The Office of the Comptroller (SAI Puerto Rico) was created by the Law no. 9 of July 25, 1952. The post of Comptroller was created by the Constitution of Puerto Rico (Sec 22, Art III), as part of Legislative Branch. The Head of the SAI is appointed by the Parliament (approved by the Legislature). The period of appointment is 10 years with no age limit.
The procedure for terminating the appointment is by impeachment. This procedure is stated in the Constitution of the Commonwealth of Puerto Rico, which created the position or post of Comptroller of Puerto Rico. The House of Representatives initiate the procedure by vote of 2/3rd of their members. The Senate calls for a session to discuss the allegations for impeachment. The causes for impeachment are: bribery, felony and misdemeanor resulting from acts of corruption or depraved manners. These causes are specifically stated in the Constitution of Puerto Rico.
According to the Constitution of Puerto Rico, the qualifications prescribed for appointment for the head of the SAI are following:
The various conditions of service of the Head of the SAI to secure independence of the SAI are:
Regarding the relationship of the SAI with other branches of the government, in general, the relationship is limited to audit matters. Although the SAI has a close relationship with the Justice Department during the process of filing criminal charges in the cases concerning corruption, fraud and misuse of public resources. The SAI also participates during the trial, as expert witness or as advisor to the prosecutors. With the Office of Governmental Ethics, which is part of the Executive Branch, the SAI has a cooperation agreement. During the audit procedure, the SAI looks for the application and fulfillment of the Ethics Law by the governmental personnel. The SAI informs to the Office of Governmental Ethics, any apparent violation of this law for their review and final determination. The SAI collaborates with them during their investigation in the process of finding more evidence, documental or testimonial.
The SAI has financial independence. The SAI submits its budget to the Governor, for his knowledge and to be included in the General Budget. Each year, the Comptroller attends the Legislature to inform the result of the previous year operations and to explain the budget for the next year. The budget can not be altered or reduced to less of the previous year amount.
As regards the mechanism to secure accountability of the SAI, each year, the Comptroller attends the Legislature to inform the result of the operations. Comptroller makes a detailed report on the use of the resources, the objectives and the achievements. Annually, the SAI issues a Comprehensive Annual Financial Report. In this report, the SAI also makes public information of the results of the operations and other statistical information of the goals and objectives and achievements made during the year. This report is made by certified public accountants contracted by the SAI.
The SAI's jurisdiction extends to following:
The only limitation imposed on the SAI's jurisdiction is that in case of private entities, the SAI can only examine the public funds they administered or used. In case, the SAI wants to examine the bank accounts of any private entity or person, the SAI has to demonstrate the relation to public funds and to inform the person or the entity the intention of examining the account. Otherwise, the SAI has to obtain a court order to examine those private records with out the knowledge of the owner.
The SAI is entitled to audit the use of public funds and property anywhere they are, public or private entities.
The Constitution of Puerto Rico states that the SAI has the power and the authority to request by contempt any document, testimony or any other matter needed to complete an investigation. The Law no. 9 of July 25, 1952, the law that created the Office of Comptroller, also establishes this power.
It has the powers to seek testimonials of the persons concerned (appearances and answers) of the persons concerned or those who are deemed to have been involved in the matter subject to audit and inspection. The Supreme Court of Puerto Rico has established that the SAI is entitled to audit the use of public funds and property anywhere they are, public or private entities.
The SAI has powers of instructing government investigating agencies to perform activities considered necessary. The SAI does this through recommendations when the audit reveals situations that those agencies have the obligation to investigate and resolve. For example, the SAI makes recommendations to the Treasury Department when the SAI determines in audits possible violations to the laws and regulations related to taxes and other government charges.
The SAI can not decide on claims of interested persons in connection with official actions, duties and behaviour of persons subject to audit and inspection. The person interest has to make to a claim in the entity that error or illegal action was committed, and in other related, like the Office of Governmental Ethics, Department of Justice and the office of the Ombudsman, to mention some.
The SAI has the authority to dispense with, in whole or part, the audit of Federal, Provincial and local Governments accounts and other related matters. The SAI makes its own work plans and establish the entities to be audited by year. The SAI also determines the objective or area to be audited in each entity according to the materiality and risk, the complaints received, the news and the result of the planning of the audit.
The SAI does not have powers to take punitive action and/or impose surcharges. The SAI has powers to access the computer systems of the auditees and to download and use electronic data either in site of off site. Further it can also review the development of computer systems of the auditees and suggest/enforce any controls. The SAI does not have any role in the appointment of other external auditors engaged by the auditees for meeting statutory requirements. Further if such external auditors are engaged, the SAI does not have powers to supervise and regulate their work.
