EIN: 986018534
UEI: XGK1P65NW429
Data as of August 26, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on June 7, 2026. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by December 7, 2026 (103 days from today).
What is a management decision? →1. CPA does not maintain an equipment listing that designates which federal program the assets belong to. 2. Of twelve equipment tested, aggregating $13,328,054 of a total population of $13,952,859 as of September 30, 2024, we noted deficiencies, as follows: a. One (or 8%) listed the item to be in fair condition in the physical count; however, the custodian represented that item is currently non-operational due to breakage and damage, which occurred in February 2024. b. One (or 8%) was not recorded in the physical inventory count. CPA’s reconciliation, however, acknowledged for it to be corrected. Further, it was represented during field work that the item is in very poor condition and is currently inoperable since May 2023. Finding No.: 2024-004, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: Undeterminable Condition, continued: c. One (or 8%) failed to show the item in blue color, indicating it is a federal asset as designated in its asset listing legend. Further, fields including purchase order, vendor, or serial number showed item was unknown. Moreover, item was not operational until December 2025. d. One (or 8%) did not submit log sheets or maintenance records to confirm that maintenance work was performed during FY2024. It was also represented that the asset was not in use since October 2025. Cause: CPA does not maintain an effective method of tracking U.S. Federally funded assets as the only method of tracking is through manually designating the asset in a different color within the listing generated from the fixed assets register for CPA as a whole. This manual process is subject to potential errors when produced on an annual basis as part of the audit process. Finding No.: 2024-004, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: Undeterminable Effect or potential effect: The completeness and accuracy of the program assets could not be determined. Identification as a Repeat Finding: Finding 2023-003. Recommendation: CPA should implement a formal asset tracking system or enhance its existing fixed asset register to clearly identify assets acquired with U.S. Federal grant funds (e.g., through dedicated fields or tagging within the system). This will eliminate reliance on manual color-coding and reduce the risk of errors. Additionally, CPA should establish standardized procedures for maintaining and periodically updating this information to ensure accuracy, completeness, and consistency in tracking federally funded assets. Views of Responsible Officials: Management states agreement with the findings. Refer to separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴Finding No.: 2024-004 Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR section 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award by the State in accordance with State laws and procedures. SOP 216.1 and 216.6: • A physical inventory of the property must be taken and the results reconciled with the property records annually. SOP 215.1 and 215.2: • Adequate maintenance procedures must be developed to keep the property in good condition. Condition: 1. CPA does not maintain an equipment listing that designates which federal program the assets belong to. 2. Of twelve equipment tested, aggregating $13,328,054 of a total population of $13,952,859 as of September 30, 2024, we noted deficiencies, as follows: a. One (or 8%) listed the item to be in fair condition in the physical count; however, the custodian represented that item is currently non-operational due to breakage and damage, which occurred in February 2024. b. One (or 8%) was not recorded in the physical inventory count. CPA’s reconciliation, however, acknowledged for it to be corrected. Further, it was represented during field work that the item is in very poor condition and is currently inoperable since May 2023. Finding No.: 2024-004, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: Undeterminable Condition, continued: c. One (or 8%) failed to show the item in blue color, indicating it is a federal asset as designated in its asset listing legend. Further, fields including purchase order, vendor, or serial number showed item was unknown. Moreover, item was not operational until December 2025. d. One (or 8%) did not submit log sheets or maintenance records to confirm that maintenance work was performed during FY2024. It was also represented that the asset was not in use since October 2025. Cause: CPA does not maintain an effective method of tracking U.S. Federally funded assets as the only method of tracking is through manually designating the asset in a different color within the listing generated from the fixed assets register for CPA as a whole. This manual process is subject to potential errors when produced on an annual basis as part of the audit process. Finding No.: 2024-004, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: Undeterminable Effect or potential effect: The completeness and accuracy of the program assets could not be determined. Identification as a Repeat Finding: Finding 2023-003. Recommendation: CPA should implement a formal asset tracking system or enhance its existing fixed asset register to clearly identify assets acquired with U.S. Federal grant funds (e.g., through dedicated fields or tagging within the system). This will eliminate reliance on manual color-coding and reduce the risk of errors. Additionally, CPA should establish standardized procedures for maintaining and periodically updating this information to ensure accuracy, completeness, and consistency in tracking federally funded assets. Views of Responsible Officials: Management states agreement with the findings. Refer to separate Corrective Action Plan.
CORRECTIVE ACTION PLAN: Finding No 2024-004 “ALN #20.106 Equipment and Real Property Management” Name of Contact Person(s): Sheryl Sizemore, Comptroller Ida S. De Brum, Accounting Manager Zack A. Diaz, Internal Auditor Alex Tudela, Procurement Officer Condition 1: CPA agrees with the finding. Although CPA does not maintain an equipment listing that designates which federal program (ALN number) the assets belong to, we are able to trace it through the account number, grant number, U.S. Department designation, and other specific identifying details. Condition 2a: CPA agrees with this finding. The "Fair" condition recorded during the FY24 inventory list was an error. While the asset was physically sighted, it was inoperable in February 2024. Due to funding uncertainty and higher airport priorities, repairs were not made. Current Status: This asset was officially decommissioned in March 2026. Condition 2b: CPA agrees with this finding. It has been inoperable since May 2023. This asset was not on the FY24 inventory list. The reconciliation did not include this asset and it is unclear how the oversight occurred as the inventory listing and fixed asset system records matched at the time. Current Status: This asset is on the FY25 and FY26 inventory list. However, it is still pending decommission. Condition 2c: CPA agrees with this finding. This asset was not listed in blue and data fields (PO, Vendor, Serial No.) are missing because of historical records. We have not been able to properly identify this asset and need more information. Current Status: Wendi (CIP Administrator) has sent an email to the FAA for their help in determining if there are some equipment at the Tower that’s still operational. Condition 2d: CPA agrees with this finding. Log sheets and maintenance records for this asset were not submitted. This was due to the ARFF Truck undergoing radiator repairs prior to being taken out of service in October 2025. Current Status: We are currently awaiting the final assessment report and/or the completed decommission form from ARFF Mechanic. CPA has developed the following corrective action plan related to Equipment Management findings: 1. Established Standard Operating Procedures (SOP) for Equipment Management CPA has established Equipment Management SOPs that were implemented and effective on June 30, 2022. The SOPs detail the equipment management requirements, details, and responsibilities. In addition, the SOPs include an annual mandatory schedule for inventory, disposals, and reconciliation. The Department Heads are reviewing their equipment listings to verify the accuracy of equipment details, provide additional identifying information and confirm existence of all assets listed. The Department Heads will be providing monthly updates to the Procurement Department for entry into the Equipment Management System. 2. Implemented Standard Equipment Management Forms Standard procurement forms have been developed to establish additional controls and reviews for all equipment. These standard forms include requirements such as identifying details for all fixed assets. 3. Developed a Training Plan for Equipment Management Procedures CPA developed an Equipment Management training plan that was implemented on June 17, 2022. The training plan includes annual requirements for training on equipment management and compliance requirements. The training is based on the established SOPs and best practices and is mandatory for all staff involved in equipment management. 4. Internal Auditor Position An internal auditor position was created on May 16, 2022 and hired on August 29, 2022. Part of the internal auditor’s responsibilities include reviewing inventory records and equipment management files for compliance. The internal auditor reports directly to the CPA Board of Director and provides monthly reports. The internal auditor monthly reports are used as a tool to identify areas of equipment management non-compliance for immediate correction. Although equipment SOPs were implemented in 2022, certain issues have continued to occur. These controls, nonetheless, have enabled CPA to identify, address, and correct errors on an ongoing basis, improving accuracy and compliance moving forward. Proposed Completion Date: June 30, 2026
2023-003
CPA has two divisions – airport and seaport. Certain costs are shared by both the airport and the seaport. The shared costs include management fees, salaries, legal fees, advertising, and administrative expenses. The airport pays for shared costs that are attributed to the costs of the seaport operations. The airport records the seaport’s allocation of the shared cost as ‘Due from seaport division’ and conversely, the seaport records ‘Due to airport division’. The seaport division normally settles amounts due to the airport division within 90 days. We observed that: • The airport division paid $615,140 of the seaport division’s shared costs during the fiscal year ended September 30, 2024. • As of September 30, 2024, the airport division’s receivable from the seaport division amounted to $120,582. CPA management asserts that use of airport revenues to pay operating costs of the seaport division is acceptable as the seaport division normally reimburses the airport division within 90 days. As such, CPA management believes this does not constitute a diversion of airport revenues. CPA did not provide documentation from the grantor agency to acknowledge that the grantor agency has approved the use of airport revenues to pay for the costs of the seaport operations. Finding No.: 2024-005, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Cause: CPA did not effectively seek grantor guidance over compliance with Special Tests and Provisions on revenue diversion on shared costs between its airport and seaport divisions. Effect or potential effect: CPA is in noncompliance with Special Tests and Provisions – Revenue Diversion. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2023-004 Recommendation: CPA should seek approval from the grantor agency regarding use of the airport revenues to pay for operating cost of its seaport division. Views of Responsible Officials: Management disagrees with the finding. All costs incurred by the Seaport paid initially by the Airport are reimbursed in a timely manner. For purposes of efficiency, this method is used as to reduce the number of payments to vendors being made. The Airport Division has been fully reimbursed. CPA received grantor acceptance of the use of this method even though this practice of recordkeeping has been in place for more than 20 years. Refer to separate Corrective Action Plan. Auditor Response: The Federal Aviation Administration (FAA) reviewed and approved the corrective action plan in response to the FY2023 revenue diversion finding. Under this plan, beginning in FY2026 (effective October 1, 2025), all seaport and airport costs, except for payroll, will be paid separately, with no more interdivision reimbursements allowed. Finding No.: 2024-005, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Auditor Response, continued: For payroll costs, the Seaport’s calculated share is prepared beforehand and is transferred to the Airport before pay date, with the Airport issuing a receipt of funds the next day. This prepayment arrangement is to avoid any semblance of Airport funds being used to fund Seaport operations. While the FAA has accepted CPA’s corrective action plan, its implementation does not take effect until October 1, 2025. In the absence of documented grantor approval authorizing the arrangement to use airport revenues for seaport-related expenditures to be repaid within a 90 day period and given the continued occurrence of the condition in FY2024, the finding remains unresolved and is reported as a repeat finding.
Show full finding ▾Hide full finding ▴Finding No.: 2024-005 Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Criteria: In accordance with 64 FR 7696, all revenues generated by a public airport must be expended for the capital or operating costs of the airport, the local airport system, or other local facilities that are owned or operated by the owner or operator of the airport and are directly and substantially related to the actual air transportation of passengers or property. Condition: CPA has two divisions – airport and seaport. Certain costs are shared by both the airport and the seaport. The shared costs include management fees, salaries, legal fees, advertising, and administrative expenses. The airport pays for shared costs that are attributed to the costs of the seaport operations. The airport records the seaport’s allocation of the shared cost as ‘Due from seaport division’ and conversely, the seaport records ‘Due to airport division’. The seaport division normally settles amounts due to the airport division within 90 days. We observed that: • The airport division paid $615,140 of the seaport division’s shared costs during the fiscal year ended September 30, 2024. • As of September 30, 2024, the airport division’s receivable from the seaport division amounted to $120,582. CPA management asserts that use of airport revenues to pay operating costs of the seaport division is acceptable as the seaport division normally reimburses the airport division within 90 days. As such, CPA management believes this does not constitute a diversion of airport revenues. CPA did not provide documentation from the grantor agency to acknowledge that the grantor agency has approved the use of airport revenues to pay for the costs of the seaport operations. Finding No.: 2024-005, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Cause: CPA did not effectively seek grantor guidance over compliance with Special Tests and Provisions on revenue diversion on shared costs between its airport and seaport divisions. Effect or potential effect: CPA is in noncompliance with Special Tests and Provisions – Revenue Diversion. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2023-004 Recommendation: CPA should seek approval from the grantor agency regarding use of the airport revenues to pay for operating cost of its seaport division. Views of Responsible Officials: Management disagrees with the finding. All costs incurred by the Seaport paid initially by the Airport are reimbursed in a timely manner. For purposes of efficiency, this method is used as to reduce the number of payments to vendors being made. The Airport Division has been fully reimbursed. CPA received grantor acceptance of the use of this method even though this practice of recordkeeping has been in place for more than 20 years. Refer to separate Corrective Action Plan. Auditor Response: The Federal Aviation Administration (FAA) reviewed and approved the corrective action plan in response to the FY2023 revenue diversion finding. Under this plan, beginning in FY2026 (effective October 1, 2025), all seaport and airport costs, except for payroll, will be paid separately, with no more interdivision reimbursements allowed. Finding No.: 2024-005, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Auditor Response, continued: For payroll costs, the Seaport’s calculated share is prepared beforehand and is transferred to the Airport before pay date, with the Airport issuing a receipt of funds the next day. This prepayment arrangement is to avoid any semblance of Airport funds being used to fund Seaport operations. While the FAA has accepted CPA’s corrective action plan, its implementation does not take effect until October 1, 2025. In the absence of documented grantor approval authorizing the arrangement to use airport revenues for seaport-related expenditures to be repaid within a 90 day period and given the continued occurrence of the condition in FY2024, the finding remains unresolved and is reported as a repeat finding.
CORRECTIVE ACTION PLAN: Finding No 2024-005 “ALN #20.106 Special Tests and Provisions – Revenue Diversion” Name of Contact Person(s): Sheryl Sizemore, Comptroller Ida S. De Brum, Accounting Manager Zack A. Diaz, Internal Auditor Corrective Action: CPA disagrees with this finding. All costs incurred by the Seaport paid initially by the Airport are reimbursed in a timely manner. For purposes of efficiency, this method is used as to reduce the number of payments to vendors being made. The Airport Division has been fully reimbursed. CPA received grantor acceptance of for the use of this method even though this practice of recordkeeping has been in place for more than 20 years. (See attachment) CPA believes that the costs incurred pertain to the operational costs of the airport. Per the Federal Register / Vol. 64, No. 30, “Operating costs for an airport may be both direct and indirect and may include all of the expenses and costs that are recognized under the generally accepted accounting principles and practices that apply to the airport enterprise funds of state and local government entities.” Proposed Completion Date: Not Applicable
2023-004
FAC accepted this audit on May 11, 2025 — management decision was due November 11, 2025.
Tests of equipment and real property noted the following: 1. CPA performed a capital assets inventory during fiscal year 2023. Based on controls testing, the worksheet of the count was approved by the Comptroller; however, it was not dated. 2. A reconciliation was not performed for FAA only assets which should be compared with accounting records. As such, the completeness and accuracy of program assets could not be determined. Total fixed asset additions capitalized and related to CPA’s major program, is as follows: Finding No.: 2023-003, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Condition, continued: 3. Of fifteen items (or 17%) tested of a total population of eighty-eight FAA-funded capital assets, we noted deficiencies, as follows: a. One item (or 7%) has been unidentified, and management was not able to substantiate the existence of the actual fixed asset. This asset was cited in the prior year as a finding but was not corrected. As such, it is a repeat finding for FY2023. b. Seven items (or 47%) did not have any record or log of maintenance conducted during FY2023. No questioned costs are noted as we are unable to quantify the extent of the noncompliance. c. One item (or 7%) was improperly included on the fixed asset listing (asset number 000004). This asset was the original Crash, Fire, and Rescue (CFR) building constructed in 1970. The CFR building was demolished upon the construction of the Aircraft Rescue and Fire Fighting (ARFF) building in 1996. As such, this asset should have been noted as a disposal for FY2023. We present $0 questioned costs as no net book value was noted. Finding No.: 2023-003, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Condition, continued: d. One item (or 7%) was improperly capitalized and included in the fixed asset listing (asset number 001504). This asset is the Master Plan Update for the Rota Airport. As this is a document pertaining to project deliverables and survey on airport assets, the Master Plan Update is not considered to be an actual fixed asset. We present $0 questioned costs for this asset as this is a matter of improper capitalization, and not an instance of an unallowable activity in the context of compliance. Cause: CPA lacks oversight responsibility and monitoring controls over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2022-003. Finding No.: 2023-003, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Recommendation: CPA should reconcile the results of the annual physical inventory of the program’s assets to the property records and ascertain that the costs of the individual assets also agree to the records of accounting in terms of assets identified as additions or disposals for the year. Additionally, CPA should retain maintenance logs or equivalent documentation to show evidence of maintenance done on fixed assets and equipment. Lastly, CPA should implement and enforce proper procedures and criteria for capitalization of assets, based on the capitalization policy set by management to prevent improper capitalization. Views of Responsible Officials: Management states agreement with the finding. Refer to separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with 2 CFR section 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award by the State in accordance with State laws and procedures. SOP 216.1 and 216.6: • A physical inventory of the property must be taken and the results reconciled with the property records annually. SOP 215.1 and 215.2: • Adequate maintenance procedures must be developed to keep the property in good condition. Condition: Tests of equipment and real property noted the following: 1. CPA performed a capital assets inventory during fiscal year 2023. Based on controls testing, the worksheet of the count was approved by the Comptroller; however, it was not dated. 2. A reconciliation was not performed for FAA only assets which should be compared with accounting records. As such, the completeness and accuracy of program assets could not be determined. Total fixed asset additions capitalized and related to CPA’s major program, is as follows: Finding No.: 2023-003, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Condition, continued: 3. Of fifteen items (or 17%) tested of a total population of eighty-eight FAA-funded capital assets, we noted deficiencies, as follows: a. One item (or 7%) has been unidentified, and management was not able to substantiate the existence of the actual fixed asset. This asset was cited in the prior year as a finding but was not corrected. As such, it is a repeat finding for FY2023. b. Seven items (or 47%) did not have any record or log of maintenance conducted during FY2023. No questioned costs are noted as we are unable to quantify the extent of the noncompliance. c. One item (or 7%) was improperly included on the fixed asset listing (asset number 000004). This asset was the original Crash, Fire, and Rescue (CFR) building constructed in 1970. The CFR building was demolished upon the construction of the Aircraft Rescue and Fire Fighting (ARFF) building in 1996. As such, this asset should have been noted as a disposal for FY2023. We present $0 questioned costs as no net book value was noted. Finding No.: 2023-003, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Condition, continued: d. One item (or 7%) was improperly capitalized and included in the fixed asset listing (asset number 001504). This asset is the Master Plan Update for the Rota Airport. As this is a document pertaining to project deliverables and survey on airport assets, the Master Plan Update is not considered to be an actual fixed asset. We present $0 questioned costs for this asset as this is a matter of improper capitalization, and not an instance of an unallowable activity in the context of compliance. Cause: CPA lacks oversight responsibility and monitoring controls over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2022-003. Finding No.: 2023-003, continued Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Recommendation: CPA should reconcile the results of the annual physical inventory of the program’s assets to the property records and ascertain that the costs of the individual assets also agree to the records of accounting in terms of assets identified as additions or disposals for the year. Additionally, CPA should retain maintenance logs or equivalent documentation to show evidence of maintenance done on fixed assets and equipment. Lastly, CPA should implement and enforce proper procedures and criteria for capitalization of assets, based on the capitalization policy set by management to prevent improper capitalization. Views of Responsible Officials: Management states agreement with the finding. Refer to separate Corrective Action Plan.
