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Comptroller of Puerto Rico reveals significant deficiencies in the Municipality of Las Marías following a compliance audit

San Juan, Puerto Rico — The Comptroller of Puerto Rico, Attorney Carmen A. Vega Fournier, CPA, announced the results of the Audit Report OC-26-15 corresponding to the Municipality of Las Marías, which covers the period from March 1, 2020 to June 30, 2025, and in which relevant deficiencies are identified in internal controls, the management of municipal property and financial administration.

The Comptroller expressed that “the State's oversight function requires not only technical compliance, but a solid administrative culture that guarantees the protection of public resources,” and noted that the report evidences critical areas that must be addressed urgently to strengthen accountability.

Vega Fournier explained that “the audit issued a qualified opinion, which means that, although the Municipality's operations were carried out in accordance with applicable law and regulation in general terms, significant deviations were identified in three main areas that affect the administrative and financial integrity of the municipal government.”

Regarding the management of municipal property, the report reveals substantial deficiencies in internal controls. Among these, it was identified that annual physical inventories were not carried out during several fiscal years, in breach of the regulatory provisions. In addition, several units of acquired property were not located, including electronic equipment and tools, property-in-use receipts were not issued to custodial employees and multiple assets were not properly identified or tagged. Likewise, deficiencies were detected in the registration of assets in the SIMA system, including unregistered units, incomplete data and discrepancies in the information, which significantly weakens the Municipality's ability to safeguard its assets and fosters risks of loss, misuse and lack of transparency.

Similarly, it was determined that the Municipality did not notify the Office of the Comptroller of 39 accidents involving municipal vehicles, nor did it conduct administrative investigations into those incidents. This omission limits the ability to establish responsibilities and negatively affects the internal control culture and public trust in government management.

In the area of real property, the audit identified that not all properties were registered in the official system and that the files lacked essential documentation, such as Property Registry certifications, title studies and tax validations. These deficiencies affect the reliability of the financial statements and informed administrative decision-making.

Regarding the reliability of the information, the report concludes that the Fixed Assets module of the SIMA system does not contain reliable data, due to the existence of thousands of incomplete fields, duplicate records, the inclusion of assets that do not qualify as municipal property and discrepancies in the registration sequences. These deficiencies compromise the integrity of the financial information and limit the Municipality's ability to adequately manage its resources.

In the financial area, the audit revealed significant deficiencies in bank reconciliations, including delays of up to 52 months in their preparation, differences between bank balances and accounting records, checks not canceled for long periods and transactions recorded incorrectly between accounts. These situations affect the reliability of the financial information and limit the Municipality's ability to make responsible and timely fiscal decisions.

The Municipality of Las Marías indicated, through its official comments, that it has initiated corrective actions, including conducting physical inventories within a term of
90 days, the identification and registration of properties, the issuance of property-in-use receipts, the implementation of monthly reports on losses, the registration of assets in the SIMA system and the start of processes to complete real property files. It also reported that some bank accounts have been reconciled and that it is in the process of canceling pending checks and correcting accounting records.

Nevertheless, the Office of the Comptroller determined that the findings prevail, as sufficient evidence was not presented to support the full correction of the noted deficiencies and inconsistencies persist in the records, as well as breaches of the required administrative controls.

The report attributes these deficiencies primarily to the lack of supervision on the part of the directors of Finance and Budget, to non-compliance with established procedures, to deficiencies in internal communication regarding the acquisition and transfer of assets, and to the absence of effective administrative controls.

As a result of the findings, the Office of the Comptroller issued multiple recommendations addressed to the mayor, to municipal management and its Office of Management and Budget. “Among the recommendations are conducting annual physical inventories, the location or investigation of assets not found, the issuance of property-in-use receipts, the strengthening of asset registration in the SIMA system, the timely notification of losses or irregularities, the conducting of administrative investigations, the monthly preparation of bank reconciliations, the correction of accounting discrepancies, the cancellation of pending checks, the reimbursement of funds used incorrectly and the maintenance of complete real property files.”

The Comptroller reiterated that transparency, fiscal discipline and administrative integrity are fundamental pillars of public service, and that each finding represents an opportunity for improvement, but also a non-delegable responsibility of the officials in charge of administering public funds. She added that this report establishes a clear roadmap to strengthen municipal governance and guarantee the responsible, efficient and ethical use of resources for the benefit of the people of Puerto Rico.

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

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