Press Releases

Comptroller of Puerto Rico reveals significant findings in an audit of the Municipality of Las Piedras and issues recommendations to strengthen fiscal and administrative management

San Juan, Puerto Rico — The Comptroller of Puerto Rico, Attorney Carmen A. Vega Fournier, CPA, announced the results of the Audit Report OC-26-14 corresponding to the Municipality of Las Piedras, which covers the period from February 1, 2019 to December 31, 2022. The report identifies multiple deficiencies in the processes of purchasing, contracting, works administration, fiscal control and municipal governance, which gave rise to a qualified opinion.

The Comptroller expressed that, “although the Municipality's operations were carried out in accordance with the law in general terms, the findings identified evidence significant deviations that require immediate attention to guarantee the efficient, transparent and legal use of public resources. She further noted that oversight not only seeks to identify breaches, but to promote structural improvements in municipal public administration.”

Vega Fournier detailed that among the main findings, “it was identified that the Municipality acquired six vehicles for $255,404 through a quotation process directed at dealers of a single brand, which restricted free competition and limited the possibility of obtaining better alternatives in the market. The audit determined that specifications favoring a particular brand were included, contrary to the applicable state and federal regulations. Municipal management indicated that this decision responded to fleet uniformity and previous experience with said suppliers, as well as the emergency conditions during the COVID-19 pandemic. Nevertheless, the Office of the Comptroller concluded that the finding prevails, as said circumstances do not justify the limitation of open competition.”

“Likewise, according to the report, the auditors determined that the Municipality formalized contracts for $640,033 for construction projects without having previously obtained the permits required by the Permit Management Office. Although the works were completed and accepted, the permits were obtained after the works had begun, which prevented timely regulatory supervision and exposed the Municipality to possible sanctions. The municipal administration alleged that it used the design and construction method, delegating the responsibility to the contractor; however, the Comptroller reiterated that ultimate responsibility rests with the Municipality as owner of the projects, so the finding prevails.”

In the area of governance, the audit revealed significant delays in the submission of the appointments of the members of the Bidding Board for their confirmation by the Municipal Legislature. In some cases, these appointments were submitted up to 969 days after the start of the new four-year term, despite the fact that the Board continued making decisions during that period. Municipal management maintained that the members could continue in their functions in accordance with the Municipal Code; nevertheless, the Comptroller determined that the breach in the confirmation process could call into question the validity of the decisions made.

In the fiscal sphere, it was identified that budgetary credits were not encumbered at the time contracts for $640,033 were granted, with delays of up to 473 days recorded in the registration of said obligations. This situation weakens budgetary control and can foster overdrafts and legal risks. Management attributed this situation to the operational conditions during the pandemic, but the audit determined that several contracts were granted before said emergency, so the finding prevails.

In addition, it was noted that the Municipality made a payment of $21,980 for electrical repair services without formalizing a written contract, limiting itself to a purchase order. This practice left the Municipality without adequate legal guarantees and hindered the verification of the correctness of the disbursement. Although the administration argued that the purchase order was sufficient in the context of an emergency, the Comptroller emphasized that said mechanism does not replace the legal obligation to formalize contracts.

Similarly, it was determined that the Municipality granted contracts and amendments for more than $8.5 million for the administration of the Diagnostic and Treatment Center without submitting them to the Municipal Legislature for its evaluation and approval, limiting the oversight function of said body. Management maintained that these were professional services; however, the Office of the Comptroller concluded that the nature of the contract required legislative approval, so the finding prevails.

The report also includes other findings related to the lack of written contracts in the sale or rental of plots in the municipal cemetery, the failure to locate equipment and delays in administrative investigations, as well as a special comment on a civil lawsuit pending resolution.

The Comptroller indicated that, although the municipal administration presented arguments and corrective measures in several of the findings, in all cases it was determined that the noted deficiencies persist or were not duly remedied with sufficient evidence.

As a result of these findings, the Office of the Comptroller issued recommendations addressed to the mayor, to the municipal administration, to the Municipal Legislature and to other relevant entities. These include strengthening the purchasing processes to guarantee free competition, ensuring compliance with permit requirements before beginning construction projects, complying with the confirmation processes of the Bidding Board, establishing effective controls in the encumbrance of funds, properly formalizing all contracts, submitting to the Legislature those contracts that so require, and reinforcing the internal control mechanisms in all operational areas.

The Comptroller reiterated that sound public administration requires fiscal discipline, strict compliance with the law and effective supervision at all levels of government. She added that each of the findings represents an opportunity to correct deficiencies, strengthen municipal governance and guarantee that public resources are used for the benefit of the people of Puerto Rico.

The full report is available on the official website of the Office of the Comptroller of Puerto Rico www.ocpr.gov.pr.

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