Two FSM National Government audit reports released this month found significant problems with the management of the Ta Outer Island Airport Project and national government's travel program.The FSM National Government Travel Internal Controls audit found that travel vouchers were issued without proper documentation or were issued to those with outstanding advances. The audit report also cited the offices inability to prove that all vouchers were issued for official government business. In addition, the auditors found that the office had failed to properly monitor outstanding or overdrawn travel advances of more than $600,000 to ensure payments were arranged.
According to the report, travelers must have an approved travel authorization processed through the Department of Finance & Administration prior to the commencement of official travel. Travel funds disbursed for authorized travel advances are considered advances due from travelers until travel vouchers are filed with the required supporting documents.The report found that government funds were issued to travelers with outstanding travel advances or who had not filed travel vouchers on previous travel advances. In addition, past travel advances are not constantly monitored and reviewed prior to the issuance of current travel advances and not all travelers are compelled to file all outstanding travel vouchers consistently.
Travel claim vouchers were either not filed or those filed did not contain complete and accurate supporting documents. The Secretary of the Department of Finance & Administration or his designee cannot definitively determine that all travel was undertaken to conduct official Government business, according to the FSM Public Auditor.Outstanding and/or overdrawn travel advances for $616,045 was not properly monitored to ensure that repayment arrangements were negotiated or settled with the Secretary of the Department of Finance & Administration, as required under the FSM Financial Management Regulations.
The audit concluded that the office had not complied with the FMR in the management of government travel funds. Along with future compliance with those regulations, the audit recommended a uniform system be put in place to systematically monitor and notify travelers with overdrawn travel claims, or those who have not filed travel vouchers, and compel them to settle all funds owed to the government in a timely manner.
The Ta Outer Island Airport audit found a waiver was improperly approved for the airport project, allowing the project manager to approve contract bids in excess of the approved amount. The contracts were also not presented as 'open bids' because of the emergency waiver. On March 17, 1999, a waiver for $200,000 was approved by the former FSM President for the "renovation and paving of Ta Airport Runway". The waiver exempted all requirements under the Public Contract Act and the Financial Management Regulations. The total funds appropriated by the FSM Congress for the Ta Airport Project, as of July 31, 2004, were $982,000. The airport runway was cleared in 1991 by the Civic Action Team with the assistance of the local residents of Ta Municipality.
The nature of an emergency and the danger to the public health, safety, or convenience caused by the delay, to the extent necessary, to meet the emergency without open bidding was not provided and documented to justify the issuance of the waiver, according to the report. The waiver was not effective due to inadequate planning and the management of the waiver. Contracts were executed totaling $334,989, which was $134,989 in excess of the original authorized amount of $200,000 in the waiver. In addition, there was lack of high-level oversight of the management of the waiver.
Also, the project managers did not submit the required semi-annual reports to the Congress and the Secretary of the Department of Finance & Administration and there was an overall lack of adequate review and monitoring of contracts terms and conditions as well as payments to contractors, according to the auditors.There was a lack of segregation of duties between the role of Project Manager and that of Project Inspection Official. Effectively, there was a lack of adequate management, oversight, and independent assessment of the status of the project.
The report recommended the waiver should be withdrawn and all future contracts be subjected to competitive bidding as set out in the Financial Management Regulations. Future waiver requests should be thoroughly documented to justify their approval with sound situational analysis and recommendations. Project status reports should be submitted to the Congress and the Secretary of the Department of Finance & Administration to enhance overall high-level oversight and accountability.
All contracts should be adequately monitored and managed to ensure that they comply with all contracts' terms and conditions. The duties of a Project Manager and that of a Project Inspection Official should be adequately segregated to ensure that there is adequate accountability and no apparent conflict-of-interest.All public audit reports, news, and other information can be viewed at the office's website at www.fsmpublicauditor.fm.