Municipality of Santa Isabel did not require $98K in excise and business license tax payments from contractor, and made improper payments of over $25K to former officials
The Office of the Comptroller of Puerto Rico (OCPR) issued a qualified opinion on the fiscal operations of the Municipality of Santa Isabel. A qualified opinion is issued when the noncompliances, individually or as a whole, are significant but not pervasive.
The Report reveals that the Municipality did not require the contractor to pay the excise and business license taxes for the athletic track construction project, whose total cost amounted to $2,001,021. For both concepts, the contractor should have paid the Municipality $110,056; however, it only paid $11,255.
As of November 16, 2022, the Municipality had not required the contractor to pay the difference of $98,801, nor had it withheld this amount from the payments already made. As of February 27, 2023, the Municipality owed the contractor $115,498 for pending work and for the 10% retained. In this regard, the Report recommends that the mayor withhold the $98,801 in construction excise taxes and business license taxes from the balance pending payment.
The five-finding audit notes multiple significant control deficiencies, since the responsible officials did not find or deliver to the OCPR auditors documents related to the construction of the athletic track and to the remodeling of the public plaza. For example, they did not provide evidence of the mayor's authorization to the contractor to subcontract, nor the minutes approving change orders, nor five disbursement vouchers for $343,117, among others. This situation makes it difficult to maintain reliable records of the agreements between the Municipality and the contractor, and prevented verifying in all its details the correctness of the construction processes.
The Municipality paid $25,113 to six former officials and five former employees for days accumulated in excess of the 90 days of sick leave in January 2021. The Municipal Code of 2020 establishes that, upon separation from public service or retirement, the employee will be paid for accumulated sick days up to a maximum of 90 days. The Report recommends that the mayor evaluate this violation of law and the possible application of sanctions to the officials in charge of the global payment transaction to the former mayor, the former officials, and the former employees.
On the other hand, the mayor appointed a director of Public Works without her having the work experience required to hold that position. Nonetheless, the Municipal Legislature confirmed her on February 25, 2021. In addition, the Municipality had not updated the regulations for the administration of confidential or career personnel as of June 30, 2022.
From an examined sample of the disbursement vouchers, it was evidenced that the Municipality of Santa Isabel does not maintain effective control of expenses or of the budget. For example, 52 vouchers for $1,338,656 were not signed by the pre-intervention employees, 51 vouchers for $1,413,902 were not signed by the finance director, and 44 vouchers for $1,329,412 were not signed by the mayor. A similar situation had already been published in audit reports OC-24-25 of 2023, and M-19-43 of 2019.
The audit notes that, on April 22, 2024, the Office of Government Ethics fined the former mayor $5,500 for not submitting additional information requested regarding his annual financial reports of 2016 and 2017.
As of June 30, 2022, the Municipality had six civil lawsuits for $1,799,228, pending resolution in the courts. The lawsuits filed were on grounds of political discrimination, collection of money, and damages.
The General Fund budget, for fiscal years 2017-18 to 2021-22, amounted to $10,125,158, $10,527,726, $10,661,367, $11,089,633, and $11,384,893, respectively.
The Municipality had its financial statements prepared, audited by certified public accountants, for fiscal years 2017-18 to 2019-20. These reflected accumulated deficits of $6,824,806, $5,138,810, and $4,550,499, respectively.
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 OCPR.
This second and final report of the Municipality of Santa Isabel covers the period from June 1, 2018, to June 30, 2022.
The Audit Report OC-25-04 can be obtained on our website: www.ocpr.gov.pr.
Some documents on this page are saved in PDF format.
To view these documents, you must have the following free program installed.
