November 30, 2020

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Comptroller’s report reveals lack of internal controls in Ponce operations


The audit of five findings indicates that $ 308,569 was paid for excess vacation without having documented the need for service for the payment of the excess from 2015 to 2016

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San Juan – The Office of the Comptroller of Puerto Rico issued on Tuesday, a qualified opinion of the fiscal operations of the Municipality of Ponce.

The Report reveals that from 2015 to 2018 the Municipality of Ponce and the Municipal Legislature had a total of 69 positions approved in the trust service, 19 in excess of the limit established in the Law. The maximum number of positions of trust for municipalities with more of 50,000 inhabitants is 30; which can be expanded by ordinance to 50 depending on the functional complexity or size of the municipality.

The audit of five findings indicates that $ 308,569 was paid for excess vacation without having documented the need for service for the excess payment from 2015 to 2016. The Law 81-1991 of Autonomous Municipalities empowers the mayors to authorize the payment of the excess of 60 days of vacation leave via exception. However, the Director of Human Resources certified that there is no evidence of need in the files.

The Municipality of Ponce paid $ 53,131 in air maintenance services for the Fair Complex, which corresponded to pay to the managing entity of the Complex, according to the contract formalized in 2013 between the Corporación de Empresas del Municipio Autónomo de Ponce (Municipal Corporation) and the managing entity.

In fact, the Report comments that the managing entity hired by the Municipal Corporation to manage the Fair Complex, generated revenues of $ 2,180,469 from 2013 to 2016, of which the Corporation has not received economic benefits. The first contract with the managing entity established that the Municipal Corporation would receive as payment of rent, 25 percent of the net profit of the entity. The second contract of July 2013, valid for 10 years, determined that the Corporation would receive 37.5 percent of the gross income generated in excess of 1.8 million dollars, as payment of rent.

In addition, the construction of the Fair Complex was carried out with a federal loan from the Community Development Block Grant (CDBG) for $ 17,600,000. The loan contract had established that the Municipality agreed to comply with the repayment guarantees, originating, among others, from the income generated from the use or rental of the property built with CDBG funds.

This possible deficiency was referred to the Inspector General of the United States Department of Housing and Urban Development (HUD) on August 20, 2019 for evaluation and corresponding action.

On the other hand, the Comptroller’s auditors identified that the two property managers who ceased their functions in 2014 and 2017, did not carry out an inventory of personal property, nor did the Finance directors request it. Similar situations had been commented on in Audit Report M-13-07 of 2012. As of August 2, 2017, the Municipality had an inventory of 72,219 personal property units valued at $ 70,503,805.

A service agreement formalized with the Puerto Rico Public School Improvement Office in 2014, for $ 242,135, was not submitted for approval by the Municipal Legislature, a situation that prevented the Legislature from evaluating the need and reasonableness of the agreement. .

The audit comments that the Municipality has 50 civil cases pending resolution in the Courts for $ 9,711,347 as of December 31, 2018.

The Report recommends that the Office of Management and Budget ensure that the Municipality complies with the Corrective Action Plan established by the Comptroller of Puerto Rico.

This second and last Ponce Report covers the period from July 1, 2014 to December 30, 2017, and is available at www.ocpr.gov.pr.



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