FAC Explorer

Finding 1224396 (2023-013)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2026-07-22
Audit: 407734
Organization: Commonwealth of the Northern Mariana Islands (MP)
Auditor: ERNST & YOUNG (CNMI) INC

AI Summary

  • Core Issue: CNMI failed to provide necessary documentation for $3,695,208 in questioned costs, including invoices and cancelled checks, leading to noncompliance with federal requirements.
  • Impacted Requirements: Noncompliance with 2 CFR 200.303(a) and 2 CFR §200.403(g) regarding internal controls and documentation for federal awards.
  • Recommended Follow-Up: CNMI should enhance record-keeping and document retention practices using their ERP software, Tyler MUNIS, to ensure compliance and prevent future issues.

Finding Text

Finding No. 2023-013 Federal Agency: U.S. Department of Commerce AL Program: 11.307 Economic Adjustment Assistance Federal Award No.: 07-79-07645, 07-79-07631, 07-79-07562 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Criteria: In accordance with 2 CFR 200.303(a), the recipient 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. Additionally, in accordance with 2 CFR §200.403(g), non-Federal entities must maintain adequate documentation to support all charges to Federal awards. Condition: Of twenty-two nonpayroll expenditures tested, aggregating $3,695,208 of a total population of $4,435,648, the following were noted: 1. For two (or 9%), CNMI did not provide the invoices and/or contract agreements. No questioned costs are presented as amounts are questioned at Condition 2. 2. For twenty-two (or 100%), CNMI did not provide cancelled checks or related bank statements to provide evidence that payments were properly authorized, were made to eligible parties, and did not constitute improper payments for the following transactions. Finding No. 2023-013, continued Federal Agency: U.S. Department of Commerce AL Program: 11.307 Economic Adjustment Assistance Federal Award No.: 07-79-07645, 07-79-07631, 07-79-07562 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Cause: CNMI did not properly enforce their record-keeping and document retention controls. Effect or Potential Effect: CNMI is in noncompliance with applicable activities allowed or unallowed and allowable costs/cost principles compliance requirements and questioned costs of $3,695,208 result for Condition 2. Identification of a Repeat Finding: This is not a repeat finding. Recommendation: CNMI should improve their record-keeping and document retention policies by properly utilizing the database functionality of their current Enterprise Resources Planning (ERP) software, which is Tyler MUNIS. Views of Responsible Officials: Condition 1 - CNMI Department of Finance respectfully disagrees with this finding related to project number FG17010001 (Economic Resiliency Center). CNMI DOF acknowledges that although supporting documentation, such as journal entries, approvals of expense transfers, sole-source justification memo and grantor approval were submitted, copies of the related invoices and/or contract agreement were not included. This omission was an oversight and resulted in a documentation-timing deficiency. Condition 2 - CNMI Department of Finance respectfully disagrees with this finding related to PA Journals 478, 360, 2137 and 335. These transactions pertain to the Department’s Economic Resiliency Center (ERC) project. Due to internal scheduling constraints and the compressed 2-day turnaround to provide supporting documentation to the auditors, the requested documents were not submitted by the specified deadline. This timing issue resulted in the finding; however, it does not reflect a lack of documentation or inadequate record-keeping. CNMI DOF maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. Finding No. 2023-013, continued Federal Agency: U.S. Department of Commerce AL Program: 11.307 Economic Adjustment Assistance Federal Award No.: 07-79-07645, 07-79-07631, 07-79-07562 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Views of Responsible Officials, continued: The Office of Planning and Development (OPD) partially agrees with the finding. OPD reviewed the questioned transactions and supporting documentation available under its custody. Payment documentation has been identified for PA Journals 186, 142, 141, 2670, 270, 4200, 556, 4180, and 913 and is maintained by OPD for review. For PA Journals 191 and 144, OPD verified that the invoice amounts are consistent with Contract No. 32200454; however, the PA Journal effective dates and journal numbers provided in the audit schedule do not correspond with the records reflected in the Munis system. For PA Journals 1585, 1862, 2219, 1138, 197, 593, and 219, additional information is required to complete verification because the PA Journal effective dates and journal numbers differ from the Munis records available to OPD. The referenced invoice amounts alone are insufficient to identify the transactions, as they may represent portions of cost shared expenditures or partial payments associated with larger transactions. Identification of the vendor would significantly assist in locating and reconciling the transactions. Refer to CNMI’s Corrective Action Plan for additional information. Auditor response: Conditions 1 and 2 - CNMI states disagreement; however, CNMI also acknowledges that documentation supporting program costs were not provided. In addition, the program office should coordinate with the CNMI Department of Finance on identifying the PA journal effective dates, journal numbers and vendors that the program could not trace in the Munis system.

