P.R. Laws tit. 21, § 4360
The Commissioner, in coordination with the municipalities, shall be responsible for serving as advisor to the municipalities and watching over the fiscal organization, the uniform accounting system, and the payment, income, and property procedures of all the municipalities, pursuant to generally accepted accounting principles. As part of said procedures, he/she shall design and review all the fiscal reports used by the municipalities, as well as integrate the standards applicable to accounting systems contained within the Recommendations for Promoting Sound Public Administration and Countering Corruption submitted by the Office of the Comptroller of Puerto Rico.
(a) The system and the accounting and property procedures shall be designed in such a way that they will allow the municipality to carry out its functions while serving as a basis to maintain uniform and coordinated municipal accounting, provide a complete picture of the results of the financial operations of the municipality, and also supply the needed financial information that the municipality must provide to assist the Legislative Assembly, the Governor, and the Secretary of the Treasury and the Commissioner in the performance of their respective responsibilities.
(b) Municipal accounting shall be performed by funds, and shall be based on generally accepted accounting principles and the requirements established by the Governmental Accounting Standard Board (GASB). The statements of the National Committee on Governmental Accounting (NCGA) and the book entitled Governmental Accounting, Auditing and Financial Reporting, commonly known as the “Blue Book”, shall also be used as the basis to design the accounting system and the fiscal procedures of the municipalities.
(c) Every municipality shall be bound to use the uniform accounting system that complies with the account schematics, financial report requirements, and internal control standards established by the Commissioner, or with the uniform system and public policy on governmental control and accounting established by §§ 283–283p of Title 3, better known as the “Puerto Rico Government Accounting Act”. The Commissioner shall also see to the municipal accounting systems’ compliance with the abovementioned requirements, which shall also:
(1) Provide complete information on the result of municipal operations;
(2) provide adequate and necessary financial information for an efficient municipal administration;
(3) have an effective control and accounting of all funds, properties and assets belonging to the municipality, and
(4) produce reliable reports and financial statements that can serve as a basis for the preparation and justification of the municipalities’ budget needs.
(d) The procedures to incur and defray expenses, to receive and deposit public municipal funds, and to control and account for public municipal property, shall have adequate and sufficient controls to prevent and impede irregularities from being committed. However, if irregularities are committed, these procedures shall enable these to be discovered and accountability to be established, and the clarity and purity of fiscal procedures shall also be ensured.
(e) The mayor and all other municipal officials shall use the uniform parameters provided by the Commissioner for the design of the fiscal organization of their respective municipalities, of the accounting system, and the payments, income, and property procedures. Nevertheless, the Commissioner shall offer the municipality any advice and assistance that he/she deems pertinent for the installation of said system and procedures.
(f) The municipalities may design, their own computerized accounting system and fiscal procedures, insofar as they meet the standards and guidelines established by the Commissioner of Municipal Affairs or by the uniform system and public policy on governmental control and accounting established by §§ 283–283p of Title 3, better known as the “Puerto Rico Government, Accounting Act”, and shall not require final approval for implementation.
(g) The Commissioner shall audit the fiscal organizations and the accounting system and property procedures of each municipality from time to time, to ascertain if they are being followed and if they meet their objectives fully. In order to prevent the accounting system and the accounting and property procedures from departing from the policies or regulations established by the Commissioner of Municipal Affairs or from the uniform system and the public policy on governmental control and accounting established by §§ 283–283p of Title 3, and from losing their effectiveness, the Commissioner shall review them according to the changing needs of government and the modern standards that govern these matters.
(h) The Commissioner may advise any municipality on how to modify its own system, its accounting and property procedures, and its fiscal organizations when they depart from the required standards. The modifications shall be performed as per the directions and norms established by the Commissioner.
(i) Each municipality shall be responsible for the implementation of a uniform accounting system that complies with the requirements established by the Commissioner of Municipal Affairs. The Commissioner shall ensure that the accounting system complies with the basic and uniform requirements established by him/her for accounting and to originate the required reports. If the accounting system is found not to be in compliance with any of these requirements, the Commissioner shall advise the municipality on how to correct it.
(j) It shall be the responsibility of the municipalities to have account balances at hand, as well as the bank statements and accounts payable and receivable, as a requirement, at the time of entering the information into the uniform accounting system. When this is not the case, or it is not possible, the municipality shall notify the Commissioner, who shall conduct an evaluation together with an Advisory Council created for the purposes of this subsection and subsection (k).
(k) The Commissioner is hereby empowered to create an Advisory Council that shall be integrated by five (5) members. Four (4) of these members shall be designated by the Commissioner in consensus with the mayor, and shall be persons in good standing of proven repute and knowledgeable in accounting and computerized information systems. The fifth member of the Advisory Council shall be the mayor of the municipality concerned, except in cases in which the mayor designates his/her financial director. The Commissioner shall be responsible for the remuneration of the members of the Advisory Council who are not government employees and for all the related costs incurred by said members in the performance of their duties.
Taking into consideration the specific situation of the municipality concerned, and after receiving the evaluation and recommendations of the Advisory Council, the Commissioner may:
(1) Authorize the purging of incorrect information entered into the system, including its total elimination.
(2) Fix the balances of the latest single audit of the municipality, as starting point.
(3) Identify a date on which there is reliable information as of which the system shall be started.
(4) Authorize any municipality that is unable to balance its accounting history, because of the lack of the documents needed to do so, or for any other reason that makes it impossible to comply with the statutory mandate, to perform a cash register cutoff and make any necessary adjustments in their accounts provided that the following circumstances concur:
(A) The municipality submits to the Commissioner a detailed evaluation of how deviation from the accounting procedures occurred along with a proposal with assurances such as internal and administrative controls to guarantee that such irregularity shall not occur again. The Commissioner shall submit the proposal to the Council.
(B) The Council shall study the municipal proposal, request whatever supplementary information it deems pertinent, and shall prepare, together with the municipality, an action plan stating the adjustments to be made, how the accounting transactions affected by the adjustments will be dealt with, and who shall be personally responsible at the municipal level for the execution of the plan; this plan shall also provide the manner in which the Council shall provide follow-up, and the evaluation methods, before making its recommendation to the Commissioner.
(C) Whenever the Council deems it convenient in these and any other cases, it may request the advice of the Accounting Board, created by § 771 et seq. of Title 20.
None of these measures shall release the municipalities from their responsibility of making all possible efforts to correct their accounting practices and maintain the documentation of their operations in such a way that audits may be performed in non-automated periods.
History —Aug. 30, 1991, No. 81, § 8.010; Apr. 13, 1995, No. 36, § 31; July 20, 1996, No. 73, § 1; Jan. 13, 2000, No. 28, § 1; Nov. 22, 2009, No. 152, § 1.