Comptroller reveals vehicle purchases without bidding and other control deficiencies in Yauco
The Office of the Comptroller of Puerto Rico (OCPR) issued a qualified opinion on the fiscal operations of the Municipality of Yauco. A qualified opinion is issued when the noncompliances, individually or together, are significant but not pervasive.
The report reveals that the Municipality of Yauco did not conduct a public bid in 2021 to purchase six motor vehicles and 853 cisterns, for which it disbursed $785 thousand. In addition, between 2021 and 2022, the Municipality acquired a tractor, purchased trimmers and construction materials, and paid for a student trip to Peru, among others, for $203 thousand, without obtaining quotes from at least three representative suppliers in the market. These situations are attributed to the mayor and the Finance director not protecting the interests of the Municipality by failing to carry out the free-competition processes required by law.
The auditors detected multiple deficiencies in the operations related to purchases and disbursements as a result of the COVID-19 emergencies and the earthquakes in Yauco. For example, the Municipality paid $9 thousand in excess in the purchase of spotlights, computers, and maintenance equipment, without justifying the award to bidders whose offers were more expensive. In addition, disbursement vouchers without the signature of the requesting official were identified, vouchers without invoices signed by the supplier, and vouchers whose requisitions identified the make and model of the seven vehicles. These actions foster favoritism, limit competition, render internal control inoperative, and prevent any irregularity, should it be committed, from being detected in time.
The 10-finding audit notes that an authorized official purchased three plane tickets for $2,246 for an official trip, a transaction he thought he had canceled. The tickets were purchased again and, upon receiving the account statement, they noticed the error and claimed the amount from the bank, but the effort was unsuccessful. In addition, the director of the Office of the First Lady ordered the purchase of a vacation package for $61,285 for a student trip to Peru, without verifying the academic performance or the proof of residence of the 24 students. The OCPR auditors could not examine the correctness of the expense, since the files did not keep evidence of the trip (boarding pass).
In violation of the current laws and regulation, the Municipality paid more than $16 thousand for the excess vacation leave of nine municipal employees. In addition, the computations to determine the payment to three officials were incorrect since they used a formula contrary to Circular Letter 1300-28-07 of the Department of the Treasury.
On the other hand, the report states that the Municipality disbursed more than $80 thousand even though the invoices did not have all the required information. Two invoices submitted for security consulting and medical services during the pandemic did not contain a detailed breakdown of the work performed, but rather a generic description of the tasks. Two other invoices for services to evaluate the homes affected by the earthquakes did not contain the detail of the homes evaluated.
In addition, the examination of the donation of 20 cisterns to store water and 10 electric generators revealed that the Municipality did not keep in the files information with the data of the benefited citizen or the need for the donation with the certification of income. In addition, the Municipal Legislature did not require three nonprofit entities that received four donations for $70 thousand to provide evidence of the certificate of incorporation, the certificate of having no debts with the government, and the certificate of compliance with the submission of the annual reports to the Department of State.
The mayor of the Municipality of Yauco kept seven officials in six trust positions not included in the Classification and Compensation Plan for the Trust Service of May 15, 1998. These officials were paid $209 thousand from 2020 to 2022. In addition, more than $19 thousand was disbursed in salary differentials for positions whose additional tasks were already included in the descriptions of the positions they held. This situation does not allow sound personnel administration on the basis of the merit system.
The Municipality did not have a public documents administrator from 2021 to 2024. The previous documents administrator had not prepared the inventory, nor the Document Retention Plan for the years 2019 and 2020. During a visit, on February 14, 2023, the auditors observed water leaks, humidity, and no air conditioner or equipment to control the temperature in the public documents archive. These deficiencies have the effect that the documents can be lost, deteriorated, or destroyed. Similar situations had been commented on in Audit Report M-21-18 of 2020.
As of April 14, 2023, the Municipality had not registered or remitted to the OCPR copies of three deeds of sale of real property valued at $1.2 million granted in 2022. In addition, as of January 23, 2023, it had also not prepared or sent the annual certifications for 2020 and 2021, in compliance with the Act on the Status of Privatizations of 2003.
The report evidences that the person in charge of property had not prepared the annual physical inventory of 2020, nor finished that of 2022. The person in charge of property had also not notified the Finance director of the incidence of four thefts of 36 units of property for more than $10 thousand.
The Department of Public Works did not keep the files of the maintenance work on the vehicles and heavy equipment at the private workshop since Yauco does not have a municipal garage. This situation does not allow the Municipality to know the total costs incurred and fosters the commission of errors or the improper use of the vehicles.
The General Fund budget was $12.8 million, $13.6 million, $14.3 million, and $14 million from 2020 to 2023, respectively. The financial statements reflected accumulated deficits of $10.8 million, $7.9 million, and $4 million from 2020 to 2022, respectively.
The Report recommends that the director of the Office of Management and Budget ensure that the Municipality complies with the Corrective Action Plan established by the OCPR.
This first report on the Municipality of Yauco with 20 recommendations covers the period from January 1, 2020, to December 31, 2022.
Audit Report OC-25-58 is available on our website: www.ocpr.gov.pr.
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