Corrective Action Plan

Finding No.: 2023-013 AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: Condition 1: The CNMI Department of Finance respectfully disagrees with this finding related to project number FG17010001 (Economic Resiliency Center). The Department acknowledges that although supporting documentation – such as journal entries, approvals of expense transfers, sole-source justification memo, and grantor approval - was submitted, copies of the related invoices and/or contract agreement were not included. This omission was an oversight and resulted in a documentation-timing deficiency. The Department maintains copies of all required documents, and they are available for review upon request. To prevent recurrence, the department will reinforce our internal review procedures to ensure that all required supporting documentation is consistently compiled, retained within the Tyler MUNIS system, and submitted as part of future audit requests. Proposed Completion Date: Ongoing Condition 2: The CNMI Department of Finance respectfully disagrees with this finding related to PA Journals 478, 360, 2137, and 335. These transactions pertain to the Department’s Economic Resiliency Center (ERC) project. Due to internal scheduling constraints and the compressed 2-day turnaround to provide supporting documentation to the auditors, the requested documents were not submitted by the specified deadline. This timing issue resulted in the finding; however, it does not reflect a Finding No.: 2023-013, continued AL Programs: 11.307 – Economic Adjustment Assistance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Questioned Costs: $3,695,208 Contact Person(s): Elizabeth S. Balajadia, Office of Planning and Development Acting Director / James Kintol, Project Manager, Department of Finance Corrective Action Plan: lack of documentation or inadequate recordkeeping. The Department maintains all relevant supporting documentation for these transactions and such documentation is available for review upon request from the Grantor. The Office of Planning and Development (OPD) partially agrees with the finding. OPD reviewed the questioned transactions and supporting documentation available under its custody. Payment documentation has been identified for PA Journals 186, 142, 141, 2670, 270, 4200, 556, 4180, and 913 and is maintained by OPD for review. For PA Journals 191 and 144, OPD verified that the invoice amounts are consistent with Contract No. 32200454; however, the PA Journal effective dates and journal numbers provided in the audit schedule do not correspond with the records reflected in the Munis system. For PA Journals 1585, 1862, 2219, 1138, 197, 593, and 219, additional information is required to complete verification because the PA Journal effective dates and journal numbers differ from the Munis records available to OPD. The referenced invoice amounts alone are insufficient to identify the transactions, as they may represent portions of cost shared expenditures or partial payments associated with larger transactions. Identification of the vendor would significantly assist in locating and reconciling the transactions. OPD further notes that the compilation of requested documentation occurred under significant time constraints. During the audit process, agencies were at one point provided approximately two business days to submit requested samples and supporting documentation. Given the volume of transactions and the age of some records, the limited response timeframe may have affected the ability to fully research, reconcile, and compile all supporting documentation prior to submission. Additional time for both agency response and auditor review may have facilitated a more comprehensive reconciliation and verification of the questioned items. OPD will continue coordinating with the Department of Finance and the auditors to reconcile discrepancies between the audit schedules and Munis records, provide available supporting documentation, and strengthen record-retention and transaction-tracking procedures to ensure supporting documentation is readily identifiable and accessible for future audits. Proposed Completion Date: Ongoing

