Deloitte and Touche, which was contracted by Office of Public Auditor to conduct the CNMI-wide single audit for the fiscal year ending Sept. 30, 2007, also disclosed a 17 percent drop in government revenues.
The government’s FY 2006 cumulative unreserved fund deficit amounted to $188.1 million.
The primary cause of the increase in the deficit is the underfunding of the government’s employer retirement contributions and related penalties.
The auditing firm noted that the suspension of government obligations to the Retirement Fund occurred for parts in FY 2006 and all of FY 2007.
The cumulative amount due to the pension and other employee benefit trust fund grew to $175.1 million as of end of the fiscal year.
In FY 2007, moreover, actual general fund revenue collections totaled $159.9 million — a decrease of $32.8 million from the prior fiscal year.
The general fund gets the bulk of its revenues from taxes, charges for sales and services, and licenses and fees.
According to the report, the decline in revenue was related to the drop in tourist arrivals, the significantly reduced garment manufacturing activity, and the general downturn of the economy.
In FY 2007, the audit stated that government expenditures decreased by 7.6 percent through the imposition of austerity measures.
In FY 2006, total government expenditures amounted to $209 million compared to $193.1 million in FY 2007, or $15.9 million less.
Salaries and wages constitute the largest expenditure item of the government — from $109.3 million in FY 2006 to $101.2 million in FY 2007.
But spending on utilities decreased by $5.8 million; on travel by $876,000; and on supplies by $875,000, the audit stated.
However, there were increases in other areas including professional services, capital outlays, repairs and maintenance.
The audit indicated that questioned costs — grants that did not comply with federal standards — also increased by $2.2 million, bringing the total amount to $7.2 million.