Finding No 2023-003 “ALN #20.106 Equipment and Real Property Management” Name of Contact Person(s): Sheryl Sizemore, Comptroller Ida S. De Brum, Accounting Manager Zack A. Diaz, Internal Auditor Alex Tudela, Procurement Officer Corrective Action: CPA agrees with this finding. CPA has implemented Equipment Management Standard Operating Procedures (SOPs) in June 2022 and trained staff involved in Equipment Management in August 2022. Because trainings on the newly developed SOPs were first conducted in August 2022, CPA noted and FAA acknowledged that repeat findings may be found in this audit report. CPA emphasizes that SOP trainings are continuing and mandatory for all of CPA Management, and CPA expects that the SOPs and related training will resolve this issue moving forward. Equipment SOP trainings occur twice per year and will continue indefinitely. In July 2023, CPA issued the inventory and property records to all CPA Department Heads to review, verify and confirm details of each fixed asset and provide additional identifying information for entry. These updates will be submitted to the Procurement Division in August 2023 for verification and entry into the Equipment Management System. Condition 1: CPA will ensure that count sheets are dated to reflect timing of the approval of fixed asset inventory performed. Condition 2: The fixed asset schedule provided to the auditors included a column that listed all contributed fixed assets as funded by the Federal Aviation Administration (FAA). The FAA column was mistakenly entered into the schedule. CPA Accounting verified that the details of all assets that were identified as non-FAA assets indicate funding through other federal or local programs. The fixed asset schedule will go through verification by the Accounting Manager and Comptroller to ensure that only the program assets requested are listed. Condition 3a: CPA will write off the asset from its fixed asset system. Condition 3b: CPA will write off assets 000015, 000040, 000047 as they have been already replaced with an existing asset. For assets 000091, 000589, and 000791: we will create maintenance logs for these assets as well as all assets that require maintenance in the fixed asset system. Condition 3c: CPA will write off the asset from its fixed asset system. Condition 3d: CPA will write off the asset from its fixed asset system and adjust and reclassify for any remaining depreciation still left on the books. CPA has developed the following corrective action plan for this finding: 1. Establish Standard Operating Procedures (SOP) for Equipment Management CPA has established Equipment Management SOPs that were implemented and effective on June 30, 2022. The SOPs detail the equipment management requirements, details, and responsibilities. In addition, the SOPs include an annual mandatory schedule for inventory, disposals, and reconciliation. The Department Heads are reviewing their equipment listings to verify the accuracy of equipment details, provide additional identifying information and confirm existence of all assets listed. The Department Heads will be providing monthly updates to the Procurement Department for entry into the Equipment Management System. 2. Implement Standard Equipment Management Forms Standard procurement forms have been developed to establish additional controls and reviews for all equipment. These standard forms include requirements such as identifying details for all fixed assets. 3. Develop a Training Plan for Equipment Management Procedures CPA developed an Equipment Management training plan that was implemented on June 17, 2022. The training plan includes annual requirements for training on equipment management and compliance requirements. The training is based on the established SOPs and best practices and is mandatory for all staff involved in equipment management. 4. Internal Auditor Position An internal auditor position was created on May 16, 2022 and hired on August 29, 2022. Part of the internal auditor’s responsibilities include reviewing inventory records and equipment management files for compliance. The internal auditor reports directly to the CPA Board of Director and provides monthly reports. The internal auditor monthly reports are used as a tool to identify areas of equipment management non-compliance for immediate correction. Proposed Completion Date: June 30, 2025
2022-003
Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should implement and enforce adequate documentations over its monitoring control procedures in place over disbursements of program funds. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-003 Federal Agency: U.S. Department of Agriculture AL Program: 10.555 National School Lunch Program (NSLP) Federal Award No.: 217NMNM3N1174, 227NMNM3N1174 and 237NMNM3N1174 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should implement and enforce adequate documentations over its monitoring control procedures in place over disbursements of program funds. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-003 AL Program: 10.555 National School Lunch Program (NSLP) Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org
1. CPA has two divisions – airport and seaport. Certain costs are shared by both the airport and the seaport. The shared costs include management fees, salaries, legal fees, advertising, and administrative expenses. The airport pays for shared cost attributed to the cost of the seaport operations. The airport records the seaport’s allocation of the shared cost as ‘Due from seaport division’ and conversely, the seaport records ‘Due to airport division’. The seaport division normally settles amounts due to the airport division within 90 days. We observed that: • The airport division paid $789,887 of the seaports shared costs during fiscal year ended September 30, 2023. • As of September 30, 2023, receivables due from the seaport division totaled $198,055. CPA management asserts that use of airport revenues to pay operating costs of the seaport division is acceptable as the seaport division normally reimbursed the airport division within 90 days. As such, CPA management believes this does not constitute a diversion of airport revenues. CPA did not provide documentation from the grantor agency to acknowledge that the grantor agency has approved the use of airport revenues to pay for the costs of the seaport operations. Finding No.: 2023-004, continued Federal Agency: U.S. Department of Transportation Assistance Listing Program: 20.106 Airport Improvement Program Award Numbers: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Condition, continued: 2. For one (or 4%) of twenty-five cash journal entries tested, aggregating $789,887 of a total population of $63,692,682, airport funds were expended for the costs of a holiday event celebration. The costs included venue and meals which do not appear to be directly related to the airport operations. Details are as follows: Cause: CPA did not effectively seek grantor guidance over compliance with Special Tests and Provisions on revenue division on shared costs between its airport and seaport divisions. Moreover, CPA did not obtain grantor approval for the expenditure referred to whether it is duly permitted by the Federal Aviation Administration regulation. Effect: CPA is in noncompliance with Special Tests and Provisions – Revenue Diversion. Recommendation: CPA should seek approval from the grantor agency regarding use of the airport revenues: • to pay for operating cost of its seaport division, and • to pay for expenditures, such as cost of holiday events, that do not appear to be directly related to airport operations. Views of Responsible Officials: Management disagrees with the finding. Refer to separate Corrective Action Plan. Auditor Response: Condition 1: Although costs incurred by the Seaport division are fully reimbursed, it does not appear to meet the standards of compliance of using airport revenue for airport purposes only. Condition remains. Finding No.: 2023-004, continued Federal Agency: U.S. Department of Transportation Assistance Listing Program: 20.106 Airport Improvement Program Award Numbers: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Auditor Response, continued: Condition 2: The costs of the event appear to be entertainment expenses not part of the airport’s business purposes and not directly related to generating revenue for the airport. Condition remains.
Show full finding ▾Hide full finding ▴Finding No.: 2023-004 Federal Agency: U.S. Department of Transportation Assistance Listing Program: 20.106 Airport Improvement Program Award Numbers: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Criteria: In accordance with 64 FR 7696, all revenues generated by a public airport must be expended for the capital or operating costs of the airport, the local airport system, or other local facilities that are owned or operated by the owner or operator of the airport and are directly and substantially related to the actual air transportation of passengers or property. Condition: 1. CPA has two divisions – airport and seaport. Certain costs are shared by both the airport and the seaport. The shared costs include management fees, salaries, legal fees, advertising, and administrative expenses. The airport pays for shared cost attributed to the cost of the seaport operations. The airport records the seaport’s allocation of the shared cost as ‘Due from seaport division’ and conversely, the seaport records ‘Due to airport division’. The seaport division normally settles amounts due to the airport division within 90 days. We observed that: • The airport division paid $789,887 of the seaports shared costs during fiscal year ended September 30, 2023. • As of September 30, 2023, receivables due from the seaport division totaled $198,055. CPA management asserts that use of airport revenues to pay operating costs of the seaport division is acceptable as the seaport division normally reimbursed the airport division within 90 days. As such, CPA management believes this does not constitute a diversion of airport revenues. CPA did not provide documentation from the grantor agency to acknowledge that the grantor agency has approved the use of airport revenues to pay for the costs of the seaport operations. Finding No.: 2023-004, continued Federal Agency: U.S. Department of Transportation Assistance Listing Program: 20.106 Airport Improvement Program Award Numbers: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Condition, continued: 2. For one (or 4%) of twenty-five cash journal entries tested, aggregating $789,887 of a total population of $63,692,682, airport funds were expended for the costs of a holiday event celebration. The costs included venue and meals which do not appear to be directly related to the airport operations. Details are as follows: Cause: CPA did not effectively seek grantor guidance over compliance with Special Tests and Provisions on revenue division on shared costs between its airport and seaport divisions. Moreover, CPA did not obtain grantor approval for the expenditure referred to whether it is duly permitted by the Federal Aviation Administration regulation. Effect: CPA is in noncompliance with Special Tests and Provisions – Revenue Diversion. Recommendation: CPA should seek approval from the grantor agency regarding use of the airport revenues: • to pay for operating cost of its seaport division, and • to pay for expenditures, such as cost of holiday events, that do not appear to be directly related to airport operations. Views of Responsible Officials: Management disagrees with the finding. Refer to separate Corrective Action Plan. Auditor Response: Condition 1: Although costs incurred by the Seaport division are fully reimbursed, it does not appear to meet the standards of compliance of using airport revenue for airport purposes only. Condition remains. Finding No.: 2023-004, continued Federal Agency: U.S. Department of Transportation Assistance Listing Program: 20.106 Airport Improvement Program Award Numbers: All AIP Grants Area: Special Tests and Provisions – Revenue Diversion Questioned Costs: $-0- Auditor Response, continued: Condition 2: The costs of the event appear to be entertainment expenses not part of the airport’s business purposes and not directly related to generating revenue for the airport. Condition remains.
Finding No 2023-004 “ALN #20.106 Special Tests and Provisions – Revenue Diversion” Name of Contact Person(s): Sheryl Sizemore, Comptroller Ida S. De Brum, Accounting Manager Zack A. Diaz, Internal Auditor Corrective Action: CPA disagrees with this finding. Condition 1: All costs incurred by the Seaport paid initially by the Airport are reimbursed in a timely manner. For purposes of efficiency, this method is used as to reduce the number of payments to vendors being made. The Airport Division has been fully reimbursed. CPA will be seeking grantor approval for the use of this method even though this practice of recordkeeping has been in place for more than 20 years. Condition 2: CPA believes that the costs incurred pertain to the operational costs of the airport. Per the Federal Register / Vol. 64, No. 30, “Operating costs for an airport may be both direct and indirect and may include all of the expenses and costs that are recognized under the generally accepted accounting principles and practices that apply to the airport enterprise funds of state and local government entities.” Proposed Completion Date: June 30, 2025
1. Of twenty-one expenditures tested, aggregating $711,947 of a total population of $17,350,718 in nonpayroll expenditures subject to procurement, the following were noted: a. For one (or 5%), the selected vendor for contract number 00182076-OC was the third lowest bidder, for which documentation of the selection justification, was not provided. b. For one (or 5%), for contract number 00182076-OC only two public announcements of the invitation for bids were provided. No questioned costs are presented as the amount is questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs; and 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment regulations and questioned costs of $725,425 result for Conditions 1a and 2. Identification as Repeat Finding: Finding No. 2022-012 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval; and 2. Establish and implement effective monitoring controls over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-004 Federal Agency: U.S. Department of Agriculture AL Program: 10.555 National School Lunch Program (NSLP) Federal Award No.: 217NMNM3N1174, 227NMNM3N1174, 237NMNM3N1174 Area: Procurement and Suspension and Debarment Questioned Costs: $725,425 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations requires the following: 1. § 60-40-205 Competitive Sealed Bidding: • Public Notice - Adequate public notice of the invitation for bids shall be given a reasonable time prior to the date set forth for the opening of bids. Publication of notice shall be on the Public School website over a continuous period of four weeks shall be deemed to be adequate notice; and • Bid Acceptance and Bid Evaluation - Bids shall be unconditionally accepted without alteration or correction, except as authorized in the chapter. Bids shall be evaluated based on the requirements set forth in the invitation for bids, which may include criteria as necessary to reasonably permit a determination as to the acceptability of the bid for the particular purpose intended. 2. § 60-40-225 Competitive Sealed Proposals: • Condition for Use - When the Commissioner of Education determines in writing upon the advise of the legal counsel that the use of a competitive sealed bidding is either not practical or not advantageous to the Public School System, a contract may be entered into by competitive sealed proposals; • Public Notice - Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids; and • Award - Award shall be made to the responsible offeror whose proposal is determined in writing to be most advantageous to the Public School System taking into consideration price and the evaluation factors set forth in the request for proposals. The award cannot be made less than five business days after the issuance of a notice of intent to award pursuant to subsection (g). No other factors or criteria shall be used in the evaluation and the contract file shall contain the basis on which the award is made. 3. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and • The debarment shall not be for a period of more than three years. The Commissioner of Education, after consultation with Public School System legal counsel, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months. 4. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Condition: 1. Of twenty-one expenditures tested, aggregating $711,947 of a total population of $17,350,718 in nonpayroll expenditures subject to procurement, the following were noted: a. For one (or 5%), the selected vendor for contract number 00182076-OC was the third lowest bidder, for which documentation of the selection justification, was not provided. b. For one (or 5%), for contract number 00182076-OC only two public announcements of the invitation for bids were provided. No questioned costs are presented as the amount is questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs; and 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment regulations and questioned costs of $725,425 result for Conditions 1a and 2. Identification as Repeat Finding: Finding No. 2022-012 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval; and 2. Establish and implement effective monitoring controls over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-004 AL Program: 10.555 National School Lunch Program (NSLP) Area: Procurement and Suspension and Debarment Questioned Costs: $725,425 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings regarding procurement and suspension and debarment procedures. We recognize that maintaining the integrity of the competitive bidding process requires strict adherence to public notice timelines, documented justifications for vendor selection, and mandatory debarment verifications. Procurement processes were promulgated in a SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to improve documentation of the vendor selection process, both competitive and sole source exception. Corrective Action Plan: To remediate these deficiencies and ensure compliance with 2 CFR §200.317 and PSS Procurement Rules, management will implement the following: I. Procurement Selection Justification Requirement: PSS will implement a formal "Basis for Award" memorandum template. In any instance where the lowest bidder is not selected, the Procurement Officer must provide a detailed written justification—reviewed and approved by legal counsel—explaining why the selected offeror is the most advantageous to PSS based on the criteria in the solicitation. This is covered by § 60-40-205 Competitive Sealed Bidding (i) Notice of Intent to Award. After bid evaluation, a notice of intent to award the contract to the lowest responsive bid by a responsible bidder whose bid fully meets the requirements of the invitation for bids and this chapter shall be issued to all bidders. The notice of intent to award is not a promise or guarantee of award, and the intended bidder should not incur any costs based on either the notice of intent to award or reliance of a contract. Bid rejections are issued as well detailing where the bids did not qualify under § 60-40-205(g). II. Mandatory SAM.gov Verification Protocol: PSS has updated its contracting checklist to include a mandatory "Suspension and Debarment Verification" step. For all contracts exceeding $25,000, a SAM.gov exclusion search must be performed, and a dated PDF of the search results must be physically or digitally attached to the contract file prior to execution. The Procurement SOP will be updated with more specific guidance and selection checklist for each method (e.g., sealed bid, sole source) including documentation requirements to support vendor eligibility as verified at a minimum by review of SAM.gov and certification by the proposer. CNMI PSS legal counsel will be consulted regarding the addition of an appropriate contract clause to add to new contracts. All vendors with active contracts in 2023 and subsequent years will be reviewed in SAM.gov for eligibility. III. Centralized Procurement Filing System: PSS is implementing a digitization protocol of all procurement documents. A review will be conducted prior to upload to ensure it contains the public notice evidence, all received bids, the evaluation rubric, and the debarment verification. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
2022-012
For one (or 33%) of three reports examined, the quarter ending 9/30/2023 cumulative amount reported as federal share of $2,009,788 did not agree with expected cumulative federal share per audit expectation of $2,041,923, resulting in a variance of $32,135. Cause: CPA did not effectively monitor the accuracy and completeness of the financial report based on underlying accounting records. Effect: CPA is in noncompliance with the applicable reporting requirements. No questioned cost is reported as we are unable to quantify the extent of noncompliance. Recommendation: Responsible personnel should regularly monitor reports to verify that amounts reported are supported by underlying accounting records. Views of Responsible Officials: Management states agreement with the finding. Refer to separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴Finding No.: 2023-005 Federal Agency: U.S. Department of the Treasury Pass-Through Entity: CNMI Government AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No. and year: CNMI22028 2021-2023 Area: Reporting Questioned Costs: $-0- Criteria: In accordance with the grant award CNMI22028, CPA will submit quarterly reports to the Department of Finance Office of the Secretary that are accurately prepared and supported. Condition: For one (or 33%) of three reports examined, the quarter ending 9/30/2023 cumulative amount reported as federal share of $2,009,788 did not agree with expected cumulative federal share per audit expectation of $2,041,923, resulting in a variance of $32,135. Cause: CPA did not effectively monitor the accuracy and completeness of the financial report based on underlying accounting records. Effect: CPA is in noncompliance with the applicable reporting requirements. No questioned cost is reported as we are unable to quantify the extent of noncompliance. Recommendation: Responsible personnel should regularly monitor reports to verify that amounts reported are supported by underlying accounting records. Views of Responsible Officials: Management states agreement with the finding. Refer to separate Corrective Action Plan.
