Comptroller: PREPA paid $2.46 million in advertising without a written contract (CP-09-21)

On March 10, 2009, the Office of the Comptroller published Audit Report CP-09-21 on the Puerto Rico Electric Power Authority (Unit 3075). Period audited: January 1, 2005 to June 30, 2007. The exam covers payments for advertising services rendered without formalizing a written contract and the absence of detailed information on the invoices. Adverse opinion: the PREPA operations covered by the report were not conducted in accordance with applicable law and regulations. The finding is classified as principal.

From December 23, 2005 to August 10, 2007 PREPA paid $2,461,584 for advertising — 345 of 346 invoices (99.7%). Those services and payments were required and authorized by executive directors, the Deputy Executive Director, the Press Office Administrator and the Finance Director without a contract between the parties. That prevented compliance with Law No. 237 (prior written formalization of professional services) and registration/remittal to the Comptroller. The Comptroller’s Office recommends recovery efforts for the $2,461,584.

In the same financial frame, PREPA generated operating revenues of $10,664,629,000 and incurred expenses of $10,713,728,000 (loss $49,099,000). Similar situations had been noted in CP-05-31 and CP-08-18; failing to address audit recommendations without just cause may violate the Government Ethics Act (Circular Letter 86-4).

The draft finding was submitted for management comments in late 2008; the Executive Director replied on January 30, 2009. Recommendations to Justice, the Board of Directors and the Executive Director: formalize written contracts before starting professional and consulting services. Audit finding ≠ formal charge or conviction in this note. Improper disbursement ≠ criminal theft. This note tracks the PDF. Topic politics. Official primary: OpenDoc CP-09-21. Cousin: none.

Source: Oficina del Contralor de Puerto Rico. https://iapconsulta.ocpr.gov.pr/OpenDoc.aspx?id=b4cf6336-8b4c-4eb1-9626-72ac8fcf4a95&nombre=CP-09-21