‘Labor lost over half-a-million dollars’

The CNMI lost over half-a-million dollars because the Department of Labor accepted applications without collecting the correct amount of fees, according to a report by the Office of the Public Auditor.

The Labor Department concurred with the report and agreed to implement OPA’s recommendations.

The June 6, 2005, report resulted from an audit intended to determine whether the Department of Finance received the correct amount of fees, based on the number of alien worker applications processed by Labor.

The audit, which focused on Labor transactions with two unnamed employers, covered applications submitted from Oct. 18, 1999 through Jan. 5, 2004.

According to public auditor Michael Sablan, Labor accepted applications for 2,293 workers for which the required fees were not collected by Finance.

One company submitted 1,486 of the total applications, including 1,469 one-year applications and 17 extensions. The remaining 807 were filed by the other firm.

This translates to a total of $512,410 in lost revenues. The one-year application fee was at $225 during the audit period, while the permit extension fee was at $10 per month.

“Based on OPA’s analysis, DOL has been receiving applications without ensuring that the correct amount of fees were collected,” a portion of the report read.

The report cited three examples of the types of discrepancies noted.

One discrepancy involved a receipt issued for the payment of an Alien Physical Exam Clearance—costing $20—being used for 39 applications. “These applications alone amounted to $8,775 in uncollected fees,” OPA noted.

In another case, an original receipt was issued to pay for the submission of an application for an employer unrelated to either of the two employers covered by the audit. The amount collected was $225.

“However, OPA found that 11 and 26 applications were submitted for Company A and Company B, respectively, using the same OR number as reference for payment. This resulted in a loss of $2,475 due from Company A and $5,850 due from Company B,” said OPA.

Yet another discrepancy entailed the use of one receipt—issued for the payment of a $50 alien registration—as reference for payment for 99 applications. OPA noted that this resulted in a loss of $22,275 for this OR number alone.

“The discrepancies were not discovered previously because Labor’s internal controls involving the process of receiving and entering nonresident worker applications into the [Labor and Immigration Identification System] were inadequate. The DOL lacked control measures to ensure that the applications were paid prior to the entering of application information into the LIIDS,” OPA said.

The public auditor recommended that Labor enforce a regulation requiring the submission of proof of payment with other required documents. The Labor Department was also urged to segregate duties among its personnel, rather than allowing supervisors and managers responsible for reviewing and approving to also receive and input applications.

Further, OPA said Labor should perform periodic comparisons between the fees reflected on Labor’s records and fees actually collected as shown on Finance’s records.

Lastly, OPA instructed Labor to recover uncollected fees of $330,835 from one of the two employers, and $181,585 from the other.

In response, acting Labor secretary Dean Tenorio agreement with OPA’s findings regarding the improper use of vouchers presented to the department.

“We have carefully examined the report and recommendations, and the methodology used in arriving at your conclusions. We have no disagreement with your approach to the investigation and have no basis on which to challenge the conclusion,” Tenorio said.

The Labor official vowed to establish procedures within the department to prevent similar problems noted in the report from occurring.

As for the fourth recommendation, Tenorio said Labor’s response would depend on the findings by other agencies currently investigating how the discrepancies took place.

“It is possible to envision a couple of scenarios that would lead to this result. One concerns the possibility of misconduct be persons submitting the applications; the other suggests affirmative DOL employee misconduct. Since other investigators may have information pertinent to this inquiry, we will follow up with other investigators to determine the responsible parties,” Tenorio said.