May 29, 2013 Pohnpei, FSM -The Office of the National Public Auditor (ONPA) has released an audit of congressionally funded projects appropriated during fiscal year 2010 and 2011. It disclosed weaknesses in the implementation of the projects from the Project Control Documents (PCDs) through to reporting.
It said that auditors found evidence of significant issues:
Auditors found that 113 out of the 191 PCDs they selected for review were not in compliance with the FSM's Financial Management Regulations (FMR). 28 were not approved or signed by the allottee as required. 51 did not designate an inspection official. Many of the project inspections were performed by the allottee in violation of the FMR which requires independence.
The audit said that 31 of the PCDs lacked sufficient detailed descriptions to determine the relationship of costs or consistency with the appropriation. As an example they pointed to on PCR for a secondary farm road improvement project which included a description on the PCD that said "also to purchase a set of computer for administrative work." Auditors said that they could find no logical connection to farm road improvement.
Seven of the PCDs the auditors reviewed were not approved by the SBOC Director or budget officer.
Five were not signed by the allottees certifying that they had read, understood, and would abide by the regulations and applicable laws. Five of the projects drew funds but no PCD was ever filed.
Neither the DF&A nor the allottees reported to Congress the $149,033 that had been over spent on 47 projects as the law requires. 41 projects in Chuuk totaling $561,128 were overspent to the tune of $123,411. Five totaling $116,000 were overspent in Pohnpei for a total of $21,349. One project that was supposed to have cost $15,000 was overspent in Kosrae by $4,273.
Auditors said that assets were being misused or lost during implementation of several of the projects. They specifically mentioned the fact that 12 vehicles purchased in Chuuk and funded by Congress appropriations were missing. A later investigation located 9 of them. They were being misused for personal purposes.
They also discovered that assets purchased by public projects funds were not labeled as required by law.
147 of 668 check vouchers reviewed were lacking approval by the project inspection official as required. 77 of 668 check vouchers reviewed were lacking approved accounts payable vouchers for disbursements to ensure completion, and 13 of 668 check vouchers reviewed were lacking Allottee's certifications or approval for disbursements to ensure completion as required.
By law, Senators are prohibited from being involved in the implementation of projects for which they appropriate money. ONPA made its recommendations for management action to the Director of SBOC and to the Secretary of the Department of Finance and Administration, (DF&A) neither of whom were in those positions during the period time the audit covered.
The auditors recommended to the Director of SBOC that she should review the key internal control proecdures in accepting and reviewing PCDs. They said that the Director should ensure awareness and compliance with the existing guidelines, requirements, laws and regulations for preparing the Project Control Document. They said that the office should properly execute the key controls to ensure complete and accurate PCDs and to reject incomplete PCDs. They should ensure and independent Project Inspection Official is required in a PCD whenever an inspection of project progress and completion is applicable to the project or program before a payment is made. Lastly they recommended that the office should consider collaborating with DF&A to implement a strong annual education and certification program for eligible allottees, as identified by DF&A's list of eligible allottees.
Auditors had the following recommendations for the Department of DF&A:
The copy of the Director of SBOCs response to the audit was poorly reproduced and impossible to read. What we could decipher from the response is that the office of SBOC agrees with the one finding that applied to its office on better control of PCDs. It also said that SBOC has requested funding through President Mori's office to conduct a joint training with DF&A on the matter of PCDs.
The Department of Finance and Administration's response generally agreed with the audits finding and supplied some further information. It said that DF&A representatives had met with Chuuk State Senators to work out a potential resolution to the problem of the $123,410.97 the allottees of its public projects had overspent. They have worked out a few possible scenarios that will take care of that problem.
On the $306,521 worth of expenditures that could not be located, DF&A definitively agreed. They said that the former field office manager in Chuuk State deliberately did not file the check vouchers as required. It said that in the latter part of Fiscal Year 2010 they uncovered fraud. DF&A asked the field office staff to resign and terminated the employment of the manager. The current employees are properly filing check vouchers.
On the issue of disbursements without certification of $478,900 DF&A said that they agree with the finding with the qualification that some of the expenditures in Kosrae may not have required certification. They said that they are awaiting the opinion of the FSM Attorney General on those particular expenditures.