It also recommended the termination of all federal funding until the council implements corrective action.
From Feb. 2006 to Aug. 2009, the Arts Council was headed by Cecilia Celes and, later, by Ramona Rebuenog, the Covenant Party’s mayoral candidate for the Northern Islands last year. She lost to independent candidate, Tobias DLC. Aldan, and now works for the Department of Public Lands.
The audit report noted mismanagement and potential conflict of interest in the council’s handling of four federal grants awarded from Oct. 2005 to Sept. 2009.
Hence, the Art Council failed to accomplish the objectives of the four grants, the report stated.
The report found that the Arts Council did not have a financial management system to adequately track, monitor and report accurate and complete costs.
Based on the preliminary findings of the audit, the NEA suspended its funding to the Council in Oct. 2009.
The report stated that the Arts Council did not maintain appropriate expense documentation and may have inappropriately awarded grants to ineligible organizations and individuals.
The Arts Council also failed to keep the required personnel activity report and did not have adequate internal control in place, the report added.
Mismanagement
The grants were supposed to support partnership agreement activities.
Two of them were awarded in Oct. 2005 and Oct. 2006 amounting to $499,798 and $423,053. The third was awarded in Oct. 2007 in the amount of $501,540 while the fourth was awarded in Oct. 2008, amounting to $48,499.
The report noted that several grants were awarded to an Arts Council employee in the amount of $18,350. This was charged to both the NEA grant and local matching portions.
The report did not identify the employee.
The employee, however, said “they did not apply nor receive any of the awards, except for $300 used for teaching traditional weaving.”
The auditors had a copy of an award check payable to the same employee. But someone other than the employee picked up the check from the employee’s post office box.
The report did not identify the person who picked up the check.
The report said the NEA should not to allow the $18,350 to be charged to the grants.
Conflict of interest
The auditors also saw indicators of conflict of interest in how the Arts Council handled the NEA grants.
The Arts Council, the report said, made several awards and payments to ineligible award recipients and companies such as former and current employees, employees of the Office of the Governor, relatives, Arts Council board members and companies owned by their relatives.
The Arts Council violated its own guidelines and CNMI Procurement Regulations which prohibit awarding funds that could create actual or appearance of conflict of interest.
The inspector general recommended the NEA not to allow a total $64,376 to be charged to the grants.
Personnel activity
The report also questioned the Arts Council’s costs on personnel activity. The total amount was $574,707.
It said the Arts Council did not maintain personnel activity — time and effort — reports for all employees whose salaries and fringe benefits were charged in whole or in part, to either the award or the matching funds for all the four grants that were audited.
The Arts Council staff informed the auditors that only the executive director’s salary was charged to the NEA grant. But the auditors found that all of the employees’ salaries were included in the total outlays reported.
The Arts Council, the report said, should submit personnel activity reports to the inspector general to support its explanation on the questioned salaries.
Without these documents, the Arts Council must refund the money to the NEA.
