An independent audit under the Office of the Public Auditor has found out that a spouse of a Commonwealth Casino Commission board member entered into a lease deal for a warehouse with Saipan’s exclusive casino licensee, Imperial Pacific International (CNMI) LLC.
The CCC management is unable to determine whether the lease agreement is of similar terms and conditions that would prevail in “arm’s length transactions,” said Deloitte & Touche LLC, referring to a business deal in which buyers and sellers act independently without one party influencing the other.
Deloitte’s audit did not name the board member and the spouse. It also did not specify whether he is a current or a former board member.
OPA hired Deloitte to conduct the independent audit on CCC’s internal control and on compliance for the year ended Sept. 30, 2018.
As of press time yesterday, Saipan Tribune was still waiting for comments from IPI.
Deloitte said the warehouse transaction may not be at arm’s length, which is not compliant with accounting principles generally accepted in the United States, as adequate evidence has not been provided. Deloitte recommends that CCC await the results of an investigation, if an investigation occurs.
In CCC’s response and corrective action plan, then-CCC acting executive director Charlie Atalig disclosed that CCC provided the Office of the Attorney General with information regarding the payments in question, and the proper investigative agency has been provided with enough information to begin an investigation.
Deloitte considers the warehouse issue a “material weakness” that it identified as a deficiency in CCC’s internal control. The auditing firm defines deficiency in internal control as “when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis.”
Deloitte also defines material weakness as “a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected or corrected on a timely basis.”