EXECUTIVE SUMMARY

TR-05-02: Audit Recommendations Tracking Report As of December 31, 2005 (Issued 6/29/06)

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is one in which the client has taken sufficient action to meet the intent of the recommendation or we have withdrawn it.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 in 2005 totaled 84. Of the 84 audit recommendations, 5 were closed and 79 remained either open or resolved. Of the 79 open or resolved recommendations, 46 were considered delinquent.

The table below presents the status of OPA’s audit recommendations for the year 2005.

OPA’s follow-up on outstanding audit recommendations and the response letters received from various government agencies resulted in the closure of audit recommendations and encouraged agency action on delinquent recommendations. OPA closed 5 of the 84 recommendations it tracked in the year 2005. The number of delinquent recommendations, however, increased by 53% as of December31, 2005.

An analysis of the five closed recommendations showed that two were closed because the agencies implemented OPA’s recommendations, one was closed because the agency implemented the decision of an arbitration panel, one was closed because the agency adopted a policy as recommended by OPA, and one was closed due to alternative actions taken that was sufficient enough for the closure of the recommendation.

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 103 recommendations in 8 recent audit reports issued by private CPA firms under contract by OPA.

As of December 31, 2005, recommendations in 13 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 $2,735,557 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. Initial actions by agencies as of December 31, 2005 resulted in the partial recovery of $942,382. A balance recoverable was also redirected to the AGO [AR-99-02] thus leaving a balance recoverable of $3,719,606 which hinge on agencies’ actions.

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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