Finding No 2023-005 “ALN #21.027 Reporting” Name of Contact Person(s): Sheryl Sizemore, Comptroller Ida S. De Brum, Accounting Manager Zack A. Diaz, Internal Auditor Corrective Action: CPA agrees with the finding. CPA has subsequently made corrections to the reports. Proposed Completion Date: April 30, 2025
1. Of five SF-425 reports that were due for submission during FY2023, the underlying accounting records supporting all five (or 100%) SF-425 reports, were not provided. 2. Of four quarterly program reports that were due for submission during FY2023, the underlying accounting records supporting all four (or 100%) quarterly program reports, were not provided. Cause: 1. PSS lacks monitoring control procedures to ensure data included in the SF-425 and quarterly program reports are supported with underlying accounting records. 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting the SF-425 and quarterly program reports. Effect or potential effect: PSS is in noncompliance with the applicable reporting compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable reporting requirements; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-005 Federal Agency: U.S. Department of Agriculture AL Program: 10.555 National School Lunch Program (NSLP) Federal Award No.: 217NMNM3N1174, 227NMNM3N1174, 237NMNM3N1174 Area: Reporting Questioned Costs: $-0- Criteria: In accordance with 7 CFR Section 210.8, to be entitled to reimbursement under this part, each school food authority shall submit to the State agency, a Claim for Reimbursement that must include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Report of School Program Operations required under § 210.5(d). Such data must include, at a minimum, the number of free, reduced price, and paid lunches and after school snacks served to eligible children. The claim must be signed by a school food authority official. In addition, School food authorities shall maintain on file, each Claim for Reimbursement and all data used in the claims review process, by school. Records shall be retained as specified in § 210.23(c) of this part. School food authorities shall make this information available to the Department and the State agency upon request. In accordance with the applicable reporting requirements, an SF-425 report is required to be accompanied by supporting accounting records to verify the accuracy of the reported amounts. Condition: 1. Of five SF-425 reports that were due for submission during FY2023, the underlying accounting records supporting all five (or 100%) SF-425 reports, were not provided. 2. Of four quarterly program reports that were due for submission during FY2023, the underlying accounting records supporting all four (or 100%) quarterly program reports, were not provided. Cause: 1. PSS lacks monitoring control procedures to ensure data included in the SF-425 and quarterly program reports are supported with underlying accounting records. 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting the SF-425 and quarterly program reports. Effect or potential effect: PSS is in noncompliance with the applicable reporting compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable reporting requirements; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-005 AL Program: 10.555 National School Lunch Program (NSLP) Area: Reporting Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management procedures were promulgated in a SOP on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve coding of grant details and expenditures, increased frequency of reconciliations, and a specific SOP for report preparation. Corrective Action Plan: I. Implementation of a Comprehensive Grant Tracker: PSS will develop and implement a centralized Grant Lifecycle Tracker for all active federal awards. This tool will serve as the primary monitoring mechanism for compliance by recording all financial and programmatic reporting due dates, assigning specific preparers for each report, and establishing automated milestones to ensure sufficient lead time for both the preparation phase and the subsequent supervisory review. II. Deployment of Enhanced Data Analysis Tools: To ensure that quarterly program reporting is both consistent and timely, PSS will develop and implement specialized data analysis tools. these tools will streamline the aggregation of program data, reducing manual entry errors and allowing for more efficient evaluation of program performance against federal benchmarks. Proposed Completion Date: In progress for FY 2024 with completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org
1. Of ten nonpayroll expenditures tested, aggregating $184,105 of a total population of $1,241,478, one (or 10%), transaction pertains to an off-island travel from Rota to Saipan to attend PSS’ education day celebration event. There was no documentation provided to justify that such an event is necessary and reasonable for the performance of the federal award, for which the corresponding directly associated travel costs are also questioned. 2. Of thirty payroll expenditures tested, aggregating $75,035 of a total population of $3,488,866, the following were noted: a. For one (or 3%), the differential pay rate for the nine hours paid to an employee was not provided, for which the corresponding directly associated payroll costs are also questioned. b. For one (or 3%), the gross pay comprised of the employee’s payroll cost and annual leave pay out; however, the approved timesheet for the hours worked was not provided, for which the corresponding directly associated costs are also questioned. Cause: 1. PSS lacks monitoring control procedures to ensure program costs are supported; and 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. Effect or potential effect: PSS is in noncompliance with the applicable allowable costs/cost principles compliance requirements and questioned costs of $5,130 result as the projected questioned costs exceed the $25,000 threshold. Identification as Repeat Finding: Finding No. 2022-003 Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable allowable costs/cost principles; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the audit findings and the associated questioned costs. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-006 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A200106, H027A210106, H027X210106, H027A22106, H027A230106 Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Criteria: 1. Per CFR §200.403(a), costs must be necessary and reasonable for the performance of the Federal award. 2. In accordance with 2 CFR §200.403, costs must be adequately documented in order to be allowable under federal programs. Condition: 1. Of ten nonpayroll expenditures tested, aggregating $184,105 of a total population of $1,241,478, one (or 10%), transaction pertains to an off-island travel from Rota to Saipan to attend PSS’ education day celebration event. There was no documentation provided to justify that such an event is necessary and reasonable for the performance of the federal award, for which the corresponding directly associated travel costs are also questioned. 2. Of thirty payroll expenditures tested, aggregating $75,035 of a total population of $3,488,866, the following were noted: a. For one (or 3%), the differential pay rate for the nine hours paid to an employee was not provided, for which the corresponding directly associated payroll costs are also questioned. b. For one (or 3%), the gross pay comprised of the employee’s payroll cost and annual leave pay out; however, the approved timesheet for the hours worked was not provided, for which the corresponding directly associated costs are also questioned. Cause: 1. PSS lacks monitoring control procedures to ensure program costs are supported; and 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. Effect or potential effect: PSS is in noncompliance with the applicable allowable costs/cost principles compliance requirements and questioned costs of $5,130 result as the projected questioned costs exceed the $25,000 threshold. Identification as Repeat Finding: Finding No. 2022-003 Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable allowable costs/cost principles; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the audit findings and the associated questioned costs. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-006 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and the associated questioned costs. Financial and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: To prevent future occurrences and ensure full compliance with federal cost principles, PSS will implement the following: I. Review of Travel Authorization Requirements: PSS will conduct a review of its travel policy to require a written statement of alignment with program goals or objectives for every travel request. This statement must explicitly document how the travel is necessary and reasonable for the performance of the specific federal award. II. Centralized Digital Documentation Protocol: To resolve the inadequate systematic filing issue, PSS implemented a protocol to improve its digital filing procedures. All supporting documents, including invoices, boarding passes, approved timesheets, and pay rate authorizations, must be uploaded and verified before the final liquidation of any federal drawdowns. III. Strengthening Review Process: Finalize expanded SOPs and policies to include more detail on time and effort reporting (including differential pay) and travel justifications specific to allowability determinations that are currently in draft including an analysis rubric and checklist for review. Where necessary, program specific supplemental guidance for allowability determinations will be provided. PSS central office staff participated in live training in October 2025. Refresher training on cost principles will be required annually for staff making allowability determinations. Proposed Completion Date: PSS is currently in the process of implementing these corrective actions with full implementation by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org
2022-003
1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For four (or 80%) of the five locations selected for testing, no maintenance procedures and safeguarding measures for equipment are documented. 3. For one (or 13%) of eight capital assets selected for testing, PSS did not provide approved count sheets signed nor submitted the assigned custodian to support that a physical count was performed in FY2023. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. 3. PSS’ document retention and record-keeping practices did not operate effectively to ensure that required inventory documentation, such as approved custodian count sheets, is properly maintained, stored and easily retrievable. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records, inconsistent safeguarding and maintenance practices, and insufficient inventory documentation increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: Finding No. 2022-008 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. 4. Lastly, PSS should strengthen physical inventory procedures by requiring annual inventories to be properly documented, reviewed, approved, and retained, including ensuring all custodians submit signed inventory count sheets in accordance with its policy. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-007 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A210106, H027A220106, H027A230106 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. In accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Further, in accordance with 2 CFR 200.313 (3), a control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Additionally, 2 CFR 200.313(d)(4) requires that adequate maintenance procedures must be developed to keep the property in good condition. PSS Policy Subpart C Inventory Management Policy section 60-20-815 (a)(1) states that PSS shall require a physical count of all stock supply and equipment items at least once each year. Lastly, according to PSS Policy Subpart C Inventory Management Policy section 60-20-815 (c)(5), during inventory counts, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. Condition: 1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For four (or 80%) of the five locations selected for testing, no maintenance procedures and safeguarding measures for equipment are documented. 3. For one (or 13%) of eight capital assets selected for testing, PSS did not provide approved count sheets signed nor submitted the assigned custodian to support that a physical count was performed in FY2023. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. 3. PSS’ document retention and record-keeping practices did not operate effectively to ensure that required inventory documentation, such as approved custodian count sheets, is properly maintained, stored and easily retrievable. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records, inconsistent safeguarding and maintenance practices, and insufficient inventory documentation increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: Finding No. 2022-008 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. 4. Lastly, PSS should strengthen physical inventory procedures by requiring annual inventories to be properly documented, reviewed, approved, and retained, including ensuring all custodians submit signed inventory count sheets in accordance with its policy. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-007 AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. We recognize that our current capital asset records and decentralized maintenance practices do not fully meet the rigorous data and oversight standards of 2 CFR §200.313. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. PSS is committed to a comprehensive overhaul of our inventory management system to ensure full compliance and better protection of federal property. Corrective Action Plan: To address the deficiencies in recordkeeping, safeguarding, and physical verification, PSS will implement the following: I. Asset Listing Remediation: PSS will update the Master Capital Asset Listing to include information such as asset condition. II. Standardized Safeguarding & Maintenance Guidance: PSS will finalize SOPs and policies to include more detail on property management and inventory control. PSS will develop and distribute a district-wide equipment maintenance & safeguarding guidance. This will establish the minimum required procedures for all schools and offices, including standardized logs for routine maintenance and specific security protocols (e.g., tagging, restricted access, and secure storage) to prevent loss or theft. III. Formal Inventory Certification: To resolve the issue of missing count sheets, PSS will implement a standardized annual inventory process. This will require each location custodian to submit a signed and dated "Physical Inventory Certification" along with the count sheets to be verified by Procurement personnel. No inventory will be considered complete until the Central Office verifies that the custodian list matches the asset records. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
2022-008
1. Based on the comparison of State expenditures recorded under Business Unit (BU) 111133 against the amount indicated on the Part B Application for MFS, we noted that PSS failed to maintain the required level of State financial support for special education and related services in FY2023. In addition, PSS included open encumbrances as part of its calculation for maintenance of effort. However, PSS was unable to substantiate these encumbrances or provide adequate documentation to support the inclusion of these encumbrances. As a result, questioned costs were determined based on the actual expenditures incurred in FY2023. 2. Per our walkthrough procedures over internal control, evidence of review and approval by the Director of Finance over the local expenditures recorded under business unit 111133 was not provided. Cause: PSS failed to adhere to the maintenance of effort requirements under IDEA §612(a)(18), 34 CFR §300.163 and applicable grant award requirements. Additionally, PSS lacks proper monitoring, review and approval controls over State expenditures recorded under business unit 111133 to ensure compliance with maintenance of effort requirements. Effect or potential effect: PSS is in noncompliance with applicable maintenance of effort regulations and questioned costs of $345,823 result. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should ensure compliance with maintenance of effort requirements in accordance with applicable federal regulations and grant award terms. 2. PSS should establish and implement policies and procedures for monitoring, reviewing and reconciling State expenditures to accurately compare prior year and current year levels of State financial support for special education and related services. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-008 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A220106, H027A230106, H027X210106 Area: Matching, Level of Effort, and Earmarking Questioned Costs: $345,823 Criteria: In accordance with IDEA §612(a)(18) as part of the IDEA Part B Application, states may meet the maintenance of State financial support (MFS), on either a total or per capita basis. Additionally, 34 CFR §300.163(a) says a State must not reduce the amount of State financial support for special education and related services for children with disabilities or otherwise made available because of the excess costs of educating those children, below the amount of support for the preceding fiscal year. Condition: 1. Based on the comparison of State expenditures recorded under Business Unit (BU) 111133 against the amount indicated on the Part B Application for MFS, we noted that PSS failed to maintain the required level of State financial support for special education and related services in FY2023. In addition, PSS included open encumbrances as part of its calculation for maintenance of effort. However, PSS was unable to substantiate these encumbrances or provide adequate documentation to support the inclusion of these encumbrances. As a result, questioned costs were determined based on the actual expenditures incurred in FY2023. 2. Per our walkthrough procedures over internal control, evidence of review and approval by the Director of Finance over the local expenditures recorded under business unit 111133 was not provided. Cause: PSS failed to adhere to the maintenance of effort requirements under IDEA §612(a)(18), 34 CFR §300.163 and applicable grant award requirements. Additionally, PSS lacks proper monitoring, review and approval controls over State expenditures recorded under business unit 111133 to ensure compliance with maintenance of effort requirements. Effect or potential effect: PSS is in noncompliance with applicable maintenance of effort regulations and questioned costs of $345,823 result. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should ensure compliance with maintenance of effort requirements in accordance with applicable federal regulations and grant award terms. 2. PSS should establish and implement policies and procedures for monitoring, reviewing and reconciling State expenditures to accurately compare prior year and current year levels of State financial support for special education and related services. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-008 AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Matching, Level of Effort, and Earmarking Questioned Costs: $345,823 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding regarding the Maintenance of Financial Support (MFS) for IDEA Part B. We recognize that the inclusion of unverified encumbrances in the MFS calculation led to an inadvertent shortfall in actual expenditures compared to the required support levels. Corrective Action Plan: To ensure future compliance with IDEA §612(a)(18) and 34 CFR §300.163(a), PSS is implementing the following measures: I. Establishment of an MFS Monitoring Framework: The Finance Department, in coordination with the Special Education Program, will develop a formal MFS Tracking Ledger. This tool will track actual expenditures on a quarterly basis to ensure spending is on pace to meet or exceed the preceding fiscal year’s support levels. II. Verification of Encumbrances: PSS policy has been clarified to ensure that only "liquidated expenditures" (actual costs incurred) are used for MFS compliance reporting. Any encumbrances included in preliminary projections must be supported by valid contracts or purchase orders and must be reconciled against actual payments prior to final federal reporting. III. Enhanced Supervisory Review: PSS will develop an "MFS Certification" process. The Director of Finance will review and sign off on the expenditure reports at mid-year and year-end. This review will include a side-by-side comparison of current-year spending against the Part B Application requirements to identify potential shortfalls early. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org
Of twelve expenditures tested, aggregating $114,356 of a total population of $1,156,858 in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 17%), transactions were procured under the $10,000 small purchases threshold; however, only one quotation was obtained. 2. For two (or 17%), contracts were procured through a competitive sealed proposal for professional services; however, the evaluation for and proposal submitted by the offeror was not provided for contract 00180716-OC. For contract 00190611-OC, the request for proposals outlining scope of work and proposal submitted by the offeror was not provided. 3. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. No questioned costs are presented as the amount is questioned at Condition 2. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment compliance requirements and questioned costs of $102,862 result for Conditions 1 and 2. Identification as Repeat Finding: Finding No. 2022-013 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. 2. Establish and implement effective monitoring controls to ensure that all procurement regulations are complied with, including over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to the PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-009 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Award Number: H027A210106, H027A220106, H027A230106, H027X210106 Area: Procurement and Suspension and Debarment Questioned Costs: $102,862 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations states the following: 1. § 60-40-210 Small Purchases • Purchases not exceeding $500 may be made without securing bids or price quotations if the Chief of Procurement and Supply considers the price reasonable. Such determination shall be made in writing and shall indicate: 1) the reason why price quotations were not sought; 2) the utility of the purchase; and 3) an explanation of why the price is reasonable under the circumstances. • Bidding is not required but is encouraged for procurement under $10,000. Price quotations from at least three vendors must be obtained and the selection based on competitive price and quality for procurement valued at under $10,000. Any price quotations obtained must be written, documented, and submitted to the Chief for approval. However, if it is an emergency and three price quotations are not practicable, the purchase shall function as an emergency procurement and follow § 60-40-220. 2. § 60-40-230 Competitive Selection Procedures for Professional Services: • Procurement Method – The services of accountants shall be procured as provided in this section except when authorized as a small purchase, emergency procurement, sole-source procurement or non-employment services contracts such as special education related services. • Policy – It is the policy to publicly announce all requirements for professional services and negotiate contracts on the basis of demonstrated competence and qualifications at a fair and reasonable price. The Chief Procurement Officer shall maintain files of current statements of qualifications of professional firms. Persons engaged in providing professional services may submit statements of qualifications and expressions of interests providing such types of services. Persons may amend these statements at any time by filing a new statement. • Public Announcement and Form of Request for Proposals – Adequate notice of the need for such services shall be given by the official with expenditure authority through a request for proposals. The request for proposals shall describe the services required, list the type of information and data required of each offeror and state the relative importance of particular qualifications. • Award – Award shall be made to the offeror determined in writing by the official with expenditure authority to be the best qualified based on the evaluation factors set forth in the request for proposals, and negotiation of compensation determined to be fair and reasonable. If compensation cannot be agreed upon with the best qualified offeror then negotiations will be formally terminated with the selected offeror. If proposals were submitted by one or more other offerors determined to be qualified, negotiations may be conducted with such other offeror or offerors, in the order of their respective qualification ranking, and the contract may be awarded to the offeror then ranked as best qualified if the amount of compensation is determined to be fair and reasonable. 3. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and • The debarment shall not be for a period of more than three years. The Commissioner of Education, after consultation with Public School System legal counsel, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months. 4. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: a. Checking SAM.gov Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. Condition: Of twelve expenditures tested, aggregating $114,356 of a total population of $1,156,858 in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 17%), transactions were procured under the $10,000 small purchases threshold; however, only one quotation was obtained. 2. For two (or 17%), contracts were procured through a competitive sealed proposal for professional services; however, the evaluation for and proposal submitted by the offeror was not provided for contract 00180716-OC. For contract 00190611-OC, the request for proposals outlining scope of work and proposal submitted by the offeror was not provided. 3. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. No questioned costs are presented as the amount is questioned at Condition 2. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment compliance requirements and questioned costs of $102,862 result for Conditions 1 and 2. Identification as Repeat Finding: Finding No. 2022-013 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. 2. Establish and implement effective monitoring controls to ensure that all procurement regulations are complied with, including over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to the PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-009 AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Area: Procurement and Suspension and Debarment Questioned Costs: $102,862 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit finding. While there are internal practices to monitor for compliance, we acknowledge that there are inconsistencies of completeness. Furthermore, we recognize the necessity of performing and documenting SAM.gov exclusion checks for all covered transactions over $25,000. Procurement processes were promulgated in a SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to improve documentation of the vendor selection process, both competitive and sole source exception. (See also 2023-004) Corrective Action Plan: To address these deficiencies and ensure compliance with PSS Procurement Rules and 2 CFR §200.317, PSS will implement the following: I. Small Purchase Compliance Enforcement: The Procurement Office will strictly enforce the procurement policies through the implementation of a compliance checklist. This checklist is to be aligned with procurement regulations and completed by requesters with procurement personnel reviewing for compliance. II. Competitive Sealed Proposal (RFP) Workflow: PSS implemented a mandatory RFP Authorization document as a result of FY22 findings. FY22 findings where issued and completed at the beginning of FY24. This packet must include the written determination from the Commissioner of Education, citing legal counsel's advice, regarding the impracticality of sealed bidding. No RFP will be advertised until this signed determination and the corresponding evaluation rubric are uploaded to the permanent contract file. III. Strengthening SOP’s: Update Procurement SOP with more specific guidance and selection checklist for each method (e.g., sealed bid, sole source) including documentation requirements to support vendor eligibility as verified at a minimum by review of SAM.gov and certification by the proposer. CNMI PSS legal counsel will be consulted regarding the addition of an appropriate contract clause to add to new contracts. All vendors with active contracts in 2023 and subsequent years will be reviewed in SAM.gov for eligibility. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
2022-013
Based on walkthrough procedures performed over the disbursement of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as Repeat Finding: Finding No. 2022-004 Recommendation: PSS should implement, document and consistently enforce appropriate review and approval controls over disbursements of program funds Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-010 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grants to the Outlying Areas Federal Award No.: S403A210001, S403A220001, S403A230001 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as Repeat Finding: Finding No. 2022-004 Recommendation: PSS should implement, document and consistently enforce appropriate review and approval controls over disbursements of program funds Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-010 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org
2022-004
Finding No. 2023-011 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grants to the Outlying Areas Federal Award No.: S403A220001 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. In accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Further, in accordance with 2 CFR 200.313 (3), a control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Additionally, 2 CFR 200.313(d)(4) requires that adequate maintenance procedures must be developed to keep the property in good condition. The PSS Policy Subpart C Inventory Management Policy section 60-20-815 (a)(1) states that PSS shall require a physical count of all stock supply and equipment items at least once each year. Lastly, according to PSS Policy Subpart C Inventory Management Policy section 60-20-815 (c)(5), during inventory counts, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. Condition 1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For all seventeen (or 100%) locations selected for testing, no maintenance procedures and safeguarding measures for equipment are documented. 3. For one (or 10%) of ten capital assets selected for testing, PSS did not provide approved count sheets signed and submitted by the assigned custodian to support that a physical counts was performed in FY2023. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. 3. PSS’ document retention and record-keeping practices did not operate effectively to ensure that required inventory documentation, such as approved custodian count sheets, is properly maintained, stored and are easily retrievable. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records, inconsistent safeguarding and maintenance practices, and insufficient inventory documentation increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: 2022-009 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. 4. Lastly, PSS should strengthen physical inventory procedures by requiring annual inventories to be properly documented, reviewed, approved, and retained, including ensuring all custodians submit signed inventory count sheets in accordance with its policy. Views of Auditee and Corrective Action Plan: PSS concurs with the finding and recommendations. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-011 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grants to the Outlying Areas Federal Award No.: S403A220001 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. In accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Further, in accordance with 2 CFR 200.313 (3), a control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Additionally, 2 CFR 200.313(d)(4) requires that adequate maintenance procedures must be developed to keep the property in good condition. The PSS Policy Subpart C Inventory Management Policy section 60-20-815 (a)(1) states that PSS shall require a physical count of all stock supply and equipment items at least once each year. Lastly, according to PSS Policy Subpart C Inventory Management Policy section 60-20-815 (c)(5), during inventory counts, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. Condition 1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For all seventeen (or 100%) locations selected for testing, no maintenance procedures and safeguarding measures for equipment are documented. 3. For one (or 10%) of ten capital assets selected for testing, PSS did not provide approved count sheets signed and submitted by the assigned custodian to support that a physical counts was performed in FY2023. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. 3. PSS’ document retention and record-keeping practices did not operate effectively to ensure that required inventory documentation, such as approved custodian count sheets, is properly maintained, stored and are easily retrievable. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records, inconsistent safeguarding and maintenance practices, and insufficient inventory documentation increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: 2022-009 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. 4. Lastly, PSS should strengthen physical inventory procedures by requiring annual inventories to be properly documented, reviewed, approved, and retained, including ensuring all custodians submit signed inventory count sheets in accordance with its policy. Views of Auditee and Corrective Action Plan: PSS concurs with the finding and recommendations. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-011 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding and recommendations regarding Equipment and Real Property Management. We acknowledge that current decentralized practices have led to inconsistencies in asset record-keeping and maintenance. PSS is committed to fully aligning its internal policies with 2 CFR §200.313 to ensure the integrity and protection of all federally funded assets. Property management and inventory control processes were promulgated in the Procurement and Supplies SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to expand property management and inventory control into a separate SOP. PSS central office has contacted the State Infrastructure Technology Department for additional information about an existing inventory tracking system and its potential for implementation and integration with the new financial management system, Tyler Munis. (See 2023-0007) Corrective Action Plan: To remediate these deficiencies and ensure consistent compliance across all locations, PSS will execute the following: I. Comprehensive Asset Data Update: PSS will redesign the Master Capital Asset Listing to include all federally mandated fields and the specific physical condition of each asset. A one-time district-wide data validation check will be conducted to populate these missing fields. II. Standardized Maintenance and Safeguarding Framework: PSS will develop a Unified Asset Protection Guidance that establishes mandatory safeguarding protocols and maintenance schedules for all equipment types. This framework will serve as the minimum standard for all schools and offices, requiring them to maintain localized logs that prove equipment is being serviced and secured. III. Standard Operating Procedures and Policies finalized: PSS will include more detail on property management and inventory control. Identify and evaluate the use of a digital inventory management system with the intent, if feasible, to implement within the next year. PSS staff at each school and in the central office will be identified as property custodians held accountable for annual inventory and property management of assigned assets. Training to be required annually for these personnel. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
2022-009
1. Of twenty-five expenditures tested, aggregating $846,783 of a total population of $8,192,986 in nonpayroll expenditures subject to procurement, the following were noted: a. For five (or 20%), bid evaluation forms for the unsuccessful bidders for the following contracts procured through invitation for bid, were not provided. For contract number 00181592-OC, none of the bid evaluation forms were provided, including the bid opening summary sheet. b. For two (or 8%), public announcements of the invitation for bids were not provided. No questioned costs are presented as the amounts are questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs; and 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment regulations and questioned costs of $1,019,874 result for Conditions 1a and 3. Identification as Repeat Finding: Finding No. 2022-014 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval; and 2. Establish and implement effective monitoring controls over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-012 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grants to the Outlying Areas Federal Award No.: S403A220001 Area: Procurement and Suspension and Debarment Questioned Costs: $1,019,874 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations states the following: 1. § 60-40-205 Competitive Sealed Bidding: • Public Notice - Adequate public notice of the invitation for bids shall be given a reasonable time prior to the date set forth for the opening of bids. Publication of notice shall be on the Public School website over a continuous period of four weeks shall be deemed to be adequate notice; and • Bid Acceptance and Bid Evaluation - Bids shall be unconditionally accepted without alteration or correction, except as authorized in the chapter. Bids shall be evaluated based on the requirements set forth in the invitation for bids, which may include criteria as necessary to reasonably permit a determination as to the acceptability of the bid for the particular purpose intended. 2. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and • The debarment shall not be for a period of more than three years. The Commissioner of Education, after consultation with Public School System legal counsel, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months. 3. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: a. Checking SAM.gov Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. Condition: 1. Of twenty-five expenditures tested, aggregating $846,783 of a total population of $8,192,986 in nonpayroll expenditures subject to procurement, the following were noted: a. For five (or 20%), bid evaluation forms for the unsuccessful bidders for the following contracts procured through invitation for bid, were not provided. For contract number 00181592-OC, none of the bid evaluation forms were provided, including the bid opening summary sheet. b. For two (or 8%), public announcements of the invitation for bids were not provided. No questioned costs are presented as the amounts are questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs; and 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment regulations and questioned costs of $1,019,874 result for Conditions 1a and 3. Identification as Repeat Finding: Finding No. 2022-014 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval; and 2. Establish and implement effective monitoring controls over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-012 AL Program: 84.403 Consolidated Grants to the Outlying Areas Area: Procurement and Suspension and Debarment Questioned Costs: $1,019,874 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings. We recognize that the procurement files for the identified contracts lacked the necessary documentation, specifically bid evaluation forms, public notices, and suspension and debarment verifications, required to substantiate compliance with PSS Procurement Rules and 2 CFR §200.317. Procurement processes were promulgated in a SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to improve documentation of the vendor selection process, both competitive and sole source exception. (See also 2023-004, 2023-0009) Corrective Action Plan: To address the systematic filing issues and ensure robust monitoring of procurement requirements, PSS will implement the following: I. Mandatory Bid Opening and Evaluation Packet: PSS is implementing a standardized "Bid Evaluation Checklist" that must be completed for every Invitation for Bid (IFB). This checklist will require the Procurement Officer to verify that the file contains: (1) the Bid Opening Summary Sheet, (2) evaluation forms for all bidders (successful and unsuccessful), and (3) the original signed bids. II. Proof of Publication Certification: To ensure compliance with the four-week public notice requirement, PSS will now require a "Publication Certification Form" for every competitive procurement. This form will include dated evidence (such as website timestamps or newspaper affidavits) to provide a verifiable audit trail of the continuous advertisement period. III. Standardized SAM.gov Verification Protocol: For all covered transactions equal to or exceeding $25,000, PSS has made it a mandatory requirement to perform a SAM.gov exclusion search prior to contract execution. A dated PDF copy of the search result must be printed and physically or digitally attached to the contract file as evidence of compliance with 2 CFR §180.300. IV. Updated Procurement Standard Operating Procedures: Procurement SOPs will be updated with more specific guidance and selection checklist for each method (e.g., sealed bid, sole source) including documentation requirements to support vendor eligibility as verified at a minimum by review of SAM.gov and certification by the proposer. CNMI PSS legal counsel will be consulted regarding the addition of an appropriate contract clause to add to new contracts. All vendors with active contracts in 2023 and subsequent years will be reviewed in SAM.gov for eligibility. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
2022-014
Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as Repeat Finding: Finding No. 2022-005 Recommendation: PSS should implement compensating, redundant, or adjacent control activities, including documented supervisory reviews and approval checklists, to ensure compliance with federal requirements. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-013 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A200001, S425A210001, S425X210001 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as Repeat Finding: Finding No. 2022-005 Recommendation: PSS should implement compensating, redundant, or adjacent control activities, including documented supervisory reviews and approval checklists, to ensure compliance with federal requirements. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-013 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management policies procedures were promulgated in SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Corrective Action Plan: I. Finalization of Allowability and Disbursement SOPs: PSS will finalize comprehensive Standard Operating Procedures (SOPs) and policies specifically governing allowability determinations and vendor payments. II. Enhanced Disbursement Controls: PSS is implementing a documented review and approval controls over the payment process. Before any check or ACH disbursement is finalized, a reviewer must verify that the payment amount agrees exactly with the approved invoice. This verification will be physically or digitally documented on the payment voucher to provide a clear audit trail of the pre-payment review. Proposed Completion Date: In progress for FY 2024 with full implementation and documentation processes expected to be completed in 2026. As part of this improvement, we are designing a standardized, documented review process to ensure all disbursements are verified against approved invoices prior to payment. Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org
2022-005
1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For twenty-six (or 96%) of the twenty-seven locations selected for testing, no maintenance procedures and safeguarding measures for equipment were documented. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records and inconsistent safeguarding and maintenance practices increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: Finding No. 2022-010 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-014 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. In accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Further, in accordance with 2 CFR 200.313 (3), a control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Lastly, 2 CFR 200.313(d)(4) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: 1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For twenty-six (or 96%) of the twenty-seven locations selected for testing, no maintenance procedures and safeguarding measures for equipment were documented. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records and inconsistent safeguarding and maintenance practices increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: Finding No. 2022-010 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-014 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Equipment and Real Property Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and recognizes the systemic nature of the deficiencies in equipment management. We acknowledge that the current decentralized approach to safeguarding and maintenance is insufficient to meet the standards of 2 CFR §200.313. PSS is committed to implementing a district-wide, standardized asset management framework to protect federally funded property. Financial and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Payment procedures are being addressed in a separate SOP. Corrective Action Plan: To remediate these findings and ensure consistent compliance across all 27+ locations, PSS will implement the following: I. Capital Asset Listing Enhancement: PSS will immediately update the master inventory database to include all data fields required by 2 CFR 200.313(d)(1). A system-wide data validation will be conducted semi-annually or greater to ensure these fields are populated for all existing federal assets. II. Uniform Safeguarding and Maintenance Guidance: PSS will develop and issue a mandatory guidance on Uniform Safeguarding and Maintenance. This will provide standardized maintenance schedules and safeguarding protocols (e.g., specific tagging requirements and secure storage standards) that must be adopted by every school and office. This eliminates the "lack of standardized controls" across different locations. III. Standardized Maintenance Logs: PSS will require all locations to utilize a standard "Equipment Maintenance Log." This log will serve as the primary documented evidence that maintenance procedures are being performed. IV. Standard Operating Procedures and Policies: PSS will finalize SOPs and policies internal controls and specifically allowability determinations and vendor payments that are currently in draft including an analysis rubric and checklist for review. Where necessary, program specific supplemental guidance for allowability determinations will be provided. PSS central office staff participated in live training in October 2025 regarding allowability of costs. Refresher training on cost principles will be required annually for staff making allowability determinations. Payment processes will be added to this training. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
2022-010
PSS did not maintain or provide adequate supporting documentation to demonstrate compliance with the ARP-OA earmarking requirements. Specifically, PSS did not provide budgetary documentation evidencing that the required portions of ARP-OA funds were allocated and expended for allowable evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Cause: PSS does not have an effective internal control over financial documentation related to earmarked ARP-OA funds. PSS lacks established procedures to ensure that budget allocations and supporting record related to earmarking requirements are properly prepared, retained and readily available for audit and compliance reporting purposes. Effect or potential effect: PSS is in noncompliance with the earmarking requirements for the ARP-OA program. Questioned costs are undeterminable as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should strengthen internal controls over ARP‑OA earmarking compliance by establishing and implementing formal procedures to ensure that: 1. Required earmarking allocations are clearly identified in budgets; and 2. Supporting documentation is retained, organized, and readily available for audit and compliance review purposes. Views of Auditee and Corrective Action Plan: PSS does not agree with the finding. PSS has allocated and expended more than 20% on evidence-based interventions to address learning loss. Specifically, projects listed under the ARP expense report are mapped directly to learning loss categories (e.g. expenses for summer school, extended learning opportunities, high dosage tutors, etc.). Refer to PSS’ Corrective Action Plan for additional information. Auditor Response: The supporting documentation provided, including the ARPA-OA budget that was resubmitted, did not clearly identify the required earmarking allocations and related expenditures for evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Recalculation or verification of compliance with the earmarking requirements of the ARP-OA program could not be performed. The finding remains.
