This report presents the results of our audit of cash receipts and disbursements of the 1999 Liberation Day Committee (LDC) for the period April 1 to October 31, 1999. Our audit objectives were to determine whether: (1) LDC followed sound operating and accounting procedures in conducting its activities, and (2) LDC properly used and accounted for its funds and resources.

Our audit showed that LDC conducted its activities without following sound operating and accounting procedures, and was unable to account for all of its funds. More specifically, we found that LDC: (1) had incomplete accounting records; (2) could not account for raffle tickets valued at $18,950; (3) did not issue official cash receipts to document cash collections of $56,277 and in-kind contributions valued at about $4,400; (4) used cash collections instead of checks to pay for expenses of $6,400; (5) disposed of and transferred property, valued at about $28,000, to other agencies without having adequate documentation; (6) spent about $10,300 on unsupported expenditures and about $8,985 on questionable expenditures, and (7) purchased goods and services of about $105,000 without following competitive procurement procedures. We also noted that LDC conducted fund-raising activities and practices which the Office of the Attorney General (AGO) considered questionable.

Accordingly, we recommended that the Saipan Mayor's Office (SMO):

1. Develop and implement written policies and procedures to guide future LDC appointees. At a minimum, the policies and procedures should address record keeping, maintenance of cash receipts and disbursement records, competitive procurement, adequate documentation and justification of expenditures, establishment of control procedures, and accountability.
2. Immediately address concerns previously raised by the AGO. The AGO had recommended on June 17, 1999 that the SMO seek to enact legislation addressing: (a) LDC's authority to conduct fund-raising activities, (b) LDC's need to comply with CNMI laws and regulations such as procurement and ethics rules, and (c) LDC's need to maintain good records and account for funds received and used. Such legislation should clarify whether LDC needs to comply with applicable CNMI regulations or adopt regulations more suited to its unique and short-term operation.

In his letter response dated May 10, 2001, the Mayor of Saipan concurred with Recommendation 1. In addressing Recommendation 2, the Mayor of Saipan provided OPA documents showing that on April 19, 1999 and again on January 13, 2000, he sought clarification from the AGO regarding the validity of a local ordinance granting the SMO authority over the Liberation Day activities. He also provided OPA with documents showing that the AGO authorized LDC to operate as a non-profit, tax-exempt corporation, licensed to engage in fund-raising activities. He further stated that the agenda of LDC's board of directors included the promulgation of rules and procedures for procurement and finance, as well as guidelines for appointing a chairperson.

Based on the response we received from the SMO, we consider Recommendations 1 resolved, and Recommendation 2 closed. The additional information or actions required to close Recommendation 1 is presented in the report.

View/download copy of full report