DESPITE ECONOMIC DOWNTURN
Government vehicle expenditures amounted to $3.7 million in fiscal year 2020, yet ballooned to $6.9 million in fiscal year 2021. That has raised some red flags for the Office of the Public Auditor, which said in its audit report that the 88% increase—which is equivalent to $3.2 million—during a time of economic downturn for the CNMI is questionable in terms of fiscal responsibilities.
OPA’s audit report, which was released yesterday, said that, regardless of the funding source, an increase in the number of vehicles issued to CNMI agencies poses additional liabilities and obligations associated with fuel consumption and cost of repairs and maintenance.
The OPA audit covered the period from when the CNMI was just emerging from Super Typhoon Yutu’s devastation in October 2018 when it ran headlong into the COVID-19 pandemic in March 2020, during which global travel was shut down in the U.S. and other territories. Starting in June 2019, the CNMI government implemented austerity measures that included eight-hour pay cuts, then eventually 16-hour pay cuts in March 2020, and the furlough of government employees in February 2021.
Yet despite these events, OPA said, based on the CNMI’s unaudited financial records, the CNMI incurred expenditures related to government vehicles amounting to $6,949,168 and $3,702,296 in fiscal years 2021 and 2020, respectively.
Between Nov. 11, 2021, and Dec. 28, 2021, OPA conducted an inventory survey of government vehicles and noted multiple discrepancies between various government agencies’ vehicle inventory listings and Department of Finance-Division of Procurement Services’ inventory listings of purchased and leased vehicles.
Based on the results of the survey, OPA initiated an audit of Finance-PS’ accountability of government vehicles for the period of Oct. 1, 2019 to Nov. 12, 2021.
Based on the Finance-PS’ Fixed Asset Master Information listing provided by Finance-PS, 111 vehicles totaling $4,204,180 were purchased from Oct. 1, 2019 to Nov. 12, 2021.
Finance-PS also provided a listing of nine lease contracts consisting of 13 vehicles with an average contract cost of $27,645 executed within the same period.
Of the 111 vehicles purchased, OPA was only able to test 51 (46%) totaling $2,073,157.
OPA said the procurement documents for 60 (54%) samples totaling $2,131,023 were not provided as Finance-PS could not locate the documents.
Additionally, OPA said, three of the 60 samples could not be located because the required procurement document information entered into the FAMI listing were insufficient.
OPA said Finance-PS has a duty to ensure that vehicle inventory is accounted for in the financial records of the CNMI.
OPA said procurement laws, regulations, and policies were established to promote the accountability and transparency of the CNMI government’s inventory. However, OPA’s audit found that documents were not provided for review or lacked sufficient information, Finance-PS is not in compliance with NMI Administrative Code that requires agencies to justify their decision to purchase or lease a vehicle, government vehicles were not accurately reflected on Finance-PS and government inventory listings, and procurement regulations lack provisions for rental vehicles used for operations.
OPA recommends that Finance’s Division of Procurement Services perform the following:
Establish policies and procedures to ensure all supporting documents for all purchases are complete, properly filed, monitored, and maintained.
Properly store documents in an orderly and efficient manner to ensure all supporting documents are easily accessible and readily available.
Ensure the requirements of the Finance-PS Procurement Regulations are strictly adhered to before any vehicle is purchased or leased.
Review all submitted lease or purchase of vehicle(s) Procurement Justification Forms for completeness and ensure that they are properly filed and maintained.
Educate government agencies on Finance-PS’ current procurement regulations and the CNMI Property Management Policies and Procedures Manual to ensure all government vehicles are properly accounted for.
Conduct an annual inventory of government vehicles and maintain detailed property records in accordance with the CNMI Property Management Policies and Procedures Manual.
Work with the Office of the Finance Secretary to define the classification of lease and rental vehicles and determine if rental vehicles are allowable for government operations.
OPA also recommends that the Office of the Finance Secretary perform an analysis on the appropriateness of the number of government vehicles currently issued to CNMI agencies and if additional vehicles are warranted based on the scope of assignments of the agencies, regardless of the availability of non-local funding sources.
interim Public Auditor Dora I. Deleon Guerrero notified Finance Secretary David DLG Atalig yesterday of their findings and recommendations.