Show full finding ▾Hide full finding ▴Finding No. 2023-015 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with the terms and conditions in the Grant Agreement, the State Educational Agencies (SEA) will use (a) not less than twenty percent of its ARP-OA SEA allocation to carry out, directly or through subgrants or contracts, activities to address the academic impact of lost instructional time by supporting the implementation of evidence-based interventions; (b) a portion of their ARP-OA SEA allocation to carry out, directly or through subgrants to Local Educational Agencies (LEAs) or through contracts, the implementation of evidence-based summer enrichment programs; (c) and a portion of their ARP-OA SEA allocation to carry out, directly or through subgrants to LEAs or through contracts, the implementation of evidence-based comprehensive afterschool programs. Condition: PSS did not maintain or provide adequate supporting documentation to demonstrate compliance with the ARP-OA earmarking requirements. Specifically, PSS did not provide budgetary documentation evidencing that the required portions of ARP-OA funds were allocated and expended for allowable evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Cause: PSS does not have an effective internal control over financial documentation related to earmarked ARP-OA funds. PSS lacks established procedures to ensure that budget allocations and supporting record related to earmarking requirements are properly prepared, retained and readily available for audit and compliance reporting purposes. Effect or potential effect: PSS is in noncompliance with the earmarking requirements for the ARP-OA program. Questioned costs are undeterminable as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should strengthen internal controls over ARP‑OA earmarking compliance by establishing and implementing formal procedures to ensure that: 1. Required earmarking allocations are clearly identified in budgets; and 2. Supporting documentation is retained, organized, and readily available for audit and compliance review purposes. Views of Auditee and Corrective Action Plan: PSS does not agree with the finding. PSS has allocated and expended more than 20% on evidence-based interventions to address learning loss. Specifically, projects listed under the ARP expense report are mapped directly to learning loss categories (e.g. expenses for summer school, extended learning opportunities, high dosage tutors, etc.). Refer to PSS’ Corrective Action Plan for additional information. Auditor Response: The supporting documentation provided, including the ARPA-OA budget that was resubmitted, did not clearly identify the required earmarking allocations and related expenditures for evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Recalculation or verification of compliance with the earmarking requirements of the ARP-OA program could not be performed. The finding remains.
Finding No.: 2023-015 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management does not agree with the finding. PSS has allocated and expended more than 20% on evidence-based interventions to address learning loss. Specifically, projects listed under the ARP expense report are mapped directly to learning loss categories (e.g. expenses for summer school, extended learning opportunities, high dosage tutors, etc.). Based on this documentation, we request that the audit finding be revised to reflect compliance. Proposed Completion Date: Resolution in progress and on track for completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org
1. For eight (or 100%) of eight construction contracts selected for testing, the required clauses, as identified in 29 CFR 5.5(a)(1) and 29 CFR 5.5(a)(8), were not inserted or referenced in the contract or purchase order. No questioned costs are presented as we are unable to quantify the extend of the noncompliance. 2. For eight (or 100%) of eight construction expenditures selected for testing, PSS did not provide the certified payrolls from contractors or subcontractors for work subject to Davis-Bacon Act requirements. No questioned costs are presented as we are unable to quantify the noncompliance. Cause: PSS did not establish and effectively implement internal control procedures to address or prevent noncompliance of the applicable wage rate requirements. Effect or potential effect: PSS is in noncompliance with applicable wage rate requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should establish and implement effective internal controls to ensure compliance with federal wage rate requirements. At a minimum, PSS should: 1. Ensure all applicable contracts and purchase orders include or reference the required Davis‑Bacon labor standards clauses; 2. Require contractors and subcontractors to submit certified payrolls for all Davis‑Bacon–covered work; and 3. Implement procedures to review, approve, and retain certified payrolls and supporting documentation. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-016 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Special Tests and Provisions - Wage Rate Requirement Questioned Costs: Undeterminable In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Under 29 CFR 5.5(a), contracts exceeding $2,000 for construction, alteration, or repair of public buildings or public works financed in whole or in part with federal funds must include the required Davis-Bacon labor standards clauses, including the incorporation by reference of all applicable rulings and interpretations (29 CFR parts 1, 3, and 5). Additionally, pursuant to 29 CFR 5.5(a)(3)(ii)(A), contractors or subcontractors must submit weekly, for each week in which any Davis Bacon Act (DBA)- or Related Acts-covered work is performed, certified payrolls to the appropriate Federal agency, if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the agency. Condition: 1. For eight (or 100%) of eight construction contracts selected for testing, the required clauses, as identified in 29 CFR 5.5(a)(1) and 29 CFR 5.5(a)(8), were not inserted or referenced in the contract or purchase order. No questioned costs are presented as we are unable to quantify the extend of the noncompliance. 2. For eight (or 100%) of eight construction expenditures selected for testing, PSS did not provide the certified payrolls from contractors or subcontractors for work subject to Davis-Bacon Act requirements. No questioned costs are presented as we are unable to quantify the noncompliance. Cause: PSS did not establish and effectively implement internal control procedures to address or prevent noncompliance of the applicable wage rate requirements. Effect or potential effect: PSS is in noncompliance with applicable wage rate requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should establish and implement effective internal controls to ensure compliance with federal wage rate requirements. At a minimum, PSS should: 1. Ensure all applicable contracts and purchase orders include or reference the required Davis‑Bacon labor standards clauses; 2. Require contractors and subcontractors to submit certified payrolls for all Davis‑Bacon–covered work; and 3. Implement procedures to review, approve, and retain certified payrolls and supporting documentation. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-016 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Special Tests and Provisions - Wage Rate Requirement Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings. We acknowledge that our current procurement and contract administration processes did not consistently incorporate the mandatory Davis-Bacon Act labor standard clauses or the subsequent collection of certified payrolls. PSS is committed to implementing a rigorous compliance framework for all federally funded construction and repair projects. Financial, Procurement, and Grants Management policies procedures were promulgated in a SOPs on September 18, 2024. The financial management system was subsequently changed to Tyler Munis to conform with CNMI central government requirements which will enhance capabilities. The SOPs and the Tyler Munis implementation are under review by an external consultant and recommendations made to improve documentation of cost allowability have been received. Payment procedures are being addressed in a separate SOP. Corrective Action Plan: To ensure full compliance with 29 CFR 5.5 and federal wage rate requirements, PSS will implement the following: I. Standardized Construction Contract Template: PSS Legal Counsel and the Procurement Office will develop a standardized "Federal Construction Contract Addendum." This addendum will contain all mandatory Davis-Bacon Act clauses required by 29 CFR 5.5(a)(1)-(10). Effective immediately, no contract or purchase order exceeding $2,000 for construction, alteration, or repair will be executed without the inclusion of this addendum. II. Mandatory Certified Payroll Submission Protocol: PSS will update its "Notice to Proceed" and project management guidelines to explicitly state that progress payments will be withheld until the contractor submits the required weekly certified payrolls. Contractors will be provided with the Form WH-347 (or an equivalent) to ensure they are using the correct reporting format. III. Pre-Construction Compliance Meetings: For all future Davis-Bacon covered projects, PSS will hold a mandatory pre-construction meeting with contractors to clearly communicate their obligations regarding certified payrolls and the posting of the applicable wage decision at the job site. IV. Document Retention and Review Audit: PSS will implement a "Project Close-out Checklist." Finance will not process the final retention payment for any construction project until the Labor Compliance Monitor certifies that all weekly certified payrolls have been received, reviewed, and filed. V. Updated Standard Operating Procedures and Training: PSS will finalize SOPs and policies internal controls with updated internal controls and procedures for required contract clauses and oversight. Checklists will be updated to include a specific control for Davis-Bacon reporting. Require all current contractors and those identified in this audit to submit certified payrolls for 2023 through the span of their contracts for all Davis-Bacon covered work. PSS Procurement and Supply staff will receive refresher training on cost principles annually regarding required contract clauses and documentation to support compliance with requirements. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
1. PSS did not provide adequate documentation to verify that there were timely and meaningful consultations with appropriate private school officials during the design and development of federally funded programs and prior to making decisions involving private school participation regarding the size and scope of the equitable services that will be provided to eligible private school children and their teachers, and other educational personnel, the amount of funds available for those services, and how that amount is determined. 2. The amount allocated to eligible private schools is not equal to the amount of funds expended for participating public schools in FY2023 on a per-pupil basis. Since no adequate documentation was provided for the calculation of the amount of funds for eligible private schools as cited at Condition 1, no questioned costs are presented as we are unable to quantify the extent of the noncompliance. Cause: 1. PSS does not perform timely consultations and follow-ups with the eligible private school officials in accordance with provisions of 34 CFR 299.7. 2. PSS does not have controls established to properly monitor the need for consultations, follow-up or corrective actions to ensure that the plans established are being met. 3. PSS does not have procedures in place to properly calculate and monitor that the per pupil amount for both private and public schools are equal. Effect or potential effect: PSS is in noncompliance with the applicable special test and provision requirements of the participation of private school children. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should adhere to the provisions of 34 CFR 299.7 and ensure that timely consultations with the eligible private schools are conducted. Additionally, PSS should establish controls and procedures to ensure that the results of the consultations are properly monitored and implemented. 2. PSS should establish monitoring procedures to ensure that costs budgeted or allocated to private and public schools will remain equal on a per pupil basis. Views of Auditee and Corrective Action Plan: PSS does not agree with the finding. PSS asserts that timely and meaningful consultations were conducted with private school officials prior to making decisions regarding the size, scope, and funding of equitable services for FY2023. Calculations for the equitable share under the Education Stabilization Funds were performed in accordance with federal regulations, ensuring that per-pupil allocations for eligible private school students and teachers were equitable relative to public school expenditures. PSS maintains that consultation timelines, meeting records, and allocation formulas were maintained. While PSS is continuously refining its administrative workflows, the existing documentation and controls were sufficient to satisfy the requirements of 34 CFR § 299.7. Refer to PSS’ Corrective Action Plan for additional information. Auditor Response: The supporting documentation provided, including the minutes of meetings with private schools, did not demonstrate the required timely and meaningful consultation with appropriate private school personnel during the design and development of federally funded programs and prior to making decisions involving private school participation regarding the size and scope. The finding remains.
Show full finding ▾Hide full finding ▴Finding No. 2023-017 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Special Tests and Provisions - Private School Participation Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 34 CFR 299.7(a)(1), in order to have a timely and meaningful consultation, an agency, consortium, or entity must: (i) Consult with appropriate private school officials during the design and development of the agency, consortium, or entity's program for eligible private school children and their teachers and other educational personnel; and (ii) Consult before the agency, consortium, or entity makes any decision that affects the opportunities of eligible private school children and their teachers and other educational personnel to participate in the applicable program. Additionally, in accordance with 34 CFR 299.7(2), such consultation must continue throughout the implementation and assessment of equitable services. Lastly, based on 34 CFR 299.9 (a)(1), expenditures of funds made by an agency, consortium, or entity under a program listed in 34 CFR 299.6 (b) for services for eligible private school children and their teachers and other educational personnel must be equal on a per-pupil basis to the amount of funds expended for participating public school children and their teachers and other educational personnel, taking into account the number and educational needs of those children and their teachers and other educational personnel. Condition: 1. PSS did not provide adequate documentation to verify that there were timely and meaningful consultations with appropriate private school officials during the design and development of federally funded programs and prior to making decisions involving private school participation regarding the size and scope of the equitable services that will be provided to eligible private school children and their teachers, and other educational personnel, the amount of funds available for those services, and how that amount is determined. 2. The amount allocated to eligible private schools is not equal to the amount of funds expended for participating public schools in FY2023 on a per-pupil basis. Since no adequate documentation was provided for the calculation of the amount of funds for eligible private schools as cited at Condition 1, no questioned costs are presented as we are unable to quantify the extent of the noncompliance. Cause: 1. PSS does not perform timely consultations and follow-ups with the eligible private school officials in accordance with provisions of 34 CFR 299.7. 2. PSS does not have controls established to properly monitor the need for consultations, follow-up or corrective actions to ensure that the plans established are being met. 3. PSS does not have procedures in place to properly calculate and monitor that the per pupil amount for both private and public schools are equal. Effect or potential effect: PSS is in noncompliance with the applicable special test and provision requirements of the participation of private school children. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should adhere to the provisions of 34 CFR 299.7 and ensure that timely consultations with the eligible private schools are conducted. Additionally, PSS should establish controls and procedures to ensure that the results of the consultations are properly monitored and implemented. 2. PSS should establish monitoring procedures to ensure that costs budgeted or allocated to private and public schools will remain equal on a per pupil basis. Views of Auditee and Corrective Action Plan: PSS does not agree with the finding. PSS asserts that timely and meaningful consultations were conducted with private school officials prior to making decisions regarding the size, scope, and funding of equitable services for FY2023. Calculations for the equitable share under the Education Stabilization Funds were performed in accordance with federal regulations, ensuring that per-pupil allocations for eligible private school students and teachers were equitable relative to public school expenditures. PSS maintains that consultation timelines, meeting records, and allocation formulas were maintained. While PSS is continuously refining its administrative workflows, the existing documentation and controls were sufficient to satisfy the requirements of 34 CFR § 299.7. Refer to PSS’ Corrective Action Plan for additional information. Auditor Response: The supporting documentation provided, including the minutes of meetings with private schools, did not demonstrate the required timely and meaningful consultation with appropriate private school personnel during the design and development of federally funded programs and prior to making decisions involving private school participation regarding the size and scope. The finding remains.
