Press Releases

Office of the Comptroller reveals overpriced construction work and deficiencies in service contracting in Ciales

The Office of the Comptroller of Puerto Rico (OCPR) issued a qualified opinion of the fiscal operations of the Municipality of Ciales. 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 construction work of a gazebo at the Toribio Rivera school was overpriced by $13,889. An engineering assistant of the Municipality had warned the former mayor, by letter, that the quote for the kiosk and the gazebo were above the standard market cost. A civil engineering expert and professional appraiser of the OCPR specified that the cost of the gazebo was $9,986 and not $23,875.

The audit of seven findings notes that, from 2019 to 2022, the Municipality of Ciales contracted five companies to carry out refrigeration and electrical services in five projects at a total cost of $569,189. In this regard, the Municipality had no certainty of the capacity of the personnel who rendered the services since contractor A was not a refrigeration technician, contractor B did not have a refrigeration technician license, contractor C was not a refrigeration technician, contractor D had an electrician license expired since 2010, and contractor E was not registered as a refrigeration technician with the Board of Refrigeration Technicians.

This situation was referred to the presidents of the Examining Board and of the College of Electrician Experts; and to the presidents of the Examining Board and of the College of Refrigeration and Air Conditioning Technicians, so that they take the pertinent measures.

Contractors A, B and C subcontracted personnel to perform air conditioning installation work without notifying the Municipality, in contravention of the Municipal Code of 2020. In addition, the Finance director did not require the contractors to provide the certification of work performed required by the Act of the Examining Board of Refrigeration and Air Conditioning Technicians. These situations prevented verifying in all their details the correctness and propriety of the disbursements.

The Municipality did not request permits for the construction of works at three schools, a school court and the sidewalks of road 615 of the Pozas ward. This constitutes 28% of the sample evaluated. In addition, the municipal secretary did not require the payment bond from four contractors, nor the evidence of public liability policy for a public roads paving project from another contractor. The payment bond is the bond posted to guarantee payment for labor, equipment and materials.

The officials of Ciales did not provide the cost estimates for the improvements to the library and Jaime Coira school, nor for the construction of the Toribio Rivera school. They also did not submit the inspection reports. These situations prevent maintaining permanent and reliable records of the Municipality's authorizations and agreements with the contractor.

The Municipality bypassed the requirement to hold a public bid for the construction and improvements of the former Jaime Coira school. Instead, the then mayor split the work into contracts ranging from $68,400 to $199,617 through requests for quotes with two contractors for a total cost of $776,061. This situation prevented free competition, and encourages favoritism, collusion and fraud.

Although the school is in good condition, it is not in use. In addition, the school building is property of the Department of Transportation and Public Works, for which the Municipality cannot include it in its capital assets.

The process of receiving and awarding quotes was not carried out in accordance with the law and the regulations. Of the 26 quotes evaluated for the construction of three projects from 2019 to 2022, 19 quotes did not identify who reviewed them, 13 did not identify by name, title and signature the employee who received them, and three quotes were awarded by an unauthorized official. In fact, as of December 31, 2022, the Municipality did not have a centralized purchasing unit. A similar situation had been commented on in Audit Report M-21-10.

The Internal Audit Office had not conducted audits as of March 11, 2022 on the internal controls, the municipal operations of public funds, and the collections, among other interventions based on a risk plan. In addition, the acting internal auditor did not prepare the audit plans for fiscal years 2020 and 2021. One of the internal auditors indicated that he could not comply for health reasons, and the other indicated that he was for eight months without an office, without a printer, without personnel, or a secretary to help him with the work. ¬

The Audit and Comptroller Affairs Commission of the Legislature also did not adequately exercise its oversight function since it did not evaluate the audited financial statements, nor two federal monitoring reports: the Housing Opportunities for Persons with AIDS program and the Section Eight Management Assessment Program. The Commission did meet on three occasions to follow up on the Corrective Action Plan of Report M-21-10 of the Comptroller.

The audit reports that in the municipal garage and in the Conservation and Ornamentation department, annual physical inventories of materials were not conducted, perpetual inventories of parts and equipment were not maintained, nor complete files of the motor vehicles, among others. As of December 31, 2021, the Municipality had 90 units of vehicles, heavy equipment and motorcycles.

In addition, the property custodians did not conduct annual physical inventories for 2020 or 2021, and the finance director had not carried out the procedures to dispose of 27 unserviceable motor vehicles.

The Report comments that the Municipality of Ciales has not recovered $65,002 corresponding to the findings of audit reports of 2010, 2016 and 2017. In addition, as of December 31, 2022, three lawsuits for $371,812 were pending resolution in the courts.

The budget of Ciales was $7,578,178, $6,818,395 and $7,922,974 for fiscal years 2020 to 2022 respectively. The financial statements reflected accumulated deficits of $3,187,446, $4,741,11629 and $4,839,153 from 2019 to 2021 respectively.

The audit recommends that the director of the Office of Management and Budget ensure that the Municipality complies with the Corrective Action Plan of the OCPR.

This report of the Municipality of Ciales covers the period from July 1, 2019 to December 31, 2022

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The Audit Report OC-25-28 can be obtained on our website: www.ocpr.gov.pr.