CCC funds just enough to last until end of August 2022—audit

The Commonwealth Casino Commission is faced with many questions in locating and identifying dependable sources of funding beyond August 2022 and into fiscal year 2023, according to an independent auditors’ report.

Right now, CCC only has enough funds for the remaining 40% of its staff until the end of August 2022, with a portion of the remaining budget covering more scaled-down operations, states the Deloitte & Touche LLC report dated July 23, 2021.

Deloitte, which the Office of the Public Auditor hired to audit CCC’s statements and expenditures for years ended Sept. 30, 2019 and 2018, informed CCC executive director Andrew Yeom that CCC’s statements of revenues and expenditures present fairly, in all material aspects, the results of operations for the years ended Sept. 30, 2019, and 2018, in accordance with accounting principles generally accepted in the U.S.

In its reports on CCC’s internal control and on compliance, Deloitte determined that their tests showed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

As part of obtaining reasonable assurance about whether CCC’s statement of revenues and expenditures are free from misstatement, the auditor performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have an effect on the determination of financial statement accounts.

Deloitte said CCC’s continuation of operations is dependent on collection of regulatory and annual casino license fees from Imperial Pacific International (CNMI) LLC. (IPI). However, given the current position of IPI, Deloitte said it is not possible to predict that this revenue source will be available in the future and it is uncertain if additional revenue sources to maintain CCC may transpire.

Deloitte said economic uncertainties have arisen as a result of the COVID-19 pandemic and that CCC expects this matter to negatively impact its future financial results. That financial impact, however, cannot be reasonably estimated at this time, Deloitte said. Other financial impacts could occur, though such potential impact is unknown.

The CCC management has already taken actions and measures to address losses and negative cash flows from operations. That includes approaching the CNMI government for local funds and working with the Legislature to amend the law to open the gaming industry to several casino licenses, if in case the exclusive license given to IPI is revoked or the exclusivity is waived.

Deloitte said the other action is that IPI’s exclusive license may be revoked if complaints/orders are not resolved and more enforcement actions/complaints are filed for revocation.

CCC is an autonomous agency that handles its own finances and procurement. From 39 employees last May, CCC’s number of employees has dwindled due to the termination of 20 employees as a result of budget constraint and resignation of others.

The auditor said that during the years ended Sept. 30, 2019, and 2018, IPI accounted for 100% and 96%, respectively, of total CCC regulatory fee.

Deloitte said financial statements of IPI have disclosed various contingencies, which cast doubt on its ability to continue as a going concern. Such matters could adversely affect the financial statements of CCC, Deloitte said.

In 2019, CCC ‘s total revenue was $3,098,361. Total expenditures, including $1,607,193 in salaries and wages and $401,664 in employee benefits, was $2,720,637. This brings to $377,724 in excess of revenues over expenditures.

In 2018, CCC collected total revenue of $4,015,068. Total expenditures was $2,971,977. This brings to $1,043,091 in excess of revenues over expenditures.