Finding No.: 2023-017 AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Area: Special Tests and Provisions - Private School Participation Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management disagrees with the finding. PSS asserts that timely and meaningful consultations were conducted with private school officials prior to making decisions regarding the size, scope, and funding of equitable services for FY2023. Calculations for the equitable share under the Education Stabilization Funds were performed in accordance with federal regulations, ensuring that per-pupil allocations for eligible private school students and teachers were equitable relative to public school expenditures. PSS maintains that consultation timelines, meeting records, and allocation formulas were maintained. While PSS is continuously refining its administrative workflows, the existing documentation and controls were sufficient to satisfy the requirements of 34 CFR § 299.7. Proposed Completion Date: Resolution in progress and on track for completion by August 2026. Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org
Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should implement, document and consistently enforce appropriate review and approval controls over disbursements of program funds. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-018 Federal Agency: U.S. Department of Education AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Federal Award No.: 1H79SM083644-01, 5H79SM083644-02, 5H79SM083644-03, 5H79SM083644-04 6H79SM086344-01M001,6H79SM086344-01M002, 6H79SM086344-01M003 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should implement, document and consistently enforce appropriate review and approval controls over disbursements of program funds. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-018 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the finding. While internal verification of disbursements is a standard part of our fiscal workflow, we recognize that our current process has the space to improve. Corrective Action Plan: To ensure that all disbursements are verified and documented prior to payment, PSS will implement the following: I. High Level Review and Approval: Implementation of Comptroller/ Director of Finance review on the Batch Invoice Summary signifying invoice entries on the said batch are verified and correct. After the review, the Comptroller will sign. II. Updated Payment Verification Process: Payments via check or ACH are reviewed by the Comptroller/ Director of Finance through Payment Manager and marking the Batch Invoice Summary that payments matched the invoice. Proposed Completion Date: December 2025 Name of Contact Person and Title: Contact: Jonathan Aguon, Director of Finance Email Address: jonathan.aguon@cnmipss.org
1. Of twelve procurement transactions tested, aggregating $217,154 of a total population of $546,111 of nonpayroll expenditures subject to procurement, the following were noted: a. For one (or 8%), PSS did not provide bid or proposal evaluations for all responsive bidders. b. For one (or 8%), CNMI PSS did not provide evidence of the Chief Procurement Officer’s determination in writing for a shorter period of bidding time for the related contract. c. For one (or 8%), PSS did not provide written summaries of the bid opening and proposals submitted. No questioned costs are presented as they were cited at Condition 1a. d. For one (or 8%), PSS did not provide documentation evidencing the public announcement of the Request for Proposal. No questioned costs are presented as they were cited at Condition 1a. e. For one (or 8%), the contract was procured through a competitive sealed proposal; however, the written determination by the Commissioner of Education upon the advice of legal counsel that a competitive sealed bidding is either not practical or not advantageous, was not provided. No questioned costs are presented as the amount is questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is excluded or disqualified pursuant to the requirements of 2 CFR 180.300 prior to entering into the following covered transactions that exceeded the $25,000 threshold. Cause: PSS did not consistently comply with its Procurement Regulations and applicable federal requirements due to inadequate internal controls and enforcement mechanisms. Further, PSS’s existing Suspension and Debarment procedures require action only upon approval of the Commissioner of Education, which is not aligned with the verification requirements of 2 CFR §180.300. The absence of standardized procedures, accountability measures, and routine compliance monitoring contributed to these deficiencies. Effect or potential effect: PSS is in noncompliance with applicable procurement regulations and questioned costs of $307,881 result. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. Enforce uniform procurement procedures that require complete documentation of all competitive sealed bidding steps, including public notices, bid openings, bid evaluations, and contract awards. 2. Establish and implement written policies and procedures to verify the suspension and debarment status of all vendors involved in covered transactions prior to contract award, in accordance with 2 CFR §180.300. 3. Require staff training and supervisory review to ensure procurement requirements are consistently followed and adequately documented. 4. Implement ongoing monitoring and internal review processes to ensure continued compliance and to prevent recurrence of similar deficiencies. Views of Auditee and Corrective Action Plan: PSS concurs with the findings and recommendations. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-019 Federal Agency: U.S. Department of Education AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award No.: 6H79SM083644 Area: Procurement and Suspension and Debarment Questioned Costs: $307,881 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations states the following: 1. § 60-40-205 Competitive Sealed Bidding: • Public Notice - Adequate public notice of the invitation for bids shall be given a reasonable time prior to the date set forth for the opening of bids. Publication of notice shall be on the Public School website over a continuous period of four weeks shall be deemed to be adequate notice; and • Bid Acceptance and Bid Evaluation - Bids shall be unconditionally accepted without alteration or correction, except as authorized in the chapter. Bids shall be evaluated based on the requirements set forth in the invitation for bids, which may include criteria as necessary to reasonably permit a determination as to the acceptability of the bid for the particular purpose intended. 2. 60-40-225 Competitive Sealed Proposals: • Condition for Use - When the Commissioner of Education determines in writing upon the advise of the legal counsel that the use of a competitive sealed bidding is either not practical or not advantageous to the Public School System, a contract may be entered into by competitive sealed proposals; 3. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and 4. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: a. Checking SAM.gov Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. Condition: 1. Of twelve procurement transactions tested, aggregating $217,154 of a total population of $546,111 of nonpayroll expenditures subject to procurement, the following were noted: a. For one (or 8%), PSS did not provide bid or proposal evaluations for all responsive bidders. b. For one (or 8%), CNMI PSS did not provide evidence of the Chief Procurement Officer’s determination in writing for a shorter period of bidding time for the related contract. c. For one (or 8%), PSS did not provide written summaries of the bid opening and proposals submitted. No questioned costs are presented as they were cited at Condition 1a. d. For one (or 8%), PSS did not provide documentation evidencing the public announcement of the Request for Proposal. No questioned costs are presented as they were cited at Condition 1a. e. For one (or 8%), the contract was procured through a competitive sealed proposal; however, the written determination by the Commissioner of Education upon the advice of legal counsel that a competitive sealed bidding is either not practical or not advantageous, was not provided. No questioned costs are presented as the amount is questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is excluded or disqualified pursuant to the requirements of 2 CFR 180.300 prior to entering into the following covered transactions that exceeded the $25,000 threshold. Cause: PSS did not consistently comply with its Procurement Regulations and applicable federal requirements due to inadequate internal controls and enforcement mechanisms. Further, PSS’s existing Suspension and Debarment procedures require action only upon approval of the Commissioner of Education, which is not aligned with the verification requirements of 2 CFR §180.300. The absence of standardized procedures, accountability measures, and routine compliance monitoring contributed to these deficiencies. Effect or potential effect: PSS is in noncompliance with applicable procurement regulations and questioned costs of $307,881 result. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. Enforce uniform procurement procedures that require complete documentation of all competitive sealed bidding steps, including public notices, bid openings, bid evaluations, and contract awards. 2. Establish and implement written policies and procedures to verify the suspension and debarment status of all vendors involved in covered transactions prior to contract award, in accordance with 2 CFR §180.300. 3. Require staff training and supervisory review to ensure procurement requirements are consistently followed and adequately documented. 4. Implement ongoing monitoring and internal review processes to ensure continued compliance and to prevent recurrence of similar deficiencies. Views of Auditee and Corrective Action Plan: PSS concurs with the findings and recommendations. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-019 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Procurement and Suspension and Debarment Questioned Costs: $307,881 Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the audit findings and recommendations. We recognize that our internal controls and existing policies regarding suspension and debarment must be modernized to align with 2 CFR §180.300. PSS is committed to implementing a standardized, mandatory verification process that ensures all vendors are vetted prior to the commitment of federal funds. Procurement processes were promulgated in a SOP on September 18, 2024. The SOP is under review by an external consultant and recommendations made to improve documentation of the vendor selection process, both competitive and sole source exception. (See also 2023-004, 2023-0009, 2023-0012) Corrective Action Plan: To address the lack of standardized procedures and ensure full compliance with procurement and debarment regulations, PSS will implement the following: I. Standardization of Procurement Files: PSS will implement a mandatory "Procurement Compliance Folder" structure for all competitive sealed bids. This folder must contain indexed sections for: (1) Evidence of four-week public notice, (2) Signed bid opening summary sheets, (3) Individual evaluation rubrics for all bidders, and (4) The final Basis of Award. No contract will be executed until the Procurement Office certifies the folder is complete. II. Revised Suspension and Debarment Protocol: PSS will update its internal policies to decouple the SAM.gov verification requirement from the Commissioner’s formal debarment actions. Per 2 CFR §180.300, a mandatory "Vendor Eligibility Verification" step will be added to the pre-award phase. Staff must perform a SAM.gov exclusion search and attach the dated results to the contract file before it is routed for the Commissioner's signature. III. Implementation of a Procurement Checklist: A comprehensive "Pre-Award Compliance Checklist" will be introduced. This checklist will serve as the primary enforcement mechanism, requiring staff to initial and date each procurement step as it is completed. IV. Updated Procurement Standard Operating Procedures: The Procurement SOP will be updated with more specific guidance and selection checklist for each method (e.g., sealed bid, sole source) including documentation requirements to support vendor eligibility as verified at a minimum by review of SAM.gov and certification by the proposer. All vendors with active contracts in 2023 and subsequent years will be reviewed in SAM.gov for eligibility. Proposed Completion Date: September 2026 Name of Contact Person and Title: Contact: Michael Jason A. Babauta, Chief Procurement & Supply Officer Email Address: michael.jason.babauta@cnmipss.org
Finding No. 2023-020 Federal Agency: U.S. Department of Education AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award No.: 6H79SM086344-01M001 and 6H79SM086344-01M002 Area: Special Tests and Provisions - Key Level Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, in accordance with the grant agreement, PSS key level management are required to provide level of effort as follows: Condition For all six (or 100%) key level management personnel required to provide level of effort, PSS did not provide adequate evidence to substantiate that the required level of effort to the program were complied with. Cause: PSS did not provide documentation evidencing the level of effort of key level management personnel. Effect or potential effect: PSS is in noncompliance with applicable key level management requirements. No questioned costs result as we are unable to determine the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should maintain documentation for its compliance with the key level management requirement, such as Notice of Personnel Action (NOPA) forms, certification of time worked under federal programs and payroll registers, among others. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Show full finding ▾Hide full finding ▴Finding No. 2023-020 Federal Agency: U.S. Department of Education AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award No.: 6H79SM086344-01M001 and 6H79SM086344-01M002 Area: Special Tests and Provisions - Key Level Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, in accordance with the grant agreement, PSS key level management are required to provide level of effort as follows: Condition For all six (or 100%) key level management personnel required to provide level of effort, PSS did not provide adequate evidence to substantiate that the required level of effort to the program were complied with. Cause: PSS did not provide documentation evidencing the level of effort of key level management personnel. Effect or potential effect: PSS is in noncompliance with applicable key level management requirements. No questioned costs result as we are unable to determine the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should maintain documentation for its compliance with the key level management requirement, such as Notice of Personnel Action (NOPA) forms, certification of time worked under federal programs and payroll registers, among others. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No.: 2023-020 AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Area: Special Tests and Provisions - Key Level Management Questioned Costs: Undeterminable Views of Auditee and Corrective Action Plan: Management’s Position: PSS Management concurs with the findings. Financial and Grants Management processes were promulgated in a SOP on September 18, 2024. The SOPs are under review by an external consultant and recommendations made to improve documentation of time and effort allocable under federal awards. (See also 2023-004, 2023-0009) Corrective Action Plan: I. Establishment of Time and Effort SOPs: PSS will finalize and implement a dedicated Time and Effort Reporting SOP. This policy will explicitly define the key management Level of Effort (LOE) requirements by position and mandate the collection of specific supporting records, including Notice of Personnel Action (NOPA) forms, payroll registers, and certified timesheets. The SOP will feature robust internal controls and supervisory review procedures designed to prevent improper payments and ensure accurate labor distribution. II. Standardization of Key Management Records: PSS will obtain and systematically retain NOPA forms or equivalent documentation for all six positions identified in the grant agreement. This documentation will serve as the primary evidence to demonstrate compliance. III. Labor Distribution Monitoring Controls: PSS is implementing ongoing monitoring controls to ensure continued compliance. This includes a periodic internal review of payroll registers against the original grant agreements to verify that the labor costs charged to the award remain consistent with the approved personnel budget and documented effort. Proposed Completion Date: August 2026 Name of Contact Person and Title: Contact: Jacqueline Che, Federal Programs Officer Email Address: jacqueline.che@cnmipss.org
FAC accepted this audit on September 4, 2023 — management decision was due March 4, 2024.
Tests of equipment and real property noted the following: 1. CPA performed a capital assets inventory during fiscal year 2022. Based on controls testing, a reconciliation was performed at the department level; however, it was not reconciled with accounting records, resulting in $1,824,424 that were identified as not program assets. Total fixed asset additions capitalized and related to CPA?s major program, is as follows: See Schedule of Findings and Questioned Costs for chart/table 2. The fixed assets schedule did not include information such as who holds title and the use of the assets. Of nine items (or 10%) tested of a total population of eighty-nine FAA-funded capital assets, we noted deficiencies, as follows: 3. One item (or 11%) has been unidentified, and management was not able to substantiate the existence of the actual fixed asset. It also has outlived its 20-year life expectancy. See Schedule of Findings and Questioned Costs for chart/table Cause: CPA lacks oversight responsibility and monitoring controls over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2021-002. Recommendation: CPA should reconcile the results of the annual physical inventory to the property records and ascertain that the acquisition costs of the individual assets agree to the records of accounting. Further, sufficient details should be included in the fixed assets subledger to specifically identify the individual assets. Views of Responsible Officials: Management states agreement. Refer to separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴Finding No.: 2022-003 Federal Agency: U.S. Department of Transportation Assistance Listings Program: 20.106 Airport Improvement Program Award Numbers: All AIP Grants Area: Equipment and Real Property Management Questioned Costs: $-0- Criteria: In accordance with applicable equipment and real property management requirements, a State must use, manage and dispose of equipment acquired under a Federal award by the State in accordance with State laws and procedures. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal of the property; (2) A physical inventory of the property must be taken and the results reconciled with the property records annually. Condition: Tests of equipment and real property noted the following: 1. CPA performed a capital assets inventory during fiscal year 2022. Based on controls testing, a reconciliation was performed at the department level; however, it was not reconciled with accounting records, resulting in $1,824,424 that were identified as not program assets. Total fixed asset additions capitalized and related to CPA?s major program, is as follows: See Schedule of Findings and Questioned Costs for chart/table 2. The fixed assets schedule did not include information such as who holds title and the use of the assets. Of nine items (or 10%) tested of a total population of eighty-nine FAA-funded capital assets, we noted deficiencies, as follows: 3. One item (or 11%) has been unidentified, and management was not able to substantiate the existence of the actual fixed asset. It also has outlived its 20-year life expectancy. See Schedule of Findings and Questioned Costs for chart/table Cause: CPA lacks oversight responsibility and monitoring controls over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2021-002. Recommendation: CPA should reconcile the results of the annual physical inventory to the property records and ascertain that the acquisition costs of the individual assets agree to the records of accounting. Further, sufficient details should be included in the fixed assets subledger to specifically identify the individual assets. Views of Responsible Officials: Management states agreement. Refer to separate Corrective Action Plan.
Finding No 2022-003 Name of Contact Person: Skye Aldan Hofschneider, Comptroller Zack Diaz, Internal Auditor Corrective Action: CPA agrees with this finding. CPA has implemented Equipment Management Standard Operating Procedures (SOPs) in June 2022 and trained staff involved in Equipment Management in August 2022. Because trainings on the newly developed SOPs were first conducted in August 2022, CPA noted and FAA acknowledged that repeat findings may be found in this audit report. CPA emphasizes that SOP trainings are continuing and mandatory for all of CPA Management, and CPA expects that the SOPs and related training will resolve this issue moving forward. Equipment SOP trainings occur twice per year and will continue indefinitely. In July 2023, CPA issued the inventory and property records to all CPA Department Heads to review, verify and confirm details of each fixed asset and provide additional identifying information for entry. These updates will be submitted to the Procurement Division in August 2023 for verification and entry into the Equipment Management System. Condition 1: The fixed asset schedule provided to the auditors included a column that listed all contributed fixed assets as funded by the Federal Aviation Administration (FAA). The FAA column was mistakenly entered into the schedule. CPA Accounting verified that the details of all assets that were identified as non-FAA assets indicate funding through other federal or local programs. The fixed asset schedule will go through verification by the Accounting Manager and Comptroller to ensure that only the program assets requested are listed. Condition 2: CPA will input the asset details to include who holds title and use of asset into the fixed asset system. CPA will update the Equipment Details Form to include title and use of assets. Condition 3: CPA will write off the asset from its fixed asset system. CPA has developed the following corrective action plan for this finding: 1. Establish Standard Operating Procedures (SOP) for Equipment Management CPA has established Equipment Management SOPs that were implemented and effective on June 30, 2022. The SOPs detail the equipment management requirements, details, and responsibilities. In addition, the SOPs include an annual mandatory schedule for inventory, disposals, and reconciliation. With the completion of the inventory reconciliation in June 2023, the Procurement Department sent out the fixed asset listings to each respective department. The Department Heads are reviewing their equipment listings to verify the accuracy of equipment details, provide additional identifying information and confirm existence of all assets listed. The Department Heads will be providing monthly updates to the Procurement Department for entry into the Equipment Management System. 2. Implement Standard Equipment Management Forms Standard procurement forms have been developed to establish additional controls and reviews for all equipment. These standard forms include requirements such as identifying details for all fixed assets. 3. Develop a Training Plan for Equipment Management Procedures CPA developed an Equipment Management training plan that was implemented on June 17, 2022. The training plan includes annual requirements for training on equipment management and compliance requirements. The training is based on the established SOPs and best practices and is mandatory for all staff involved in equipment management. 4. Internal Auditor Position An internal auditor position was created on May 16, 2022 and hired on August 29, 2022. Part of the internal auditor?s responsibilities include reviewing inventory records and equipment management files for compliance. The internal auditor reports directly to the CPA Board of Director and provides monthly reports. The internal auditor monthly reports are used as a tool to identify areas of equipment management non-compliance for immediate correction. Proposed Completion Date: FY 2023
2021-002
Tests of twenty-five expenditures, aggregating $1,067,404 of a population of $1,962,016, noted that for four (or 16%), premium pay was paid to employees not deemed essential workers, as follows: "See Schedule of Findings and Questioned Costs for chart/table" Cause: CPA did not adhere to the essential worker requirements based on the Treasury?s Final Rule. Effect: CPA is in noncompliance with activities allowed or unallowed. Recommendation: Prior to expending federal funds from a pass-through entity, responsible personnel should read the terms and conditions of the subrecipient agreement and seek guidance, if necessary, on the use of the funds. Views of Responsible Officials: CPA?s Corrective Action Plan provides a detailed rationale for disagreement with this finding. Auditor response: When CPA received the subrecipient terms and conditions in May 2022, which included ??ensuring compliance with US Treasury?s rules and guidelines found in the Act and the Final Rule,? CPA should have reassessed the premium pay expenditures for compliance.
Show full finding ▾Hide full finding ▴Finding No.: 2022-004 Federal Agency: U.S. Department of the Treasury Pass-Through Entity: CNMI Government Assistance Listings Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award Nos.: CNMI22027 Area: Activities Allowed or Unallowed Questioned Costs: $20,000 Criteria: In accordance with 31 CFR Part 35 (Treasury?s Final Rule), recipients may use payments from Program funds to provide premium pay for essential workers if each eligible worker falls into one of three categories: 1) The worker?s pay is below the wage threshold, 2) the worker is not exempt from the FSLA overtime provisions, or 3) the recipient has submitted a written justification to Treasury (or to the pass-through entity). Essential worker is defined as those employees who face greater risk of exposure due to the pandemic and those workers who continue to bear the risk of maintaining the ongoing operation of vital facilities and services. Condition: Tests of twenty-five expenditures, aggregating $1,067,404 of a population of $1,962,016, noted that for four (or 16%), premium pay was paid to employees not deemed essential workers, as follows: "See Schedule of Findings and Questioned Costs for chart/table" Cause: CPA did not adhere to the essential worker requirements based on the Treasury?s Final Rule. Effect: CPA is in noncompliance with activities allowed or unallowed. Recommendation: Prior to expending federal funds from a pass-through entity, responsible personnel should read the terms and conditions of the subrecipient agreement and seek guidance, if necessary, on the use of the funds. Views of Responsible Officials: CPA?s Corrective Action Plan provides a detailed rationale for disagreement with this finding. Auditor response: When CPA received the subrecipient terms and conditions in May 2022, which included ??ensuring compliance with US Treasury?s rules and guidelines found in the Act and the Final Rule,? CPA should have reassessed the premium pay expenditures for compliance.
Finding No 2022-004 Name of Contact Person: Christopher S. Tenorio, Executive Director Corrective Action: CPA disagrees with this finding. On October 1, 2021, CPA wrote a letter to the Office of the Governor, requesting for funds in the amount of $990,000 to provide premium pay to all CPA employees. The letter requested a one-time payment for all employees and included an exhibit with the number of employees to be issued the requested premium pay. On November 18, 2021, the CNMI government transferred $990,000 to CPA via ACH payment. There were no terms, conditions, or communication informing CPA to justify premium pay for exempt employees. CPA proceeded to issue the premium pay to all employees in November 2021. In May 2022, the Department of Finance provided terms and conditions for the use of funds issued on November 2021. CPA has reached out to the CNMI Department of Finance to provide the point of contact for a program determination on the finding and questioned costs. CPA will provide its justification for premium pay in compliance with the Treasury Final Rule. Proposed Completion Date: September 30, 2023
All FY 2022 quarterly reports for agreement no. CNMI22028 were prepared and submitted six months after the fiscal year had ended and only after auditor inquiry during fieldwork. Quarterly reports for agreement no. CNMI22027 were prepared and submitted eight months after the fiscal year had ended and after fieldwork was completed. Cause: CPA lacks internal controls over compliance with applicable reporting requirements. CPA failed to timely request for its subrecipient agreement from the CNMI Government after the funds were disbursed to them in FY 2021. Effect: CPA is in noncompliance with applicable reporting requirements. No questioned cost is reported as we are unable to quantify the extent of noncompliance. Recommendation: CPA should establish and implement internal controls over compliance with applicable reporting requirements. Prior to expending federal funds from a pass-through entity, responsible personnel should obtain and read the terms and conditions of the subrecipient agreement. Views of Responsible Officials: Management states agreement. Refer to separate Corrective Action Plan.
