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Comptroller finds Irregularities with Science Trust, Cofina Funds

By on May 2, 2016

SAN JUAN – The Comptroller’s Office reported Monday irregularities in the disbursement of public funds by the Puerto Rico Science, Technology and Research Trust.

The agency also said that after 11 years since the Trust’s creation, the Office of Management and Budget (OMB) had not audited or studied its performance, contrary to Act 214 of 2004.

The audit, which covers the period from Jan. 1, 2010, to Oct. 31, 2015, found that as of March 26, 2015, the Trust had not approved an accounting manual to govern its operations. It also had not updated two accounting procedures to adjust to administrative, technological and organizational changes.

“This encourages irregularities and, due to a lack of uniformity, could have adverse consequences for the Trust,” the comptroller said.

Among the findings were shortcomings with disbursement records, deficiencies with contract records, incomplete records of bank reconciliations and a breach of provisions in the law regarding the establishment of a general audit division.

comptroller's office logoThe Comptroller’s Office also said it found that audited financial statements for fiscal years 2012 to 2014 show that the Sales Tax Financing Corp. (Cofina by its Spanish acronym) received $4.11 billion but disbursed $4.7 billion.

The report includes information on Cofina bond issuances and the annual debt service it has paid up to June 30, 2015.

The audit, which covers the period from July 1, 2009, to Dec. 31, 2015, includes the public corporation’s estimated debt service from 2016 to 2058.

Since its inception, Cofina has carried out 15 bond issuances, for $16.32 billion with $40.54 billion in interest for a total debt service of $56.86 billion. As of June 30, 2015, Cofina had paid $3.74 billion.

In addition, according to the audited statement of 2014, Cofina had an estimated debt service of $51.47 billion through 2058.

From July 2012 to September 2015, three credit-rating agencies downgraded bonds issued by Cofina from Aa3 (senior bonds) and A3 (subordinate bonds) to a CC12 rating, or highly vulnerable.

The rating agencies said the downgrades reflect, among other factors, Puerto Rico’s economic situation, its population decline and the possibility of a decrease in sales-and-use tax revenue.

Inter News Service

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