January 13, 2014

By Bill Jaynes
The Kaselehlie Press

January 7, 2014 Pohnpei, FSM-As the result of a phone call from a concerned citizen of Madolenihmw and following interviews with municipal government officials, Pohnpei's Office of the Public Auditor conducted a review on the administration and accountability of public funds in Madolenihmw. The review was limited in scope and covered only the $105,000 that was allocated for community projects funds during fiscal years 2010 through 2012. That amount was approximately 10 percent of total municipal government budget during fiscal years under review.

As a result of the review, Pohnpei's OPA released a three page management report to communicate their findings and conclusion to management and appropriate government officials. The letter was copied to Governor John Ehsa, Speaker Peter Lohn, Meninkeder Lapalap, and the members of Menintiensapw.

The letter says that the $105,000 was divided equally among the seven major sections in the municipality. The Councilmen representing each section (lopidi) were the designated allottees of the project funds. Check disbursements, accounting and reporting were the responsibility of the executive branch.

The Management Letter listed three principal findings of the review.

Under the first finding, "Lack of Project Plan", the management letter said that there were no project plans for most of the community projects that would justify the expenditures made to implement them. It said that most of the community projects and programs were selected and implemented at the discretion of the Councilmen.

The second finding said the projects suffered from "weak project administration, monitoring and reporting". It said that funds were appropriated in one lump sum. Councilmen for each section selected projects or programs at their own discretion. "In most cases, funded projects were not properly documented, justified and monitored, making it difficult to track progress," on the projects. "Project reports were not prepared to ensure compliance with State laws.

The third and final finding was that there was non-compliance with the Pohnpei Financial Management Regulations. "Disbursements of project and program funds were often processed based on requests made directly by the councilmen without proper justification."

Because of the mismanagement of the community projects, the Madolenihmw Municipal Government (MMG) cannot answer the basic expressed questions of its citizens such as:

The auditors concluded that the MMG's practice related to public funds for community programs and projects "undermined the basic principles of government standard operations, in particular the separation of powers (amongst) the three branches of government."

They said that the lack of clear policy guidelines should be of concern to the government leadership and the people. "Unclear policy and compliance guidelines increase the risk for fraud, waste, abuse and mismanagement of public resources."

The management letter made four recommendations to strengthen and improve transparency and accountability of its community project and program funds, specifically:

1. Lawmakers should not be involved in the administration of the community project and program funds.

2. MMG should establish suitable and clear policy guidelines governing project funds, and guidelines should include a requirement for the preparation and submission of project implementation and project progress report prior to disbursement of funds.

3. Management should ensure that project funds are spent strictly for the purposes intended and in compliance with applicable laws.

4. MMG should consider and adopt its project and program development plan to guide management in its administration of public project funds.

The Management Letter was signed by Ihlen K. Joseph, the State Public Auditor.