Show full finding ▾Hide full finding ▴Finding No.: 2022-005 Federal Agency: U.S. Department of the Treasury Pass-Through Entity: CNMI Government Assistance Listings Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award Nos.: CNMI22028 and CNMI22027 Area: Reporting Questioned Costs: $-0- Criteria: Based on the subrecipient agreement from the CNMI Government as the pass-through entity, the subrecipient agrees to submit quarterly reports to the Department of Finance Office of the Secretary no later than fifteen (15) days following the end of the quarter. Condition: All FY 2022 quarterly reports for agreement no. CNMI22028 were prepared and submitted six months after the fiscal year had ended and only after auditor inquiry during fieldwork. Quarterly reports for agreement no. CNMI22027 were prepared and submitted eight months after the fiscal year had ended and after fieldwork was completed. Cause: CPA lacks internal controls over compliance with applicable reporting requirements. CPA failed to timely request for its subrecipient agreement from the CNMI Government after the funds were disbursed to them in FY 2021. Effect: CPA is in noncompliance with applicable reporting requirements. No questioned cost is reported as we are unable to quantify the extent of noncompliance. Recommendation: CPA should establish and implement internal controls over compliance with applicable reporting requirements. Prior to expending federal funds from a pass-through entity, responsible personnel should obtain and read the terms and conditions of the subrecipient agreement. Views of Responsible Officials: Management states agreement. Refer to separate Corrective Action Plan.
Finding No 2022-005 Name of Contact Person: Skye Lynn L. Aldan Hofschneider, Comptroller Corrective Action: CPA agrees with the finding. CPA has submitted all required quarterly reports and will continue to submit the required reports timely. Proposed Completion Date: July 31, 2023
FAC accepted this audit on July 31, 2022 — management decision was due January 31, 2023.
ALN 20.106 1. CPA conducted a capital assets inventory during fiscal year 2021; however, only a partial reconciliation was performed. Total fixed asset additions capitalized and related to CPA?s major program amounted to $12,113,793, $3,681,264, $29,437,789, $-0- and $6,476,899 during fiscal years 2021, 2020, 2019, 2018 and 2017, respectively. 2. The capital assets schedule did not include the federal award identification number, who holds title, percentage of federal participation, location, use and condition of the assets. Of fourteen items (or 10%) tested of a total population of one hundred and thirty-six FAA-funded capital assets, we noted deficiencies, as follows: 3. Four items (or 28%) are runways, and based on the acquisition date, they have outlived their 20-year life expectancy; as such, the assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 4. One item (or 7%) has been replaced or decommissioned and was tested in the FY2020 audit but was included in the FAA fixed asset listing as of FY2021. See Schedule of Findings and Questioned Costs for chart/table 5. Three items (or 21%) were disposed of during FY2021, but were included in the FAA fixed asset listing as of FY2021. See Schedule of Findings and Questioned Costs for chart/table Non-Federal Capital Assets Tests of non-Federal capital assets noted the following: 6. Three expense items were improperly capitalized. Management did not consider the amounts sufficiently material to the financial statements to warrant an adjustment. See Schedule of Findings and Questioned Costs for chart/table 7. For six assets, the tag number in the fixed asset system did not agree with the tag number sighted. See Schedule of Findings and Questioned Costs for chart/table 8. For fifteen assets, we were unable to determine physical existence, as we were advised that the asset had either been disposed of, replaced, or damaged. At September 30, 2021, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 9. Two assets are not functional; however, the assets have not been decommissioned. See Schedule of Findings and Questioned Costs for chart/table 10. For six assets, the description in the fixed asset system did not agree with the sighted asset. See Schedule of Findings and Questioned Costs for chart/table 11. For four assets, the description comprises numerous units; however, we were not able to verify the physical existence of these units, as they have been decommissioned. Decommissioning documents were not provided. See Schedule of Findings and Questioned Costs for chart/table 12. Of forty-six disposals tested, we noted the following: a. For three (or 7%), decommission forms were not provided. See Schedule of Findings and Questioned Costs for chart/table b. For one (or 2%), system no. 370 with an acquisition cost of $22,770 was sold in November 2013, but was recorded as a disposal in FY2021. c. For one (or 2%), system no. 1443 was replaced in FY2021; however, the decommission document for the old unit was not provided. d. System no. 1443 was added as a fixed asset in October 2021, while the receiving report indicates the asset was received in September 2021. Cause: CPA lacks oversight responsibility and monitoring controls over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2020-003. Recommendation: CPA should adhere to property management requirements and perform monitoring activities to ascertain that the results of the annual physical inventory reconcile to the property records and that sufficient details are included in the capital assets subledger to specifically identify individual assets. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement.
Show full finding ▾Hide full finding ▴Finding No.: 2021-002 Federal Agency: U.S. Department of Transportation AL Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Area: Capital Assets Questioned Costs: $-0- Criteria: In accordance with applicable equipment and real property management requirements, a State must use, manage and dispose of equipment acquired under a Federal award by the State in accordance with State laws and procedures. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal of the property; and (2) A physical inventory of the property must be taken and the results reconciled with the property records annually. Condition: ALN 20.106 1. CPA conducted a capital assets inventory during fiscal year 2021; however, only a partial reconciliation was performed. Total fixed asset additions capitalized and related to CPA?s major program amounted to $12,113,793, $3,681,264, $29,437,789, $-0- and $6,476,899 during fiscal years 2021, 2020, 2019, 2018 and 2017, respectively. 2. The capital assets schedule did not include the federal award identification number, who holds title, percentage of federal participation, location, use and condition of the assets. Of fourteen items (or 10%) tested of a total population of one hundred and thirty-six FAA-funded capital assets, we noted deficiencies, as follows: 3. Four items (or 28%) are runways, and based on the acquisition date, they have outlived their 20-year life expectancy; as such, the assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 4. One item (or 7%) has been replaced or decommissioned and was tested in the FY2020 audit but was included in the FAA fixed asset listing as of FY2021. See Schedule of Findings and Questioned Costs for chart/table 5. Three items (or 21%) were disposed of during FY2021, but were included in the FAA fixed asset listing as of FY2021. See Schedule of Findings and Questioned Costs for chart/table Non-Federal Capital Assets Tests of non-Federal capital assets noted the following: 6. Three expense items were improperly capitalized. Management did not consider the amounts sufficiently material to the financial statements to warrant an adjustment. See Schedule of Findings and Questioned Costs for chart/table 7. For six assets, the tag number in the fixed asset system did not agree with the tag number sighted. See Schedule of Findings and Questioned Costs for chart/table 8. For fifteen assets, we were unable to determine physical existence, as we were advised that the asset had either been disposed of, replaced, or damaged. At September 30, 2021, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 9. Two assets are not functional; however, the assets have not been decommissioned. See Schedule of Findings and Questioned Costs for chart/table 10. For six assets, the description in the fixed asset system did not agree with the sighted asset. See Schedule of Findings and Questioned Costs for chart/table 11. For four assets, the description comprises numerous units; however, we were not able to verify the physical existence of these units, as they have been decommissioned. Decommissioning documents were not provided. See Schedule of Findings and Questioned Costs for chart/table 12. Of forty-six disposals tested, we noted the following: a. For three (or 7%), decommission forms were not provided. See Schedule of Findings and Questioned Costs for chart/table b. For one (or 2%), system no. 370 with an acquisition cost of $22,770 was sold in November 2013, but was recorded as a disposal in FY2021. c. For one (or 2%), system no. 1443 was replaced in FY2021; however, the decommission document for the old unit was not provided. d. System no. 1443 was added as a fixed asset in October 2021, while the receiving report indicates the asset was received in September 2021. Cause: CPA lacks oversight responsibility and monitoring controls over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2020-003. Recommendation: CPA should adhere to property management requirements and perform monitoring activities to ascertain that the results of the annual physical inventory reconcile to the property records and that sufficient details are included in the capital assets subledger to specifically identify individual assets. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement.
Finding No 2021-002 Name of Contact Person: Skye Lynn L. Aldan Hofschneider Corrective Action: Conditions 1 & 2: CPA hired a technical consultant to conduct a full inventory and reconciliation of its fixed asset. The reconciliation includes the documenting of identifying information for entry into the fixed asset system. Conditions 3, 8, 9, 11: CPA will proceed with the proper decommissioning and disposals of these assets in the fixed asset system. Conditions 4 & 5: These assets were inadvertently included in the FAA fixed asset listing. Although they were included in the listing, they are identified as disposed in the listing. CPA will remove these items from the FAA asset listing. Condition 6: CPA agrees with this finding. CPA Accounting and Procurement will review all purchases to properly determine which items should be capitalized based on GAAP rules. Conditions 7 & 10: CPA will make the corrections on the fixed asset system. Condition 12: CPA has placed protocols such as a better filing system to ensure that approved decommission files are readily available for review. CPA has developed the following corrective action plan for this finding: 1. Technical Consultant Review CPA hired a technical consultant (certified public accounting firm) on May 6, 2022 to conduct a full reconciliation of its fixed asset inventory. The technical consultant completed the full fixed asset inventory on July 1, 2022. The fixed asset inventory included documenting identifying information for each fixed asset. The CPA Procurement Office is entering the identifying information for the assets into the fixed asset system. The fixed asset inventory also identified obsolete and damaged assets that were recommended to be removed from the fixed asset system. These asset disposals and decommissions are being conducted by the CPA Procurement Office. The technical consultant also conducted training and provided recommendations on resolving the equipment management finding. CPA will implement the recommendations of the technical consultant by July 31, 2022. 2. Establish Standard Operating Procedures (SOP) for Equipment Management CPA has established Equipment Management SOPs that were implemented and effective on June 30, 2022. The SOPs detail the equipment management requirements, details, and responsibilities. In addition, the SOPs include an annual mandatory schedule for inventory, disposals, and reconciliation. 3. Implement Standard Equipment Management Forms Standard procurement forms have been developed to establish additional controls and reviews for all equipment. These standard forms include requirements such as identifying details for all fixed assets. Other standard forms are being revised to align with the Equipment Management SOPs. 4. Develop a Training Plan for Equipment Management Procedures CPA developed an Equipment Management training plan that was implemented on June 17, 2022. The training plan includes annual requirements for training on equipment management and compliance requirements. The training is based on the established SOPs and is mandatory for all staff involved in equipment management. The first initial training was conducted in June 2022 by CPA legal counsel, CPA procurement staff, and the Comptroller. 5. Internal Auditor Position An internal auditor position was created on May 16, 2022. CPA is announcing this position and anticipates hiring an internal auditor by August 2022. Part of the internal auditor?s responsibilities include reviewing inventory records and equipment management files for compliance. The internal auditor reports directly to the CPA Board of Director and will be required to provide quarterly reports. The internal auditor quarterly reports will be used as a tool to identify areas of equipment management non-compliance for immediate correction. Proposed Completion Date: July 31, 2022
2020-003
FAC accepted this audit on January 2, 2022 — management decision was due July 2, 2022.
CFDA 20.106 1. CPA conducted a capital assets inventory during fiscal year 2020; however, only a partial reconciliation was performed. Total fixed asset additions capitalized and related to CPA?s major program amounted to $-0-, $8,222,248, $-0-, $6,476,899, $5,294,765 and $-0- during fiscal years 2020, 2019, 2018, 2017, 2016 and 2015, respectively. 2. The capital assets schedule did not include the federal award identification number, who holds title, percentage of federal participation, location, use and condition of the assets. Of sixty items (or 46%) tested of a total population of one hundred and thirty FAA-funded capital assets, we noted deficiencies, as follows: 3. Three items (or 7%) have been replaced; as such, the assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 4. We were unable to determine the existence of four (or 7%) as the capital asset subledger lacks a sufficient description to specifically identify the asset. See Schedule of Findings and Questioned Costs for chart/table 5. One item (or 2%) could not be verified against pictures provided as the asset detail report lacks a sufficient description. See Schedule of Findings and Questioned Costs for chart/table 6. Eight items (or 13%) have been replaced or decommissioned; as such, the assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 7. For one item (or 2%), the asset system number 60 was disposed of during FY2020, but was included in the FAA fixed asset listing of September 30, 2020. Non-Federal Capital Assets Tests of other capital assets noted the following: 8. Three expense items were improperly capitalized. Management did not consider the amounts sufficiently material to the financial statements to warrant an adjustment. See Schedule of Findings and Questioned Costs for chart/table 9. For one asset, we were unable to determine physical existence as the subledger lacked sufficient description (e.g., tag number or serial number) to match the asset to the fixed asset detail. See Schedule of Findings and Questioned Costs for chart/table 10. For fourteen assets, we were unable to determine physical existence as we were advised that the asset had either been disposed of, replaced or damaged. At September 30, 2020, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 11. The assets are not functional; however, the assets have not been decommissioned. See Schedule of Findings and Questioned Costs for chart/table 12. Nine decommissioned assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 13. For three assets, the location per the subledger did not agree to the location where the item was sighted. See Schedule of Findings and Questioned Costs for chart/table 14. For six assets, the description comprises numerous units; however, we were not able to verify physical existence of these units as they have been decommissioned. We were not provided with the decommissioning documents. See Schedule of Findings and Questioned Costs for chart/table 15. For system no. 1413, eight air-conditioning units were added in FY2020 as fixed assets to replace the old eight units; however, the decommissioning documents for the old units were not provided. 16. System no. 1436 was added as a fixed asset in April 2020, while the final project was accepted and the final billing was paid in December 2019. 17. Accumulated depreciation was understated as the accumulated depreciation was reduced equivalent to the acquisition cost of disposed assets even though it was not fully depreciated. This was corrected through a proposed audit adjustment. See Schedule of Findings and Questioned Costs for chart/table 18. We were unable to determine the existence of the following as the asset could not be sighted due to inaccessibility. See Schedule of Findings and Questioned Costs for chart/table Cause: CPA lacks controls, such as oversight responsibility and monitoring, over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2019-002. Recommendation: CPA should adhere to property management requirements such as performing monitoring activities to ascertain that the results of the annual physical inventory reconcile to the property records and that sufficient details are included in the capital assets subledger to specifically identify individual assets. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement.
Show full finding ▾Hide full finding ▴Finding No.: 2020-003 Federal Agency: U.S. Department of Transportation CFDA Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Area: Capital Assets Questioned Costs: $-0- Criteria: In accordance with applicable equipment and real property management requirements, a State must use, manage and dispose of equipment acquired under a Federal award by the State in accordance with State laws and procedures. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal of the property; and (2) A physical inventory of the property must be taken and the results reconciled with the property records annually. Condition: CFDA 20.106 1. CPA conducted a capital assets inventory during fiscal year 2020; however, only a partial reconciliation was performed. Total fixed asset additions capitalized and related to CPA?s major program amounted to $-0-, $8,222,248, $-0-, $6,476,899, $5,294,765 and $-0- during fiscal years 2020, 2019, 2018, 2017, 2016 and 2015, respectively. 2. The capital assets schedule did not include the federal award identification number, who holds title, percentage of federal participation, location, use and condition of the assets. Of sixty items (or 46%) tested of a total population of one hundred and thirty FAA-funded capital assets, we noted deficiencies, as follows: 3. Three items (or 7%) have been replaced; as such, the assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 4. We were unable to determine the existence of four (or 7%) as the capital asset subledger lacks a sufficient description to specifically identify the asset. See Schedule of Findings and Questioned Costs for chart/table 5. One item (or 2%) could not be verified against pictures provided as the asset detail report lacks a sufficient description. See Schedule of Findings and Questioned Costs for chart/table 6. Eight items (or 13%) have been replaced or decommissioned; as such, the assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 7. For one item (or 2%), the asset system number 60 was disposed of during FY2020, but was included in the FAA fixed asset listing of September 30, 2020. Non-Federal Capital Assets Tests of other capital assets noted the following: 8. Three expense items were improperly capitalized. Management did not consider the amounts sufficiently material to the financial statements to warrant an adjustment. See Schedule of Findings and Questioned Costs for chart/table 9. For one asset, we were unable to determine physical existence as the subledger lacked sufficient description (e.g., tag number or serial number) to match the asset to the fixed asset detail. See Schedule of Findings and Questioned Costs for chart/table 10. For fourteen assets, we were unable to determine physical existence as we were advised that the asset had either been disposed of, replaced or damaged. At September 30, 2020, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 11. The assets are not functional; however, the assets have not been decommissioned. See Schedule of Findings and Questioned Costs for chart/table 12. Nine decommissioned assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 13. For three assets, the location per the subledger did not agree to the location where the item was sighted. See Schedule of Findings and Questioned Costs for chart/table 14. For six assets, the description comprises numerous units; however, we were not able to verify physical existence of these units as they have been decommissioned. We were not provided with the decommissioning documents. See Schedule of Findings and Questioned Costs for chart/table 15. For system no. 1413, eight air-conditioning units were added in FY2020 as fixed assets to replace the old eight units; however, the decommissioning documents for the old units were not provided. 16. System no. 1436 was added as a fixed asset in April 2020, while the final project was accepted and the final billing was paid in December 2019. 17. Accumulated depreciation was understated as the accumulated depreciation was reduced equivalent to the acquisition cost of disposed assets even though it was not fully depreciated. This was corrected through a proposed audit adjustment. See Schedule of Findings and Questioned Costs for chart/table 18. We were unable to determine the existence of the following as the asset could not be sighted due to inaccessibility. See Schedule of Findings and Questioned Costs for chart/table Cause: CPA lacks controls, such as oversight responsibility and monitoring, over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2019-002. Recommendation: CPA should adhere to property management requirements such as performing monitoring activities to ascertain that the results of the annual physical inventory reconcile to the property records and that sufficient details are included in the capital assets subledger to specifically identify individual assets. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement.
