“We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses,” staed the audit submitted to MPLT last April 25.
It further stated that Deloitte and Touche LLC further conducted tests to ensure the financial statements of MPLT are free of material misstatement and found no instances of non-compliance by the said agency.
Total assets of the trust was $72.78 million as of 2010, a $1.65 million decrease from $74.427 million in 2009.
The audit also revealed a decrease in total liabilities from $4.702 million in 2009 to $115,260 in 2010.
Of the total liabilities, $4.430 million was the amount due to the CNMI government in 2009 which reduced to $17,741 in 2010. The amount due to brokers also decreased from $234,134 in 2009 to $59,050 in 2010.
Accrued expenses slightly increased by $544 from $5,062 in 2009 to $5,606 in 2010.
Investment assets grew from $45.106 million in 2009 to $60.79 million last year.
Moreover, the audit revealed a decline in MPLT general fund assets from $66.71 million in fiscal year 2009 to $64.74 million in fiscal year 2010.
This $1.65 million decrease was due to the “actual distribution of past accumulated interest from the Northern Marianas Housing Corp. loan and the advance of future contributions made by MPLT to the general fund.
Conversely, there was a $3.57 million increase in the assets in FY ’09 due to the increase in the value of the investments.
In the MPLT board meeting in April, the board found that the decline in assets was due to the $4.4 million that was due to the CNMI government in fiscal year 2009.
According to Deloitte and Touche LLC managing partner Michael S. Johnson, this payment of the $4.4 million to the central government was listed in the MPLT books as liability in fiscal year 2009 that resulted from the interest of the NMHC loan that was paid for in 2010.
In the FY 2009 audit report, it was stated that NMHC defaulted on its loan in 2007 when the PL 10-29 and PL 12-27 were repealed by PL 15-48.
MPLT, the report stated, negotiated a $2.025 million settlement agreement: $2.025 million was paid while the related loan portfolio transferred to MPLT.
Based on the latest independent auditor’s report, MPLT’s liabilities for 2010 decreased by $4.58 million, again, due to the $4.41 million that was due to the general fund and $175,084 due to brokers.
During his presentation before the MPLT board in April, Johnson told the trustees that there were no additional bad debts to record for the year. He said, “That was good.”
The audit report further disclosed that MPLT saw an 8 percent growth, a slight decrease from its $10 percent growth in 2009 owing to the agency’s partial recovery from recession in 2008.
Moreover, it was also reported that the agency saw a decline in administrative costs by 5 percent or $38,452 as a result of the decrease in administration expenses, loan administration fees, salaries, benefits, and office expenses.
The MPLT manages an overall trust fund that’s divided into general fund and park fund operations.
Since inception in 1983, the MPLT has distributed $47.72 million to the CNMI general fund.
In the last three years beginning 2008, the contribution to the central fund saw a drastic decline from $6.32 million in 2008, down to $2.01 million in 2009, and slightly dipped to $1.625 million in 2010.
Moreover, the MPLT board, the audit report stated, had to change its investment policy statement in December 2010 in recognition of the plummeting government revenues. The change in investment policy is expected to allow more investment income and consequently increase distribution to the central fund.
In the April 2011 board meeting of the trustees, Johnson reported, “We didn’t see anything that is outside of its investment policy.”
He told the trustees that in looking at investment statements, the Deloitte and Touche LLC performed tests to check for compliance with the investment policy.
Moreover, the MPLT general fund net assets for FY’10 increased by $2.63 million from $62 million in FY’ 2009 level to $64.64 million in FY’10.
There was a decrease in operating revenues from $5.99 million to $4.98 million in FY ’10. As the revenues decreased, expenses, meanwhile, went down from $764,156 to $719,969.
Its capital assets fluctuated between the three years since 2008, from $350,571 in 2008, to $333,931 in 2009, and $354,358 in 2010. These figures represented capital assets, net of accumulated depreciation where applicable including land, lease improvements, furniture, fixtures, and depreciation where applicable.
Johnson, in his presentation to the board, reminded the trustees that Governmental Accounting Standards Board called for regular monitoring of fixed and capital assets to check for impairment.
One of the assets, a 4,000 sq. m. property on Capital Hill was last appraised for $273,000.
The trustees acknowledged that the $273,000 could be an overstatement.
Johnson recommended for the MPLT board to make a decision on the said property and update the appraisal every three years.
Of the overall MPLT trust fund — general fund and park fund — park fund is separately managed and accounted for because of its different source and beneficiary.
According to the independent auditor’s report, the park fund saw its total assets increase from $7.42 million in 2008, to $7.75 million in 2009, and to $8.06 million in 2010.
Its net assets were $7.35 million, $7.71 million, and $8.02 million in 2008, 2009, and 2010 respectively.
Restricted incomes for 2008 to 2010 were $175,562, $218,535, and $253,261.
Restricted principal, for the same period, were $7.178 million, $7.496 million, and $7.768 million.
Current liabilities were $70,131, 2008; $35,612, 2009; and $46,413, 2010 while current assets were $843,165 in 2008, $1.938 million in 2009 and $352,124.
Annual return for the park fund slightly decreased in 2010 to 7.65 percent from 8.8 percent in 2009.
It was -6.49 percent in 2008.
The audit found that the park fund has not suffered local investment losses with initial principal contribution of $2 million prudently managed since 1983.
The audit report also stated MPLT made an arrangement with the Commonwealth Development Authority on Nov. 30, 2001 for a $2 million loan to be used with capital improvement project funding grants for the $4 million developments to American Memorial Park. The loan is payable in 15 years at 6.5 percent annual rate with $17,200 in monthly principal and interest payment.