Categories

Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1224392 2023-010
    Material Weakness Repeat
  • 1224393 2023-010
    Material Weakness Repeat
  • 1224394 2023-011
    Material Weakness Repeat
  • 1224395 2023-012
    Material Weakness Repeat
  • 1224397 2023-014
    Material Weakness Repeat
  • 1224398 2023-015
    Material Weakness Repeat
  • 1224399 2023-016
    Material Weakness Repeat
  • 1224400 2023-017
    Material Weakness Repeat
  • 1224401 2023-018
    Material Weakness Repeat
  • 1224402 2023-019
    Material Weakness Repeat
  • 1224403 2023-020
    Material Weakness Repeat
  • 1224404 2023-015
    Material Weakness Repeat
  • 1224405 2023-016
    Material Weakness Repeat
  • 1224406 2023-017
    Material Weakness Repeat
  • 1224407 2023-018
    Material Weakness Repeat
  • 1224408 2023-019
    Material Weakness Repeat
  • 1224409 2023-020
    Material Weakness Repeat
  • 1224410 2023-015
    Material Weakness Repeat
  • 1224411 2023-016
    Material Weakness Repeat
  • 1224412 2023-017
    Material Weakness Repeat
  • 1224413 2023-018
    Material Weakness Repeat
  • 1224414 2023-019
    Material Weakness Repeat
  • 1224415 2023-020
    Material Weakness Repeat
  • 1224416 2023-015
    Material Weakness Repeat
  • 1224417 2023-016
    Material Weakness Repeat
  • 1224418 2023-017
    Material Weakness Repeat
  • 1224419 2023-018
    Material Weakness Repeat
  • 1224420 2023-019
    Material Weakness Repeat
  • 1224421 2023-020
    Material Weakness Repeat
  • 1224422 2023-021
    Material Weakness Repeat
  • 1224423 2023-022
    Material Weakness Repeat
  • 1224424 2023-023
    Material Weakness Repeat
  • 1224425 2023-024
    Material Weakness Repeat
  • 1224426 2023-025
    Material Weakness Repeat
  • 1224427 2023-026
    Material Weakness Repeat
  • 1224428 2023-027
    Material Weakness Repeat
  • 1224429 2023-028
    Material Weakness Repeat
  • 1224430 2023-029
    Material Weakness Repeat
  • 1224431 2023-030
    Material Weakness Repeat
  • 1224432 2023-031
    Material Weakness Repeat
  • 1224433 2023-032
    Material Weakness Repeat
  • 1224434 2023-033
    Material Weakness Repeat
  • 1224435 2023-034
    Material Weakness Repeat
  • 1224436 2023-035
    Material Weakness Repeat
  • 1224437 2023-036
    Material Weakness Repeat
  • 1224438 2023-037
    Material Weakness Repeat
  • 1224439 2023-038
    Material Weakness Repeat
  • 1224440 2023-039
    Material Weakness Repeat
  • 1224441 2023-040
    Material Weakness Repeat
  • 1224442 2023-041
    Material Weakness Repeat
  • 1224443 2023-042
    Material Weakness Repeat
  • 1224444 2023-039
    Material Weakness Repeat
  • 1224445 2023-040
    Material Weakness Repeat
  • 1224446 2023-041
    Material Weakness Repeat
  • 1224447 2023-042
    Material Weakness Repeat
  • 1224448 2023-039
    Material Weakness Repeat
  • 1224449 2023-040
    Material Weakness Repeat
  • 1224450 2023-041
    Material Weakness Repeat
  • 1224451 2023-042
    Material Weakness Repeat
  • 1224452 2023-043
    Material Weakness Repeat
  • 1224453 2023-044
    Material Weakness Repeat
  • 1224454 2023-045
    Material Weakness Repeat
  • 1224455 2023-046
    Material Weakness Repeat
  • 1224456 2023-047
    Material Weakness Repeat
  • 1224457 2023-048
    Material Weakness Repeat
  • 1224458 2023-049
    Material Weakness Repeat
  • 1224459 2023-050
    Material Weakness Repeat
  • 1224460 2023-048
    Material Weakness Repeat
  • 1224461 2023-049
    Material Weakness Repeat