Finding No 2020-003 Name of Contact Person: Skye Lynn L. Aldan Hofschneider Corrective Action: Condition 1: In FY 2021, CPA reconciled its federally funded fixed assets and compiled a listing of federally funded assets to be removed. The grantor agency has approved the removal of these assets from the system and CPA proceeded with the decommissioning of these assets in FY 2021. Condition 2, 4 & 9, 14: CPA has implemented additional requirements for entering capital assets into its fixed asset system. For each asset entered, CPA includes the serial number, VIN number, or other identification number and the specific location within the CPA premises. CPA will include the title, percentage of federal participation, use, and condition of the assets when entering into the system Condition 3: Resolved. For fixed assets 000094 and 000025, CPA decommissioned these assets in FY 2021. For fixed asset 000066, CPA decommissioned this asset in August 2021. The fencing project was not completed until FY 2021. Condition 5: Resolved. CPA decommissioned this asset in FY 2021, as the item is not in usable condition. Condition 6: In FY 2021, CPA decommissioned the assets listed, except for FA 000749. CPA will verify the status of FA 000749. If confirmed that the asset is not in service, CPA will prepare the required documentation for decommissioning. Condition 7 & 12: Resolved. This was an oversight. CPA will enter all approved decommissions into the fixed asset system. Condition 8: CPA agrees with this finding. CPA Accounting and Procurement will review all purchases to properly determine which items should be capitalized. Condition 10 & 11: CPA will review all assets to determine if they were replaced, disposed, or not functioning. If confirmed, CPA will process the required decommission forms to remove the fixed assets from the system. Condition 13: Resolved. CPA updated the location in the subledgers to match the physical location of each asset listed. Condition 15: CPA agrees with this finding. CPA will review the fixed assets to determine which items have been decommissioned. Condition 16: CPA reviewed the project files and determined that there was a timing issue with this grant. The final billing was paid in December 2019, but the closeout documents for the grant were received in May 2020. Condition 17: Resolved. CPA entered the audit adjustment to reflect the corrected accumulated depreciation. Condition 18: Fixed asset 1403 is located on the rooftop, the area is able to be accessed through a ladder and the item is tagged. Fixed asset 1034 is located in the Saipan commuter building, which is condemned. CPA will proceed with decommissioning the asset, as it is not in usable condition. CPA agrees with the finding regarding fixed asset number 1230.
2019-002
For three (or 18%) of seventeen SF-425 reports tested, we noted incorrect amounts reported for Total recipient share required and Remaining recipient share to be provided for the reporting period ended September 30, 2020, as follows: See Schedule of Findings and Questioned Costs for chart/table Cause: CPA did not effectively monitor reports for compliance with applicable reporting requirements. Effect: CPA is in noncompliance with grant reporting requirements. No questioned costs are presented as the variances do not represent Program overpayments, and reports have been subsequently corrected. Recommendation: Responsible personnel should perform supervisory reviews so that reports accurately reflect the required recipient share and remaining recipient share in accordance with applicable reporting requirements. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement.
Show full finding ▾Hide full finding ▴Finding No.: 2020-004 Federal Agency: U.S. Department of Transportation CFDA Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Reporting Questioned Costs: $-0- Criteria: In accordance with applicable reporting requirements, SF-425, Federal Financial Report for cash status, should be supported by applicable accounting records. Condition: For three (or 18%) of seventeen SF-425 reports tested, we noted incorrect amounts reported for Total recipient share required and Remaining recipient share to be provided for the reporting period ended September 30, 2020, as follows: See Schedule of Findings and Questioned Costs for chart/table Cause: CPA did not effectively monitor reports for compliance with applicable reporting requirements. Effect: CPA is in noncompliance with grant reporting requirements. No questioned costs are presented as the variances do not represent Program overpayments, and reports have been subsequently corrected. Recommendation: Responsible personnel should perform supervisory reviews so that reports accurately reflect the required recipient share and remaining recipient share in accordance with applicable reporting requirements. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement.
Finding No 2020-004 Name of Contact Person: Skye Lynn L. Aldan Hofschneider Corrective Action: Resolved. CPA agrees to the finding listed under Federal Award No. 3-69-0002-89 and 3-69-0002-92. For federal award 3-69-0002-89, the SF-425 has been amended to include the grant amendment. For federal award 3-69-0002-92, the SF 425 was subsequently amended to reflect the closeout recipient share. Proposed Completion Date: FY 2021
Of twenty-five samples tested, totaling $3,609,993 of a total population of $11,114,508, the following were noted: 1. For one (or 4%), rental costs for decorative potted plants totaling $1,500 under AP-002935 dated 09/30/2020 were charged under the grant and is not a permitted use of airport revenues. 2. For one (or 4%), utility costs of $88,640 under AP-002922 dated 08/31/2020 were charged to the grant at 100% when only 74% appears allowable. Cause: CPA lacks such controls as oversight responsibility and monitoring over compliance with allowable costs/cost principles requirements. Effect: CPA is in noncompliance with applicable allowable costs/cost principles requirements, and questioned costs of $24,763 exist, as projected questioned costs exceed the threshold. Recommendation: CPA should adhere to allowable costs/cost principles requirements and should confirm that costs charged to the Program are in compliance with the terms and conditions of the Federal award. Views of Responsible Officials: CPA?s Corrective Action Plan states disagreement with Conditions 1 and 2, as follows: Condition 1 - CPA disagrees with this finding. According to the grant terms and conditions, the grant shall be available for any purpose for which airport revenues may be lawfully used. The plant rental service is a service provided directly to the airport and meets the requirements of the FAA Revenue Use Policy. Condition 2 - CPA disagrees with this finding. 100% of the utility costs claimed are for airport operations. Auditor Response: Condition 1 - Airport revenue may be used for the capital or operating costs of the airport directly and substantially related to the air transportation of passengers or property. Plant rental services do not meet this definition. The finding remains. Condition 2 - The terms of the CARES Act grant state that the allowable cost of utilities incurred by the Sponsor to operate and maintain airport(s) included in the Grant must not exceed the percent attributable to the capital or operating costs of the airport. The finding remains.
Show full finding ▾Hide full finding ▴Finding No.: 2020-005 Federal Agency: U.S. Department of Transportation CFDA Program: 20.106 COVID-19 Airport Improvement Program Federal Award No.: 3-69-0002-094-2020 Area: Allowable Costs/Cost Principles Questioned Costs: $24,763 Criteria: In accordance with applicable allowable costs/cost principles requirements, allowable costs must meet the purpose of the grant to maintain safe and efficient airport operations. Further, in accordance with the terms and conditions of the CARES Act award regarding utilities proration, it states that for purposes of computing the United States? share of the allowable airport operations and maintenance costs, the allowable cost of utilities incurred by the Sponsor to operate and maintain airport(s) included in the Grant must not exceed the percent attributable to the capital or operating costs of the airport. Condition: Of twenty-five samples tested, totaling $3,609,993 of a total population of $11,114,508, the following were noted: 1. For one (or 4%), rental costs for decorative potted plants totaling $1,500 under AP-002935 dated 09/30/2020 were charged under the grant and is not a permitted use of airport revenues. 2. For one (or 4%), utility costs of $88,640 under AP-002922 dated 08/31/2020 were charged to the grant at 100% when only 74% appears allowable. Cause: CPA lacks such controls as oversight responsibility and monitoring over compliance with allowable costs/cost principles requirements. Effect: CPA is in noncompliance with applicable allowable costs/cost principles requirements, and questioned costs of $24,763 exist, as projected questioned costs exceed the threshold. Recommendation: CPA should adhere to allowable costs/cost principles requirements and should confirm that costs charged to the Program are in compliance with the terms and conditions of the Federal award. Views of Responsible Officials: CPA?s Corrective Action Plan states disagreement with Conditions 1 and 2, as follows: Condition 1 - CPA disagrees with this finding. According to the grant terms and conditions, the grant shall be available for any purpose for which airport revenues may be lawfully used. The plant rental service is a service provided directly to the airport and meets the requirements of the FAA Revenue Use Policy. Condition 2 - CPA disagrees with this finding. 100% of the utility costs claimed are for airport operations. Auditor Response: Condition 1 - Airport revenue may be used for the capital or operating costs of the airport directly and substantially related to the air transportation of passengers or property. Plant rental services do not meet this definition. The finding remains. Condition 2 - The terms of the CARES Act grant state that the allowable cost of utilities incurred by the Sponsor to operate and maintain airport(s) included in the Grant must not exceed the percent attributable to the capital or operating costs of the airport. The finding remains.
Finding No 2020-005 Name of Contact Person: Skye Lynn L. Aldan Hofschneider Corrective Action: Condition 1: CPA disagrees with this finding. According to the grant terms and conditions, the grant shall be available for any purpose for which airport revenues may be lawfully used. The plant rental service is a service provided directly to the airport and meets the requirements of the FAA Revenue Use Policy. Condition 2: CPA disagrees with this finding. 100% of the utility costs claimed are for airport operations. Proposed Completion Date: FY 2021
FAC accepted this audit on March 17, 2021 — management decision was due September 17, 2021.
CFDA 20.106 1. CPA conducted a capital assets inventory during fiscal year 2019; however, only a partial reconciliation was performed. Total fixed asset additions capitalized and related to CPA?s major program amounted to $8,222,248, $-0-, $6,476,899, $5,294,765 and $-0- during fiscal years 2019, 2018, 2017, 2016 and 2015, respectively. 2. The capital assets schedule did not include the federal award identification number, who holds title, percentage of federal participation, location, use and condition of the assets. Of forty items tested, we noted deficiencies, as follows: 3. Two items (or 5%) have been replaced; as such, assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 4. One item (or 3%) was tagged; however, the tag number was not documented in the entity?s records. See Schedule of Findings and Questioned Costs for chart/table No questioned cost is raised as we were able to identify the asset through the VIN documented in the entity?s records. Non-Federal Capital Assets Tests of other capital assets noted the following: 5. Five expense items were improperly capitalized. Management did not consider the amounts sufficiently material to the financial statements to warrant an adjustment. See Schedule of Findings and Questioned Costs for chart/table 6. For five assets, we were unable to determine physical existence as the serial number on the asset does not agree with the serial number on the subledger. See Schedule of Findings and Questioned Costs for chart/table 7. For nine assets, we were unable to determine physical existence as the subledger lacked sufficient description (e.g., tag number or serial number) to match the asset to the fixed asset detail. See Schedule of Findings and Questioned Costs for chart/table 8. For five assets, we were unable to determine physical existence as we were advised that the asset had either been disposed, replaced or damaged. At September 30, 2019, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 9. For six asset items, the description comprises numerous units, however, we were not able to verify physical existence for all units. At September 30, 2019, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table In addition, we noted the following: ? Of the eight units for System No. 000583, four were decommissioned (VIN numbers 1FMZU73E72ZC23724, 1FUZM72E02UC61018, 1FMZU72E92UC61017 and 1FMZU72E72UC61011), and one was donated to a government agency (VIN number 1FMZU73E92ZC43487); however, the decommissioned and transfer of ownership documentations were not provided. ? During sighting for System No. 001377, we noted two additional units (3322205 Control Arm Left and 3322206 Control Arm Lower Right Spring) that were not included in the subledger. 10. For eight assets, we were unable to determine physical existence as there was no information as to the asset?s location. See Schedule of Findings and Questioned Costs for chart/table 11. For three assets, we were unable to determine physical existence as the asset could not be located. See Schedule of Findings and Questioned Costs for chart/table 12. The assets are not functional, however, the assets have not been decommissioned. See Schedule of Findings and Questioned Costs for chart/table Cause: CPA lacks controls, such as oversight responsibility and monitoring, over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. Recommendation: CPA should establish and implement controls over compliance with applicable property management requirements. Responsible personnel should perform monitoring activities to ascertain that the results of the annual physical inventory reconcile to the property records and that sufficient details are included in the capital assets subledger to specifically identify individual assets. Identification as a Repeat Finding: Finding 2018-002. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement and provides planned corrective actions.
Show full finding ▾Hide full finding ▴Finding No.: 2019-002 Federal Agency: U.S. Department of Transportation CFDA Program: 20.106 Airport Improvement Program Federal Award Nos.: All AIP Grants Area: Equipment and Real Property Management Area: Capital Assets Questioned Costs: $-0- Criteria: In accordance with applicable equipment and real property management requirements, a State must use, manage and dispose of equipment acquired under a Federal award by the State in accordance with State laws and procedures. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal of the property; and (2) A physical inventory of the property must be taken and the results reconciled with the property records annually. Condition: CFDA 20.106 1. CPA conducted a capital assets inventory during fiscal year 2019; however, only a partial reconciliation was performed. Total fixed asset additions capitalized and related to CPA?s major program amounted to $8,222,248, $-0-, $6,476,899, $5,294,765 and $-0- during fiscal years 2019, 2018, 2017, 2016 and 2015, respectively. 2. The capital assets schedule did not include the federal award identification number, who holds title, percentage of federal participation, location, use and condition of the assets. Of forty items tested, we noted deficiencies, as follows: 3. Two items (or 5%) have been replaced; as such, assets should have been written-off. See Schedule of Findings and Questioned Costs for chart/table 4. One item (or 3%) was tagged; however, the tag number was not documented in the entity?s records. See Schedule of Findings and Questioned Costs for chart/table No questioned cost is raised as we were able to identify the asset through the VIN documented in the entity?s records. Non-Federal Capital Assets Tests of other capital assets noted the following: 5. Five expense items were improperly capitalized. Management did not consider the amounts sufficiently material to the financial statements to warrant an adjustment. See Schedule of Findings and Questioned Costs for chart/table 6. For five assets, we were unable to determine physical existence as the serial number on the asset does not agree with the serial number on the subledger. See Schedule of Findings and Questioned Costs for chart/table 7. For nine assets, we were unable to determine physical existence as the subledger lacked sufficient description (e.g., tag number or serial number) to match the asset to the fixed asset detail. See Schedule of Findings and Questioned Costs for chart/table 8. For five assets, we were unable to determine physical existence as we were advised that the asset had either been disposed, replaced or damaged. At September 30, 2019, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table 9. For six asset items, the description comprises numerous units, however, we were not able to verify physical existence for all units. At September 30, 2019, the assets were included in the fixed asset subledger. See Schedule of Findings and Questioned Costs for chart/table In addition, we noted the following: ? Of the eight units for System No. 000583, four were decommissioned (VIN numbers 1FMZU73E72ZC23724, 1FUZM72E02UC61018, 1FMZU72E92UC61017 and 1FMZU72E72UC61011), and one was donated to a government agency (VIN number 1FMZU73E92ZC43487); however, the decommissioned and transfer of ownership documentations were not provided. ? During sighting for System No. 001377, we noted two additional units (3322205 Control Arm Left and 3322206 Control Arm Lower Right Spring) that were not included in the subledger. 10. For eight assets, we were unable to determine physical existence as there was no information as to the asset?s location. See Schedule of Findings and Questioned Costs for chart/table 11. For three assets, we were unable to determine physical existence as the asset could not be located. See Schedule of Findings and Questioned Costs for chart/table 12. The assets are not functional, however, the assets have not been decommissioned. See Schedule of Findings and Questioned Costs for chart/table Cause: CPA lacks controls, such as oversight responsibility and monitoring, over compliance with equipment and real property management requirements. Effect: CPA is in noncompliance with applicable equipment and real property management requirements. Recommendation: CPA should establish and implement controls over compliance with applicable property management requirements. Responsible personnel should perform monitoring activities to ascertain that the results of the annual physical inventory reconcile to the property records and that sufficient details are included in the capital assets subledger to specifically identify individual assets. Identification as a Repeat Finding: Finding 2018-002. Views of Responsible Officials: CPA?s Corrective Action Plan states agreement and provides planned corrective actions.
Finding No 2019-002 Name of Contact Person: Skye Lynn L. Aldan Hofschneider Corrective Action: Condition 1: In FY 2021, CPA reconciled its federally funded fixed assets and compiled a listing of federally funded assets to be removed. CPA sent a letter to the federal grantor in November 2020, requesting for the approval of the decommission of these items. Condition 2: CPA has implemented additional requirements for entering capital assets into its fixed asset system. For each asset entered, CPA includes the serial number, VIN number, or other identification number and the specific location within the CPA premises. CPA will include the title, percentage of federal participation, use, and condition of the assets when entering into the system Condition 3: In November 2020, CPA sent a letter to the federal grantor requesting to decommission fixed assets number 000094 and 000025. CPA is awaiting response from the federal grantor to concur with the removal of these fully depreciated federally funded items from CPA?s fixed asset system. Condition 4: Resolved. CPA has documented the tag number for fixed asset number 001367 in its fixed asset system and inventory records. Proposed Completion Date: Fiscal Year 2021
2018-002
FAC accepted this audit on January 7, 2020 — management decision was due July 7, 2020.
GSA_MIGRATION
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GSA_MIGRATION
2017-001
GSA_MIGRATION
Show full finding ▾Hide full finding ▴FAC accepted this audit on February 3, 2019 — management decision was due August 3, 2019.
GSA_MIGRATION
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2016-001
FAC accepted this audit on July 5, 2017 — management decision was due January 5, 2018.
GSA_MIGRATION
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GSA_MIGRATION
2015-001
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2015-002
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