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Finding No.: 2024-003 Federal Agency: U.S. Department of the Interior, Office of Insular Affairs Federal Program: Economic, Social, and Political Development of the Territories – Compact of Free Association, as Amended, Compact Sector Grants Assistance Listing: 15.875 Compliance Requirement: Activities Allowed or Unallowed – Educator Qualification Requirements Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Compact Grant’s Education Sector terms and conditions, consistent with the FSM Policy on Teacher Certification and JEMCO Resolutions 2009-9 and MT 2011-1, prohibit grantfunded compensation for teachers, tutors, and teacher aides without college degrees. The provision also prohibits payment of culture teachers from the grant. Condition: We tested 82 educators whose compensation was charged to the Education Sector Grant and were unable to verify degree completion for 16, or approximately 20%, of the items tested. The sample was not statistically selected. Although transcripts were available, the documentation provided for these 16 educators did not demonstrate that degrees had been conferred. Diplomas or other evidence confirming degree completion were not provided for the following samples: 2, 14, 16, 17, 19, 22, 35, 40, 45, 48, 49, 53, 56, 58, 61, and 64. As a result, we could not verify satisfaction of the college degree requirement for the identified educators subject to that requirement. Cause: The process for maintaining and reviewing educator qualification records did not ensure that documentation establishing degree completion was retained and available to support verification of compliance with the grant requirement. Management indicated that its practice permits official transcripts in lieu of diplomas when the transcripts clearly confirm that the required degrees were awarded. However, the documentation provided for the remaining exceptions did not establish degree conferral. Effect: Incomplete qualification records limit Yap State Government’s ability to demonstrate compliance with the grant’s educator qualification requirements and increase the risk that compensation for individuals who do not meet those requirements could be charged to the grant. The absence of documentation does not, by itself, establish that the educators lacked college degrees or that their compensation was unallowable. Questioned Costs: Undetermined Recommendation: We recommend that Yap State Government strengthen its procedures for verifying and maintaining educator qualification records by: Obtaining documentation confirming degree completion for the identified educators subject to the grant requirement, such as diplomas, official transcripts showing degree conferral, or written confirmation from the issuing institutions. Maintaining complete and accessible qualification records for educators whose compensation is charged to the grant. Requiring documented verification of applicable educator qualifications before charging compensation to the grant. Performing periodic supervisory reviews to identify and resolve missing or incomplete qualification documentation. Identification as a Repeat Finding: No. Views of Responsible Officials: See the corrective action plan.