Report reveals deficiencies with the goods purchasing and disbursement processes to address the COVID-19 pandemic at ASEM
The Office of the Comptroller of Puerto Rico (OCPR) issued a qualified opinion of the fiscal operations related to the purchases, accounts payable, and disbursements of the Medical Services Administration of Puerto Rico (ASEM), according to the most recent audit report. A qualified opinion is issued when the instances of noncompliance, individually or in the aggregate, are significant but not pervasive.
The report reveals that 92% of the purchase orders to acquire cleaning and disinfection materials, medical equipment, and COVID-19 detection tests, among others, did not include the clause on penalties in case of late deliveries. 27% of the purchase orders also did not include the delivery date.
ASEM issued 411 purchase orders from March 12, 2020 to March 30, 2023, for $10.7 million in state and federal funds to address the COVID-19 pandemic.
The one-finding audit also notes that the Accounts Payable supervisor did not perform the monthly reconciliations with the subsidiary. As of December 31, 2023, ASEM had $1,055 million in current debts and long-term debts. This situation prevents adequate control of accounts payable and leaves room for the commission of errors or irregularities.
The Report comments that ASEM has a payment balance of $448 million on a line of credit it took from the Government Development Bank in 2010 for $284 million. The OCPR's auditors identified that, for fiscal years 2013 to 2024, no budgetary allocations were made for the payment of the line of credit.
Not recording the payment of the principal and interest in the budget causes the economic situation of ASEM to accumulate and worsen. In addition, it could lose ownership of the 149 acres of land of the Medical Center of Puerto Rico, which serves as collateral for the line of credit.
As of June 30, 2023, the accumulated deficit of ASEM amounted to $708 million. A similar situation had been commented in Audit Report DA-15-26 of 2015. The recently published Audit Report OC-25-06 also commented on the lack of controls over the collections and billing process of the contracted company, as well as the absence of internal regulations in this regard. These situations affect the insufficiency of funds to cover operating expenses.
As of December 31, 2023, ASEM had received $957.6 million in its own revenues, allocated funds, and other income. For that period, it spent $881.2 million for a net surplus of $76.4 million. The financial statements, for fiscal years 2020 to 2023, reflected accumulated deficits
of $765 million; $742 million; $755 million; and $708 million, respectively.
The report recommends that the Governor, the presidents of the Senate and the House of Representatives, and the executive director of the Office of Management and Budget, take the pertinent measures with respect to the $448 million balance pending payment of the line of credit granted in 2010.
This second and final report on ASEM covers the period from July 1, 2019 to December 31, 2023
Audit Report OC-25-44 can be obtained on our website: www.ocpr.gov.pr.
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