  • 1224462 2023-050
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $104.07M
93.778 GRANTS TO STATES FOR MEDICAID $76.95M
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) $31.11M
10.539 CNMI NUTRITION ASSISTANCE $16.44M
93.767 CHILDREN'S HEALTH INSURANCE PROGRAM $14.01M
93.575 CHILD CARE AND DEVELOPMENT BLOCK GRANT $10.33M
10.542 PANDEMIC EBT FOOD BENEFITS $9.86M
20.205 HIGHWAY PLANNING AND CONSTRUCTION $7.85M
84.425H Education Stabilization Fund-Governors (Outlying Areas) $6.68M
17.225 UNEMPLOYMENT INSURANCE $5.91M
11.307 ECONOMIC ADJUSTMENT ASSISTANCE $4.56M
21.023 EMERGENCY RENTAL ASSISTANCE PROGRAM $3.57M
93.596 CHILD CARE MANDATORY AND MATCHING FUNDS OF THE CHILD CARE AND DEVELOPMENT FUND $3.54M
20.526 BUSES AND BUS FACILITIES FORMULA, COMPETITIVE, AND LOW OR NO EMISSIONS PROGRAMS $2.85M
66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support $2.46M
66.801 HAZARDOUS WASTE MANAGEMENT STATE PROGRAM SUPPORT $2.18M
97.039 HAZARD MITIGATION GRANT $2.05M
93.667 SOCIAL SERVICES BLOCK GRANT $1.52M
15.611 WILDLIFE RESTORATION AND BASIC HUNTER EDUCATION AND SAFETY $1.45M
12.617 ECONOMIC ADJUSTMENT ASSISTANCE FOR STATE GOVERNMENTS $1.43M
15.875 ECONOMIC, SOCIAL, AND POLITICAL DEVELOPMENT OF THE TERRITORIES $1.39M
11.419 COASTAL ZONE MANAGEMENT ADMINISTRATION AWARDS $1.06M
15.605 SPORT FISH RESTORATION $1.03M
20.600 State and Community Highway Safety $1.02M
84.126A Rehabilitation Services Vocational Rehabilitation Grants to States $722,785
17.277 WIOA NATIONAL DISLOCATED WORKER GRANTS / WIA NATIONAL EMERGENCY GRANTS $642,983
97.067 HOMELAND SECURITY GRANT PROGRAM $586,122
11.482 CORAL REEF CONSERVATION PROGRAM $485,806
16.575 CRIME VICTIM ASSISTANCE $480,848
93.045 SPECIAL PROGRAMS FOR THE AGING, TITLE III, PART C, NUTRITION SERVICES $465,958
16.588 VIOLENCE AGAINST WOMEN FORMULA GRANTS $463,780
10.649 PANDEMIC EBT ADMINISTRATIVE COSTS $459,938
16.710 Public Safety Partnership and Community Policing Grants $439,489
97.012 BOATING SAFETY FINANCIAL ASSISTANCE $400,545
93.044 SPECIAL PROGRAMS FOR THE AGING, TITLE III, PART B, GRANTS FOR SUPPORTIVE SERVICES AND SENIOR CENTERS $392,210
17.278 WIOA DISLOCATED WORKER FORMULA GRANTS $374,455
15.615 COOPERATIVE ENDANGERED SPECIES CONSERVATION FUND $368,265
16.738 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT PROGRAM $341,575
97.047 BRIC: BUILDING RESILIENT INFRASTRUCTURE AND COMMUNITIES $319,766
17.259 WIOA YOUTH ACTIVITIES $307,211
16.750 Support for Adam Walsh Act Implementation Program $273,641
81.041 STATE ENERGY PROGRAM $265,459
17.504 CONSULTATION AGREEMENTS $264,451
20.218 MOTOR CARRIER SAFETY ASSISTANCE $252,525
45.025 PROMOTION OF THE ARTS PARTNERSHIP AGREEMENTS $239,433
17.258 WIOA ADULT PROGRAM $229,634
17.235 SENIOR COMMUNITY SERVICE EMPLOYMENT PROGRAM $224,606
81.042 WEATHERIZATION ASSISTANCE FOR LOW-INCOME PERSONS $212,348
15.634 STATE WILDLIFE GRANTS $201,740
16.034 CORONAVIRUS EMERGENCY SUPPLEMENTAL FUNDING PROGRAM $197,962
10.766 COMMUNITY FACILITIES LOANS AND GRANTS $195,515
15.904 HISTORIC PRESERVATION FUND GRANTS-IN-AID $186,515
11.472 COOPERATIVE RESEARCH PROGRAM $168,303
93.464 ACL ASSISTIVE TECHNOLOGY $128,419
93.747 ELDER ABUSE PREVENTION INTERVENTIONS PROGRAM $123,018
17.285 REGISTERED APPRENTICESHIP $116,929
11.437 FISHERIES DATA PROGRAM $112,596
11.467 METEOROLOGIC AND HYDROLOGIC MODERNIZATION DEVELOPMENT $104,532
10.664 COOPERATIVE FORESTRY ASSISTANCE $103,272
15.663 NFWF-USFWS CONSERVATION PARTNERSHIP $91,690
11.035 BROADBAND EQUITY, ACCESS, AND DEPLOYMENT PROGRAM $87,681
