EXECUTIVE SUMMARY

TR-05-01: Audit Recommendations Tracking Report As of June 30, 2005 (Issued 12/02/05)

Summary

The Office of the Public Auditor (OPA) maintains an audit recommendations tracking system to monitor implementation and resolution of audit recommendations. On a semi-annual basis, OPA issues its Report on CNMI Agencies’ Implementation of Audit Recommendations (Audit Recommendations Tracking Report) which presents the audited agencies’ compliance with OPA’s recommendations.

Open and resolved audit recommendations are included in OPA’s tracking system report. In addition, we have also included recommendations which were closed during the past six months. An open recommendation is one where no action or plan of action has been made, or no time frame for the plan of action has been provided by the client (department or agency). A resolved recommendation is one in which OPA is satisfied that the client cannot take immediate action, but has established a reasonable plan and time frame for action. A closed recommendation is one in which the client has taken sufficient action to meet the intent of the recommendation or we have withdrawn it. Also, we have considered open or resolved recommendations as delinquent if the recommendation has been outstanding for at least 180 days and we have not been informed by the concerned agency or department of any action being taken to close the recommendations.

Audit recommendations tracked for the first six months of 2005 totaled 70. Of the 70 audit recommendations, 1 was closed and 69 remained either open or resolved. Of the 69 open or resolved recommendations, 24 were considered delinquent.

The table below presents the status of OPA’s audit recommendations for the first six months of 2005.

OPA’s follow-up on outstanding audit recommendations and the response letters received from various government agencies resulted in the closure of one audit recommendation and encouraged agency action on delinquent recommendations. OPA closed 1 of the 70 recommendations it tracked in the first six months of 2005. The number of delinquent recommendations decreased by 20% as of June 30, 2005.

A review of the one recommendation closed during the first six months of 2005 showed that the closure was a result of the agency implementing the decision of an arbitration panel that upon judicial review, was upheld by the Superior Court.

Recommendations issued by private CPA firms are also included in OPA’s audit recommendations tracking report. OPA is not responsible for tracking the implementation of these recommendations, however, they are included in the audit tracking report for information purposes. Based on th e classification followed by private CPA firms, a recommendation is described as either resolved or unresolved. OPA has included in the tracking report a total of 88 recommendations in 8 recent audit reports issued by private CPA firms under contract by OPA.

As of June 30, 2005, recommendations in 11 audit reports were referred to the Attorney General’s Office for legal action to recover monies improperly expended. According to OPA’s audit reports, approximately $2,678,712 is potentially recoverable. In addition to this, potential recovery of another $3.7 million also hinges on agencies’ actions.

Recommendations in 9 audit reports identified potential recoveries due to unpaid rentals of land leases, uncollected labor processing fees, overpayments in professional services contracts and retirement benefits, and improper expenditure of public funds. In OPA’s Audit of Controls Over the Nonresident Worker Application Process issued on June 6, 2005 [AR-05-02], OPA identified potential recovery of $512,410 in uncollected labor processing fees. OPA recommended that the Department of Labor recover these uncollected fees from Company A and Company B. Therefore, the balance recoverable which hinge on agencies’ actions as of June 30, 2005 is now $3,728,319.

In accordance with statutory restrictions in the Auditing and Ethics Acts, the names of individuals and entities in the audits are not disclosed in this report.

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