The Office of the Public Auditor (OPA) contracted with Deloitte, an independent auditing firm, to conduct the CNMI-Wide Single Audit for the fiscal year ended September 30, 2007. The audit was conducted in accordance with auditing standards generally accepted in the United States and with applicable provisions of Government Auditing Standards issued by the Comptroller General of the United States. This summary presents OPA’s review of Deloitte’s Report on the Audit of Financial Statements in Accordance with OMB Circular A-133. As such, no opinion on the related data is expressed nor inferred by OPA.

Cumulative Unreserved Fund Deficit reaches $218.2 Million in FY 2007

The CNMI General Fund cumulative unreserved fund deficit increased to $218.2M in FY07 from $188.1M in FY06, an increase of $30.1M. This is an 84% increase since FY03. The deficit is in large part the result of under funding of employer retirement contributions and related penalties. Suspension of government obligations occurred for parts of FY06 and all of FY07. The cumulative amount due to the pension (and other employee benefit) trust fund grew to $175.1M as of the end of FY07.

Revenue collections dropped by 17%

Actual General Fund revenue collections totaled $159.9M, a decrease of $32.8M from the prior year. The General Fund receives the bulk of its revenue in taxes (income, business gross, excise), charges for sales and services, and licenses and fees. Declines in revenue is related to the drop in tourist arrivals to the islands, significantly reduced garment manufacturing activity, and the general downturn in the economy.

Expenditures decreased by 7.6%

Reduced budget allotments and the imposition of austerity measures by the Administration have led to cut backs in General Fund expenditures. Actual General Fund expenditures decreased by $15.9M from $209.0M in FY06 to $193.1M in FY07. Salaries and wages, which constitute the largest expenditure item, decreased 7.4% from $109.3M in FY06 to $101.2M in FY07. Other reductions include utilities which decreased by $5.8M, travel by $876K, and supplies by $875K. Increases occurred in other areas including professional services, capital outlays, and repairs & maintenance.

Questioned Costs Increased to $7.2 Million

Federal awards by grantor agencies require that recipients comply with grant terms and conditions. Questioned costs can result in the return of grant funds by the CNMI to the Federal grantor agencies. For FY07, questioned costs increased by $2.2M, bringing the total amount to $7.2M. Of the $2.2M in questioned costs in FY07, $584K related to issues regarding period of availability, and $658K related to procurement, suspension, and debarment concerns.

Executive Summary

Financial Statements in Accordance with OMB Circular A-133 (4.7MB)

Internal Control and Compliance (5.9MB)