FAA removes CPA from ‘high risk’ status

The Federal Aviation Agency has removed the Commonwealth Ports Authority from “high-risk” status to “moderate risk” after the agency partially addressed concerns raised in previous years’ audit reports.

CPA executive director Efrain Camacho disclosed this Saturday, saying the removal of the high-risk status was a result of recent changes in the agency’s financial management and controls.

The federal agency placed CPA in the high risk category in 2007 due to “questionable administrative costs” in the federal funds provided to airport projects.

FAA ranks airports according to three categories based on how each uses the federal airport improvement project funds:

No risk status means the agency conforms with all the requirements;

Moderate risk where it needs to address certain recommendation; and

High-risk for severe noncompliance with federal rules and standards.

Camacho said that CPA was cited by FAA in the Office of the Inspector General’s Report, indicating “serious concerns” in handling grants.

He declined to give figures about the questionable administrative costs cited in the federal report.

“FAA wants CPA to set up controls within accounting to make sure that expenditures are recorded properly, and controls on travel and other expenses using federal grants,” Camacho told Saipan Tribune.

Camacho immediately took steps to address federal concerns, including the hiring of a CIP/federal grant accountant as required by FAA. CPA, Saipan Tribune learned, has hired Chris Camacho for the position and a new certified public accountant for the comptroller position.

Camacho said the new CIP/federal grant accounting is re-organizing the department and will develop a tracking system for the office.

“Both FAA and CPA are now confident that we are moving forward,” Camacho said, citing the removal of the agency from the severe FAA sanction.

Camacho said CPA has been “under-manned” and has failed to hire a CPA comptroller since the start.

He disclosed that the OIG report cited CPA for its audit reports in fiscal years 2005, 2006, and 2007.

“CPA’s attention was called to the fact that we need to address these concerns in the OIG report…so we immediately took actions that included the setting up of specific new accounts for the federal grants and hiring an individual exclusively responsible for accounting these grants,” he said.

Camacho said CPA is targeting to be in full compliance—or the no-risk category—in July 2009.

“Now that CPA is on moderate risk status—from high risk category—it is our goal to step up to the no-risk level and that’s within this year,” he said, adding that “CPA is in the right direction.”

Camacho said this will be realized when the agency completes the cost-allocation plan for all federal monies received for airport projects.

Saipan Tribune learned that there are over 30 airport projects in the CNMI worth $105.6 million that CPA had asked the federal agency to fund, with the following requested drawdown: $37.7 million in FY 2008; $32.8 million in FY 2009; and $30.1 million in FY 2010.

These projects cover improvements, expansions, procurement of equipment and rehabilitation of airport sites and facilities.