The report is available for public review online at the Web site www.fsmopa.fm and copies are available at the auditor’s offices in Palikir and Weno.
The audit was performed with the objectives of determining whether the administration of congressionally funded public projects complied with applicable laws, policies, and regulations.
The FSM Congress appropriated approximately $1 million in local revenue funds from Public Law 13-36 for the purpose of funding social and economic projects, often referred to as CFSM public projects, in Chuuk.
The audit team examined 39 of the 69 funded projects and focused on fiscal years 2005- 2008, through July 31, 2008, appropriations.
The audit was conducted in accordance with generally accepted government auditing standards.
The audit team found that parties involved in the selection, management, and oversight of the projects failed to comply with applicable laws, policies, and regulations.
Moreover, the overall process from the selection of projects to the payment of vendors was conducted without the benefit of appropriate management controls.
The audit team found that the project selection process occurred without any documentation as to why the selected projects were chosen, how they would contribute to the social and economic development of Chuuk, or what criteria was used to select projects.
The audit revealed that neither the Chuuk State Commission on Improvement Projects nor the FSM Finance Field Office in Chuuk could account for vehicles, boats, and boat engines purchased with P.L. 13-36 funds.
Seven vehicles, four boats, and 10 engines were purchased in conjunction with the 39 projects reviewed.
However, no boats or engines could be located or accounted for.
Similarly, six of the seven vehicles could not be located or accounted for.
Though project control documents are intended to ensure that all purchases are for the project’s intended purpose and within authorized limits, the audit team found that not all expenditures were appropriate and/or within the budget.
The Chuuk Delegation Office project and the Chuuk Delegation Office Operations project had the stated purposes of defraying operating costs.
However, funds were used to pay reimbursements to Congress members and to make contributions to constituents.
In essence, these funds were used as representation funds although the original intent was for the operations of the Chuuk Delegation Office.
Auditors also found that funds for a fishing project were used to purchase a vehicle and construction material.
A total of 21 of the 69 projects reviewed exceeded the dollar amount appropriated by law.
The audit also revealed that there were no controls to ensure projects were completed.
Site inspections conducted by the audit team revealed that several of these projects such as sea walls, a pathway, and a meeting hall were never completed.
Furthermore, payments for construction materials related to these projects were paid though the materials could not be accounted for because the FSM Finance Field Office did not require submittal of a completed inspection report.
Some of the findings have been referred to the Compliance Investigation Division for further review.
