CPA annual audit delayed, violates bond agreement

The Commonwealth Ports Authority has been found violating its bond indenture agreement due to a delay in the completion of its financial audit.

Saipan Tribune learned that the agency failed to issue its annual report since 2005, which is a violation of the bond agreement.

However, CPA executive director Efrain F. Camacho reported to the board that the agency’s Accounting will be aiding Engineering and Administration in getting these reports issued.

“CPA’s annual financial audit is continuing. …While the report has been delayed and represents a violation of the bond covenant agreement, [the audit] is anticipated to be completed next month,” the report stated.

During the last board meeting, Camacho said, the Office of the Inspector General raised concerns over some “unaccounted administrative costs” but the issue had already been addressed by the CPA management.

Saipan Tribune learned that CPA settled with the Federal Aviation Administration undocumented costs relating to past grant expenditures amounting to $1.2 million.

“This settlement of $1.2 million [highlighted] the need to improve controls, not only in accounting but for all departments in the CPA,” the report said, adding that the agency has already began talks with an outside company for the scanning and electronic storage of files.

CPA said this would allow for much quicker recall of individual documents and provide better documentations.

In the first six months of the fiscal year, CPA posted an increase of $1.6 million in airport revenues but a decline of 12 percent in seaport revenues.

CPA, according to its management, remains and will remain financially vulnerable due to the continued downturn in the global and local economies.

Camacho said CPA continues to develop contingency plans.

The audited financial statements for fiscal year 2008 is expected to show that CPA again failed to meet the required bond ratios for airport and possibly the seaport.

“If this is the case, the bond trustee may require additional third-party expert studies to determine changes in operations that would allow CPA to meet the ratios. This is costly and time consuming for the agency,” Camacho said.

He said the continuing subsidy of both Rota and Tinian operations also raises great concern. He said methods of operation must be reorganized to reduce cost or alternative revenues need to be found.