This report presents the results of our audit of billings under a Northern Mariana Islands Retirement Fund's (NMIRF) professional services contract covering the period October 1, 1996 through February 29, 2000. The objectives of our audit were to determine: (1) whether professional fees charged by the NMIRF contractor were in accordance with the contracted billing rates, (2) the amounts and reasons for any overpayment, and (3) whether the billings submitted by the contractor were adequately supported.

Evidence gathered showed that the Fund's professional services contractor had overstated its monthly billings to NMIRF by $7,934, and had submitted a double billing of $992, as well as an overcharge of $660 for time spent attending off-island meetings. These conditions occurred because: (1) the contractor applied an erroneous billing rate to NMIRF, and (2) NMIRF relied on the contractor's billings without adequately reviewing detailed monthly charges. As a result, the NMIRF overpaid its contractor by $9,586.

We recommended that the NMIRF Administrator instruct the Fund's Accounting Manager to:

• Formally notify the contractor of the overpayment disclosed by our audit, and make arrangements to recover the overpayment.
• Adequately review all invoices before making payments by using a written memorandum or checklist to identify the important review procedures conducted. Each payment should, at a minimum, bear evidence that: (a) each invoice was compared to the purchase order or contract agreement for description, price, rates, and quantity; (b) the invoice quantity was compared to the receiving report when applicable; (c) the person receiving any goods or services acknowledged receipt; (d) extensions and additions were tested; and (e) the invoice was approved for payment.
• Adopt measures to improve internal controls over the processing and payment of expenses. These could include measures ensuring that: (a) billings are supported by documents evidencing that goods were actually received or services rendered, (b) disbursement vouchers and supporting documents are marked paid after completion of check processing to prevent duplicate payments, and (c) written filing procedures are prepared to control and monitor the location of accounting records and documents.
• Evaluate whether it would be more cost effective for NMIRF to hire a full-time professional employee to provide the professional services previously rendered by the contractor.

Finally, we recommended that the Administrator instruct the Fund's Administrative Services Manager to request the contractor to provide NMIRF with adequate supporting documentation and information associated with the professional services rendered and billed.

OPA met with NMIRF officials on several occasions to discuss OPA's draft letter report's findings and recommendations. We are pleased that NMIRF officials took action on three of OPA's recommendations. Based on our meetings, we consider Recommendation 1 resolved, Recommendations 2 and 3 open, and Recommendation 4 and 5 closed. The additional information or action required to close the recommendations is presented in the report.

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