Press Releases

Comptroller reveals administrative and fiscal deficiencies in the Land Authority of Puerto Rico, payments of $297,177 without a contract and ordered to recover $410,677 from nonprofit entities

San Juan, Puerto Rico, (May 8, 2026) – The Comptroller of Puerto Rico, Attorney and CPA Carmen A. Vega Fournier, announced today the publication of the Audit Report OC-26-27, corresponding to the Land Authority of Puerto Rico, in which multiple legal non-compliances, internal control weaknesses and significant deficiencies in the administration of the Municipal Improvements Fund and other related operations were identified. The audited period covered from July 1, 2015 to March 31, 2023.

The audit issued an adverse opinion, which means that the tests performed and the evidence gathered reflect that the operations examined were not carried out in accordance with applicable law and regulations.

“Sound public administration requires firm controls, absolute transparency and unrestricted respect for the use of public funds. When those principles fail, citizen confidence and the Government's ability to serve with justice and efficiency are affected,” stated Comptroller Vega Fournier.

The Report contains two main findings related to the audit objectives, an additional finding on other matters detected and a special comment regarding the lack of personnel to address the responsibilities delegated to the Authority.

One of the most significant observations corresponds to $297,177 paid contrary to the contractual provisions. The audit examined contracts awarded to nonprofit entities and determined that the Authority made disbursements without valid contracts, including payments made before the formal execution of the contract and after its term had expired.

Likewise, for eight contracts for $375,820, the Authority belatedly required —or did not require— reports on the use of the funds or the return of surpluses, which caused $262,732 not to be available to address works and services for the benefit of citizens.

The audit also revealed that in seven contracts for $385,000 the works, the permanent improvements, the services to be rendered, nor the beneficiaries of the assigned funds were not clearly specified, a situation that increases the risk of misuse of public resources and hinders oversight.

In addition, in a specific case, it was determined that funds of $30,000 were used from a resolution different from the one established contractually, in violation of the agreed terms.

Regarding the second finding, the Comptroller reported that the then director of Finance, Accounting and Budget performed incompatible functions among themselves, such as pre-auditing disbursement vouchers, issuing and signing checks, and recording payments, which represents a clear lack of segregation of duties and raises the risk of errors or irregularities not detected in a timely manner.

Likewise, it was found that the Authority lacked adequate regulations for essential accounting and finance processes, including the preparation and recording of disbursement vouchers, bank reconciliations and the issuance of checks. It was also determined that the 2024 Improvements Fund Regulation had not been filed before the Department of State, despite containing requirements applicable to third parties.

Another important finding relates to contracts not registered or remitted to the Office of the Comptroller, as required by law. Six contracts for $113,500 formalized with a nonprofit entity were identified that were not registered or remitted, despite the fact that payments related to said agreements were made.

It was also determined that the Authority failed to comply with the submission of annual certifications required by law for fiscal years 2015-16 through 2021-22 and remitted ten monthly payroll and position reports with delays of between 3 and 30 days.

In its official comments, the management indicated that many of the deficiencies noted had been addressed through new regulations and internal controls, including verification processes from the legislative request to the final approval of allocations. It also expressed that the non-compliance related to unfiled contracts and annual certifications was remedied to avoid recurrence. However, the Office of the Comptroller maintained the findings after evaluating the responses received.

As a special comment, the audit highlighted that the Authority does not have sufficient administrative structure to fulfill the functions of the Rural Infrastructure and Permanent Improvements Program (PIR), responsible for handling hundreds of legislative requests and nearly a thousand contracts annually. According to the report, this insufficiency forced the contracting of external services and contributed to operational delays.

Among the recommendations issued, the Comptroller ordered to recover $410,677 from nonprofit entities, strengthen the oversight of funds, assign sufficient personnel to the PIR, ensure the legal review of contracts, implement electronic citizen transparency systems, register contracts in a timely manner, correct regulatory deficiencies and train financial personnel in the use of the accounting system.

“Our constitutional duty requires us to promote corrections, prevent recurrences and protect every public resource that belongs to the people of Puerto Rico. We urge the Authority to implement urgently all the recommendations issued, which we will evaluate in six months.,” concluded Vega Fournier.