CNMI Gov't has no centralized management control over processing of Federal Grants
(March 3, 2004)
In June 2003, a congressman of the Thirteenth Northern Marianas Commonwealth Legislature requested the Office of the Public Auditor (OPA) to review the CNMI’s processing of Federal grants, as he was concerned that the CNMI may not have obtained and used all Federal grants available. After meeting with Congressman Torres, we began survey work in two areas: (a) CNMI activities undertaken to obtain grant awards and (b) activities undertaken after a grant has been awarded. Accordingly, we established two objectives: draw down Federal funds and record related financial transactions.
According to the FY 2004 Governor’s Budget Proposal, Federal departments and agencies have awarded about $60.9 million in Federal grant funds during FY 2003 which reflects an increase of about $20 million over 1999 funding. These awards come in the form of both formula (state) and discretionary grants. Formula grants are based on direct appropriations made by the Federal Government to states and insular territories, while discretionary grants are funds available to all but are awarded through a competitive application process.
CNMI agencies are responsible for identifying and applying for grant awards and administering their federal programs. After a grant has been awarded, agencies are required to submit periodic Program Reports representing the activities undertaken to accomplish grant objectives previously stated in their grant applications.
In conducting our review, we conducted work at the Public School System, Division of Fish and Wildlife, Office of Vocational Rehabilitation, Department of Finance (DOF), and Office of Management and Budget (OMB). OPA reviewed applicable laws, regulations, and grant sources; interviewed knowledgeable individuals engaged in the Federal grants process; flowcharted the Federal grants process; reviewed documents submitted by CNMI agencies and reports generated by the CNMI’s financial management system; and compiled data and examined outstanding balances of Federal grant accounts listed in financial management system reports during Fiscal Years 2002 and 2003.
