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Audit Finds Commonwealth of Northern Mariana Islands Misused Federal Funds

A recent audit conducted by Castro & Company, LLC has uncovered serious discrepancies in the use of federal funds allocated to the Commonwealth of Northern Mariana Islands (CNMI) under the CARES Act.

Non-Compliance with CARES Act and Treasury’s Guidance

According to the audit report, CNMI’s contracts worth more than $50,000 did not comply with the CARES Act and Treasury’s Guidance. This resulted in unsupported questioned costs amounting to $11,093,139.95.

Lack of Documentation

The audit found that CNMI management was unable to demonstrate which federal grant funding was used to pay for expenses incurred and reported. Additionally, the supporting documentation, including the general ledger, did not include a specific CRF or FEMA funding code or account number to indicate whether CRF or FEMA grant funds were used for these expenditures.

Exceptions in Aggregate Payments to Individuals

The audit also identified exceptions in two of the five Aggregate Payments to Individuals expenditure transactions tested, resulting in unsupported questioned costs amounting to $7,717.00.

Non-Compliance with Aggregate Reporting Less than $50,000

Furthermore, CNMI’s Aggregate Reporting less than $50,000 did not comply with the CARES Act and Treasury’s Guidance, resulting in unsupported questioned costs amounting to $45,956.40.

Total Questioned Costs

The audit concludes that the expenditures related to Contracts greater than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals did not comply with the CARES Act and Treasury’s Guidance, resulting in total questioned costs of $11,146,813.35.

Recommendations

“We are extremely concerned about the high risk of unallowable use of funds identified in this audit,” said Wayne Ference, Partner at Castro & Company, LLC. “We recommend that Treasury OIG request missing documentation from CNMI management and follow up on necessary reporting corrections.”

Full Report Available

The full scope of the audit’s findings and recommendations can be found in the report issued by Castro & Company, LLC.

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