OPA's audit of the MHLO, covering the period from October 1999 through December 2002, showed instances of non-compliance with CNMI laws and regulations pertaining to personnel benefits, travel, official representation, Medical Referral program, and “public purpose” expenditures.

More specifically, OPA found:

• Personnel laws, regulations, and/or policies may have been violated when: (1) a former Liaison Officer1 was granted double benefits of both Outside Commonwealth Service (OCS) differential and housing allowance when no specific authorization existed for the payment of OCS or the double benefit to an appointee or excepted service employee, (2) three MHLO employees hired in Hawaii were improperly granted housing benefits, and (3) two Medical Referral Assistant employees who failed to work their assigned number of hours were fully compensated.
• MHLO and DOF did not always consistently enforce CNMI travel laws, policies and procedures pertaining to after-the-fact travel authorization requests and related travel vouchers, outstanding travel advances from previous travels, 80 percent limit on travel advances, submission of trip reports, and initiation of payroll deduction for travelers who failed to submit travel vouchers and necessary documents within the required time period.
• MHLO failed to adequately document 27 out of 37 payable vouchers selected for testing in accordance with DOF Regulations for the Control of Public Funds.
• MRO did not require family/friend escorts to file travel vouchers for subsistence allowances received from MHLO as provided in the Medical Referral Program Rules and Regulations.

OPA also found both weaknesses in and lack of internal controls necessary to prevent irregularities in the use of funds and property. These weaknesses resulted in:

• Inconsistencies in the recording of advances and collections of funds for funeral services as well as long outstanding receivables of funeral service advances;
• Inconsistencies in the approval, use, and recording of check exchange transactions as well as outstanding check exchange balances;
• Untimely and erroneous recording of bank reconciliation adjustments;
• Inaccurate property listings maintained by MHLO and DOF-P&S and MHLO property not tagged or labeled as CNMI government property;
• Inadequate timekeeping practices to properly monitor and document employees’ daily time and attendance;
• Inconsistencies in the recording of long distance calls and no review procedures to ensure that only valid long distance charges are paid with public funds; and
• Inaccurate amounts and details on the replenishment vouchers and its supporting check registers.

OPA also has concerns regarding $12,270 in official representation expenses incurred by MHLO. Of the $12,270, payments totaling $7,058 were incurred for hosting meals and gatherings and purchases of flower arrangements and fruit baskets. Aside from fiscal prudence concerns, these expenses do not appear to meet public purpose criteria as defined and regulated by the DOF Regulations for the Control of Public Funds. Our review of payments incurred under the Bento Program totaling $5,212 also showed that medical referral escorts and/or patients were, in effect, receiving a double benefit for the one day provision of food provided upon arrival in Hawaii under the Bento Program since the escorts and/or patients were also granted a subsistence allowance for the same day.

Lastly, OPA found that the CNMI Government could have saved $77,157 in rental costs for medical referral patients and escorts at the Pagoda Hotel in Honolulu if a more timely analysis had been performed by MHLO to determine the appropriate number of hotel rooms needed to serve CNMI medical referral patients. MHLO negotiated a contract renewal on November 27, 2001, effective October 5, 2001, requiring the Pagoda Hotel to block 20 rooms for medical referral patients and later renegotiated the contract revising it to 15 rooms effective June 5, 2002. Based on OPA’s analysis, occupancy at the Pagoda Hotel averaged less than 15 rooms during the 8 months between entering into the contract, in November 2001, and the renegotiation, in April 2002. If MHLO had entered into a contract for 15 rooms at the time of the contract renewal, the CNMI government would have saved $77,157 in rental costs.

The recently appointed MHLO Liaison Officer has implemented new control mechanisms, in response to recommendations made in the audit report.

View/download copy of the report