97.062 SCIENTIFIC LEADERSHIP AWARDS $86,357
93.048 SPECIAL PROGRAMS FOR THE AGING, TITLE IV, AND TITLE II, DISCRETIONARY PROJECTS $85,373
93.127 EMERGENCY MEDICAL SERVICES FOR CHILDREN $84,663
15.957 EMERGENCY SUPPLEMENTAL HISTORIC PRESERVATION FUND $73,515
17.273 TEMPORARY LABOR CERTIFICATION FOR FOREIGN WORKERS $68,059
97.042 EMERGENCY MANAGEMENT PERFORMANCE GRANTS $67,796
12.300 Basic and Applied Scientific Research $65,974
20.509 FORMULA GRANTS FOR RURAL AREAS AND TRIBAL TRANSIT PROGRAM $64,714
93.645 STEPHANIE TUBBS JONES CHILD WELFARE SERVICES PROGRAM $61,124
10.680 Forest Health Protection $60,114
10.179 MICRO-GRANTS FOR FOOD SECURITY PROGRAM $58,129
16.017 SEXUAL ASSAULT SERVICES FORMULA PROGRAM $58,045
10.170 Specialty Crop Block Grant Program - Farm Bill $52,296
93.053 NUTRITION SERVICES INCENTIVE PROGRAM $50,933
93.556 MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES PROGRAM $49,361
59.061 STATE TRADE EXPANSION $41,693
93.569 COMMUNITY SERVICES BLOCK GRANT $39,897
11.407 INTERJURISDICTIONAL FISHERIES ACT OF 1986 $36,146
45.310 Grants to States $32,929
12.022 DOD MENTOR-PROTEGE PROGRAM $31,470
93.369 ACL INDEPENDENT LIVING STATE GRANTS $31,188
21.029 CORONAVIRUS CAPITAL PROJECTS FUND $30,034
93.450 Ebola Healthcare Preparedness and Response for Select Cities with Enhanced Airport Entrance Screenings from Affected Countries in West Africa $27,956
12.600 Community Investment $25,881
66.442 WATER INFRASTRUCTURE IMPROVEMENTS FOR THE NATION SMALL AND UNDERSERVED COMMUNITIES EMERGING CONTAMINANTS GRANT PROGRAM $22,460
16.585 TREATMENT COURT DISCRETIONARY GRANT PROGRAM $18,807
93.052 NATIONAL FAMILY CAREGIVER SUPPORT, TITLE III, PART E $16,169
93.590 Community - Based Child Abuse Prevention Grants $15,683
10.698 STATE & PRIVATE FORESTRY COOPERATIVE FIRE ASSISTANCE $14,514
93.043 SPECIAL PROGRAMS FOR THE AGING, TITLE III, PART D, DISEASE PREVENTION AND HEALTH PROMOTION SERVICES $14,287
16.540 Juvenile Justice and Delinquency Prevention $13,470
84.177B Rehabilitation Services Independent Living Services for Older Individuals Who are Blind $13,468
17.600 Mine Health and Safety Grants $13,189
15.631 PARTNERS FOR FISH AND WILDLIFE $9,540
20.703 INTERAGENCY HAZARDOUS MATERIALS PUBLIC SECTOR TRAINING AND PLANNING GRANTS $9,151
45.129 PROMOTION OF THE HUMANITIES FEDERAL/STATE PARTNERSHIP $8,543
66.040 Diesel Emissions Reduction Act (DERA) State Grants $8,314
93.671 FAMILY VIOLENCE PREVENTION AND SERVICES/DOMESTIC VIOLENCE SHELTER AND SUPPORTIVE SERVICES $8,215
93.042 SPECIAL PROGRAMS FOR THE AGING, TITLE VII, CHAPTER 2, LONG TERM CARE OMBUDSMAN SERVICES FOR OLDER INDIVIDUALS $5,973
16.753 CONGRESSIONALLY RECOMMENDED AWARDS $5,484
11.032 STATE DIGITAL EQUITY PLANNING AND CAPACITY GRANT $4,673
15.657 ENDANGERED SPECIES RECOVERY IMPLEMENTATION $4,508
93.558 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES $4,200
11.U01 2010 Census $2,255
93.630 Developmental Disabilities Basic Support and Advocacy Grants $1,917
11.016 STATISTICAL, RESEARCH, AND METHODOLOGY ASSISTANCE $1,265
10.950 Agricultural Statistics Report $1,113
12.113 STATE MEMORANDUM OF AGREEMENT PROGRAM FOR THE REIMBURSEMENT OF TECHNICAL SERVICES $1,029
93.568 LOW-INCOME HOME ENERGY ASSISTANCE $854
20.500 Federal Transit Capital Investment Grants $761
93.041 SPECIAL PROGRAMS FOR THE AGING, TITLE VII, CHAPTER 3, PROGRAMS FOR PREVENTION OF ELDER ABUSE, NEGLECT, AND EXPLOITATION $525
20.513 ENHANCED MOBILITY OF SENIORS AND INDIVIDUALS WITH DISABILITIES $318
11.473 OFFICE FOR COASTAL MANAGEMENT $169