Comptroller: adverse opinion on GDB financing controls (CP-14-03)

On September 15, 2013, the Office of the Comptroller published Audit Report CP-14-03 on the Government Development Bank for Puerto Rico (Unit 3085). Audit period January 1, 2007 through December 31, 2011. The exam covers internal controls of the Financing Area and financings granted to public and private entities. Adverse opinion: the GDB fiscal operations under review were not conducted in accordance with applicable law and regulation (findings 1 through 7).

Finding 1: Financing Manual procedures not updated and absence of procedures for the General Obligations Division of the Public Financing Department, for preparing and processing financing contracts, and of the Comptrollership Manual on Accounting and Budget. Other findings document deficiencies in granting financing, in disbursements to private entities and municipalities, and conflicting roles of the Private Financing Director and Public Financing analysts.

In a municipal-disbursement exam, the Comptroller evaluated 42 disbursements totaling $16,975,425; in another cut it documented 22 disbursements totaling $10,864,905 to three municipalities, with observations on pre-intervention and timing before disbursement. The GDB operates as fiscal agent under Act No. 17 of 1948, with Public, Municipal and Private Financing departments, plus subsidiaries and affiliates that use Bank resources.

For fiscal years 2006-07 through 2010-11 the GDB generated operating revenues of $2,324,505,424 and expenses of $1,924,375,406, with a surplus of $400,130,018 as of June 30, 2011, fed by investments and interest on loans. Management and the Board answered draft findings in 2013. Audit finding ≠ formal accusation or conviction in this note. Loan disbursement ≠ theft. Topic politics. Official primary PDF: OpenDoc CP-14-03. Cousin: none.

Source: Oficina del Contralor de Puerto Rico. https://iapconsulta.ocpr.gov.pr/OpenDoc.aspx?id=411dff28-a638-4b36-9470-861811e8b4f2&nombre=CP-14-03