Translated by: Amanda Coe
According to Superior Federal Auditor (ASF), the public funds allocated to the states and Mexico City and to municipalities were so poorly administrated in 2014 that, at least 77.4 billion pesos [US$4.2 billion at current exchange rate] were found to have some kind of irregularity or merited further investigation.
According to the most recent “2014 General Report of the Public Account,” prepared by the auditing agency, these funds represent 74% of federal expenditure on education and health and 93.6% of the expenditures of the National Public Security System (SNSP).
The document adds that the reasons for further observation of the ways in which the funds were spent are “numerous" and recurrent”. In 2014 these included, for example, spending up to 9.3 billion pesos [US$507 million] without "supporting documentation"; 4.6 billion [US$249 million] in "inappropriate spending or payments in excess"; 8.4 billion [US$457 million] for purposes different from the “specific objectives of each fund or program”; and 28.5 billion pesos [US$1.6 billion] that were “not placed in interest-bearing accounts, used or refunded to the Federal Treasury.”
The report, submitted by the ASF to the Chamber of Deputies last week, indicated:
Veracruz in the Lead
The report also includes a segment called “sum of actions affecting the economy” that each state has made, and Veracruz is listed first, with 14 billion pesos [US$763 million] yet to be reconciled for 2014 and a total of 35.4 billion [US$1.9 billion] since 2011. Next is Michoacán, with 8.9 billion pesos [US$441 million] under observation in 2014, and 28.5 billion [US$1.6 billion]since 2011; Jalisco, with 6.8 billion [US$369 million] and 21.9 billion [US$1.2 billion] respectively; and the State of Mexico, with anomalous costs of 2.5 billion [US$135 million] and 17.4 billion [US$948 million].
The problem the ASF calls “opacity of fund management” means that state and municipal governments often transfer funds they receive from the federal government [for a specific program or service] to other bank accounts that end up financing other activities.
They report:
According to Superior Federal Auditor (ASF), the public funds allocated to the states and Mexico City and to municipalities were so poorly administrated in 2014 that, at least 77.4 billion pesos [US$4.2 billion at current exchange rate] were found to have some kind of irregularity or merited further investigation.
According to the most recent “2014 General Report of the Public Account,” prepared by the auditing agency, these funds represent 74% of federal expenditure on education and health and 93.6% of the expenditures of the National Public Security System (SNSP).
The document adds that the reasons for further observation of the ways in which the funds were spent are “numerous" and recurrent”. In 2014 these included, for example, spending up to 9.3 billion pesos [US$507 million] without "supporting documentation"; 4.6 billion [US$249 million] in "inappropriate spending or payments in excess"; 8.4 billion [US$457 million] for purposes different from the “specific objectives of each fund or program”; and 28.5 billion pesos [US$1.6 billion] that were “not placed in interest-bearing accounts, used or refunded to the Federal Treasury.”
The report, submitted by the ASF to the Chamber of Deputies last week, indicated:
"[Reasons for further] observations in audits of federal expenditures are numerous and recurrent. This situation demonstrates the structural problems that have become rooted in local government and internalized in their management. For this reason, their eradication will be complex,”It added:
“In the 2014 Public Account, the ASF placed under observation a total of 77.4 billion pesos [US$4.2 billion], which comprised 13.2% of the audited sample. This follows the trend of previous audits of Public Accounts: in 2013, it was 14.6%, and in 2012, 12.7%. These figures reflect a structural weakness in the management of federal expenditures.”In its review, the ASF found “high levels of [need for] observations” in programs like the Fund to Raise the Quality of Higher Education, the Support to Strengthen Quality Health Services in the “health component” of the Prospera [assistance to the poor] program, the Full-Time Schools Program, and Popular Health Insurance [for those not covered through employers], among others.
Veracruz in the Lead
The report also includes a segment called “sum of actions affecting the economy” that each state has made, and Veracruz is listed first, with 14 billion pesos [US$763 million] yet to be reconciled for 2014 and a total of 35.4 billion [US$1.9 billion] since 2011. Next is Michoacán, with 8.9 billion pesos [US$441 million] under observation in 2014, and 28.5 billion [US$1.6 billion]since 2011; Jalisco, with 6.8 billion [US$369 million] and 21.9 billion [US$1.2 billion] respectively; and the State of Mexico, with anomalous costs of 2.5 billion [US$135 million] and 17.4 billion [US$948 million].
The problem the ASF calls “opacity of fund management” means that state and municipal governments often transfer funds they receive from the federal government [for a specific program or service] to other bank accounts that end up financing other activities.
They report:
"Similarly, various states irregularly use a single account for management of federal funds transferred from different funds and programs, without the elements necessary to ensure transparency in their management, which favours disarray and diversion for other purposes, generating high level of irregularities. These practices annul all controls and violate established regulatory provisions that promote transparency and efficiency in the management of transferred federal funds.”The lack of transparency in the distribution of funds was another problem detected:
“Discretion is present on an unjustified and recurrent basis. States and municipalities were not required to describe their projects for proper prior consideration and evaluation of fund allocation.”Also, on the subject of the more than 8 billion pesos [US$457 million] used for purposes different from those established, it stated,
“the lack or order and financial discipline in states and municipalities causes inappropriate diversions of federal funds. Given the difficulties of local governments in meeting their needs that are not financed by these funds and programs, they resort to irregular use of transferred federal funds.”In 2014, federal expenditure amounted to 1 trillion 865.6 billion pesos [US$102 billion]. The 77.4 billion [US$4.2 billion] with irregularities are, according to the Federal Expenditure Budget of that year, more than all projected expenditures of the Secretary of National Defense [Army] (65.2 billion. [US$3.6 billion]) for the year, or nearly the same as the Secretariat of Govenment Relations, which includes the Federal Police (75 billion pesos [US$4.1 billion]). Spanish Original