Review of latest ASG audits described as inadequate (American Samoa)

Samoa News ^ | 8/10/2006 | Fili Sagapolutele

[coconutt2000]

The American Samoa Government (ASG) still needs to improve the way it accounts for its monies.

An off-island firm contracted to audit ASG's financial statements for the year ended Sept. 30, 2004, said the system of financial accounting and reporting used by the local government is inadequate.

RC Holsinger Associates, which issued their independent auditors' report in June, said the ASG audit reports show "significant failures in internal control structure related to general accounting and grants administration."

The independent auditors also noted that there is "evidence of a failure of identified controls in preventing or detecting misstatements of accounting information and a lack of appropriate management oversight and review and approval of transactions."

While ASG has made great strides in trying to improve areas such as budget formulation, monitoring of expenditures to help prevent overruns and cost reduction measures (compared to previous years when the government's financial records were not auditable), it appears ASG still has more work to do.

According to the independent auditors' report, ASG "had difficulty in locating documentation supporting some accounting records resulting in significant adjustments to various accounts."

"Adequate evidential matter in support of various recorded transactions was not provided," the independent auditors say. "It was impracticable to extend our procedures sufficiently to determine the extent to which these conditions have affected the financial statements as of and for the years ended Sept. 30, 2004."

Auditors also said that they were "unable to verify the accuracy of Due To/Form Other Funds - Pooled Cash due to an inability to rely on the internal control system."

"We were unable to obtain and test supporting detail schedules of the immigration deposits that we received and recorded by the Territory's attorney general," they say.

It also says that the financial statements for the ASG Employee Retirement Fund were not audited in accordance with Government Auditing Standards by their auditors.

Financial statements of the American Samoa Medical Center Authority and the American Samoa TeleCommuncations Authority, discretely presented components units, were also not audited, it says.

The report further notes that the financial statements of the American Samoa Power Authority and the American Samoa Community College were audited by other auditors whose reports have been furnished to RC Holsinger "and in our opinion, insofar as it relates to the amounts included for them is based solely upon the reports of the other auditors."

Improving audit reports or submitting timely and clean audits for two consecutive years is one condition the ASG needs to meet in order to be removed from its "high risk" status.

Nikolao Pula, director of DOI's Office of Insular Affairs told Samoa News in May that the removal of the high risk designation is dependent upon the ASG's satisfactory compliance with three conditions:

· timely completion of single audits with independent auditor opinions that do not contain material qualifications;

· balanced budgets for the two most recent consecutive years (2004 and 2005); and

· substantial compliance with the Memorandum of Agreement of 2002 and the Fiscal Reform Plan as revised in 2004."

"The ASG has made progress on each of the conditions above," said Pula. "However, due to the nature of the actions required to improve circumstances that were many years in the making, we anticipate that it will take some time for the ASG to fully meet all three conditions."

Reach the reporter at fili@samoanews.com.

[coconutt2000]

Try subpoenaing any relevant government documents on the disbursement of public funds to contractors for projects that seem to overrun in their costs, and never actually get done.

You'd be surprised how often the excuse of "lost records" figures into hearings and investigations of public corruption.