this time with a cloud solution that would require three years at a cost of $73,104,102. According to the work plan, the project must be completed by December 31, 2024.
This situation is attributed, among others, to the fact that the Department did not request all the necessary funds, which led to the project being interrupted on four occasions, and to the absence of a needs study. In addition, the difficulty of communication between the consultants and the Department's personnel due to language caused delays.
The two-finding audit also notes that the contracts and their amendments did not include detailed information on the tasks related to each of the services contracted in the ERP system reimplementation. The auditors validated that the available information did not detail the modules to be implemented, the approved deliverables, or the work completed. In addition, the company's invoices were presented with delays of up to 54 days after the 15-day term, a situation that hindered the process of certifying the services rendered.
Treasury's budget rose from $208,103,000 in 2022, to $939,423,000 in 2023, up to $987,777,000 in 2024.
The audit recommends that the secretary of Treasury conduct needs studies before contracting information systems implementation projects, and that he request the necessary funds to complete the projects, among others.
This second Treasury report covers the period from July 25, 2018, to January 26, 2024.
The Audit Report OC-25-02 can be obtained on our website: www.ocpr.gov.pr.
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