Press Releases

The Office of the Comptroller of Puerto Rico (OCPR) reveals multiple control deficiencies in license tax collection and property accounting in Guánica

The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Guánica. A qualified opinion is issued when the noncompliances, individually or together, are significant but not pervasive.

The Report reveals that the Municipality of Guánica did not carry out effective collection efforts for the municipal license taxes nor did it correctly calculate the amounts paid and owed by the taxpayer. From the examination performed on 15 taxpayer files from 2020 to 2023, it was determined that $22,800 in license taxes, interest, and surcharges were left uncollected. 60% of the files did not have the required documentation, such as: the declaration of business volume, evidence of gross income, and operating expenses. In addition, in contravention of the 2016 Municipal Regulation, the Municipality did not have a License Tax Register.

The nine-finding audit notes that, as of December 31, 2022, the Municipality owed $914,860 to LUMA Energy and to the Department of Labor and Human Resources. This figure includes $192,531 in interest, penalties, and surcharges, due to delays in payments to the Department of Labor. A similar situation had been commented on in Audit Report M-21-44 of 2021. Currently, the Municipality has payment plans with the Departments of Treasury, Labor, and the Aqueduct and Sewer Authority. These debts predate Hurricane María, the earthquakes, and the pandemic.

The Report details multiple deficiencies in the custody, control, and accounting of municipal property. The property officer did not file a timely claim with the insurer for the theft of a 2004 Ford Explorer, for which the Municipality did not recover its value. This vehicle appeared burned in the Ponce area.

In addition, for the theft of 22 trimmers, three blowers, a saw, and 20 trimmer heads, the Municipality received $15,115 from the insurer. However, the Municipality did not conduct any administrative investigation into the theft of property nor did it inform the Office of the Comptroller, as the regulations provide.

The auditors also identified that in Guánica the physical inventories of property for 2020 to 2021 were not prepared, nor were property receipts issued to the custodians. In addition, upon the separation of 57 officials and employees from 2016 to 2022, the Human Resources office did not notify the property officer, in order to verify their possible property debts.

The Report shows that the Municipality did not maintain updated, complete, and reliable information on its financial situation. The auditors found reconciliations without the signature of the Finance director, the absence of reconciliation of the bank balance with the accounting records, and delays of up to three years in preparing the reconciliations of the Current and Payroll accounts. In addition, in Finance, disbursements were authorized without the supplier's invoice, without the certification of the officer who received the goods, and without the supplier's certification on the absence of interest of the employees in the profits of the acquired good.

As of January 26, 2023, the Municipality had not submitted 40 monthly payroll and positions reports to the Office of the Comptroller as provided by the current law and regulations. The Office of the Comptroller granted the Municipality the opportunity to file the monthly reports from July 2022 onward in order to bring them up to date; however, the Municipality did not comply with submitting the reports from July to December 2022.

The auditors found that the areas designated to protect and preserve public documents, the Pedro Juan Vargas Museum and the Ceferino Colón Elementary School, had walls with termites, without air conditioning or temperature control, without fire alarms or smoke detectors. During the inspection, boxes with moisture were observed, without any organization and with an absence of adequate protection. In addition, since February 2021, the document administrator had not performed the functions of the position, nor had she prepared the Document Retention Plan for 2020 to 2022.

The Municipality did not maintain adequate control of the repair and maintenance services for the vehicles, since it did not have a record of the history of each vehicle or heavy equipment. The Public Works director indicated that when he took office, no record was given to him.

The Guánica Report comments that the Department of Housing issued a monitoring report on the Community Development Block Grant – Disaster Recovery program on September 24, 2021. This Report revealed that the Municipality submitted the 2019 and 2020 financial statements with delays of up to 18 months. This type of situation exposes the Municipality to being sanctioned and puts at risk the $4,394,541 in federal funds received.

To address the fiscal crisis, the Municipality of Guánica implemented in 2017 an austerity plan that, among other things, reduced the workday to 20 hours per week for regular employees and to 30 hours per week for trust employees, and decreased expenses on contracts and equipment acquisition.

As of December 31, 2022, the Municipality had not recovered the $285,957 indicated in the findings of the Office of the Comptroller's audit reports M-21-44 of 2021 and M-22-22 of 2022.

The budget of Guánica was $7,871,358; $6,409,272; $5,140,699; and $7,269,119, from 2020 to 2023, respectively. The Municipality had its financial statements prepared, which reflected deficits of $6,479,453 in 2019 and $5,970,420 in 2020.

The audit recommends to the director of the Office of Management and Budget that he ensure that the Municipality of Guánica complies with the Corrective Action Plan of the Office of the Comptroller of Puerto Rico. This first report of Guánica covers the period from September 1, 2019, to December 31, 2022.

The Audit Report OC-25-08 can be obtained on our website: www.ocpr.gov.pr.