The SAI prescribes Compliance & EDP Audits in its scope of Audit. The Constitution of Puerto Rico (section 22, Article III) states that the Comptroller has the duty to oversee all revenues, accounts and disbursements of the Commonwealth of Puerto Rico and to ascertain that all operations involving public funds and public property are performed according to applicable laws and regulations. The SAI conducts post audit.
Audit methodology/procedures followed is as under
The SAI does not discharge judicial functions. Regarding the procedures in following up and enforcement of audit findings, in 1988, the SAI created the Corrective Action Plan (CAP) as a follow-up mechanism, to ensure compliance with the recommendations made by the SAI in its audit reports. This mechanism has been endorsed by the Governor of Puerto Rico. In 1988 and in 1998 the then Governor issued executive orders requiring the chief executive of the audited unit to implement corrective actions in compliance with the Comptroller's recommendations. In 1998, the SAI enforced a new regulation for the CAP. Accordingly, beginning with fiscal 1998-99, all government entities have 90 days to submit the CAP. The 90 days allowed begin on the first day of the month following the publication of the audit report. Complementary report must be submitted each 90 days until the recommendation is considered implemented.
The SAI is not required to follow any specific standards, practices and guidelines in conducting audit and reporting; it issues its own regulations and procedures to conduct the audit work. The SAI can consult and/or collaborate with other countries/SAIs and international organisations on matters relating to audit. The SAI, according to Law no. 9 mentioned before, has the authority to contract experts, in any field, to advice and give support during an investigation or audit procedure.
The SAI can report on acts that infringe upon State economic interests like mass embezzlement of state assets, serious losses and wastes. The Constitution of Puerto Rico gave to the SAI wide powers concerning the overseeing of all the operations involving public funds and public property. This power has been confirmed by Supreme Court in various cases.
The SAI requires that any fraud or embezzlement be reported mandatory by the auditees. The Law no. 96 of June 24, 1964, as amended, requires that every public entity or governmental entity have to inform to the SAI any irregularity, loss or misuse of public funds or property. The SAI has implemented a system to collect and store data received from the governmental entities. During the audit process, the SAI reviews the compliance with this law and the corrective actions taken in order to avoid subsequent similar events.
The SAI's reporting procedure is the following:
The SAI has a role on the disposal or the action taken on the audit findings. The CAP, as mentioned before, has the responsibility of evaluation of the corrective action taken and determining if it is sufficient to consider the recommendation as complimented. The SAI does not present an interim report before rendering an annual report on the examination of the closing of accounts of the Federal, Provincial and local governments. The SAI does not issue annual reports of the closing of accounts of the different agencies. The SAI issues audit reports for a determined period of time usually 2 to 4 years. The office sends a draft of audit report before final report is issued.
The SAI shares the final report with the public after the Governor, the presidents of both chambers of the Legislature, the chief executive of the audited entity and other concerned executives have received it. The delay to share with the public is less than a labor day. The role of the SAI traditionally has not been of an advisory to the rest of the government. There is no statue of law or regulation that obligates the agencies to consult or look for the advisory of the Comptroller in developing different projects or transactions. Nevertheless, in the past three years, the SAI has developed this role as part of SAI's mission and vision. Beyond other things, in SAI's mission, the SAI intents to promote the effective and efficient use of government resources for the benefit of the people. In SAI's vision, SAI expects to serve the country as a true agent of change, integrating the efforts of the public and private sectors, in order to promote the honest use or the resources entrusted to the government by the people.
The SAI is constituted as an audit office with monocratic status i.e. with an Auditor General or equivalent as its head. The SAI is empowered to engage external auditors/ agencies/ consultants as required.
In 2006 SAI Puerto Rico obtained the ISO 9001-2001 certification in the audit function. The SAI can expend resources budgeted independently; in accordance to Law no. 9, the SAI has complete independence in the administration of its resources. The budget is part of the General Budget but can not be adjusted or reduced. The SAI has full independence in forming its workplan.
The SAI has its own Human Resources Regulation. The SAI has its own Classification and Salary Plan, and its own recruiting procedures. The SAI is subject to an independent audit. The SAI contracts annually a certified public accountant to make an audit of the financial operations. Initially, the SAI develops a quality control review of the audit process. The SAI submits a report on its activities to the Legislative annually, in the opportunity to explain the budget for the next fiscal year.