CUC and CHCC to meet over payment plan

The Commonwealth Utilities Corp. has arranged to meet with the Commonwealth Healthcare Corp. next Tuesday to iron out the details of a payment plan for the hospital’s average $500,000 monthly utility bills, acting CUC executive director John Riegel told Saipan Tribune yesterday.

The hospital owes around $16 million in unpaid bills to CUC. They owe around $560,000 in bills plus penalties per month. Recently, the CUC board drafted a monthly $150,000 payment plan, but gave CUC management a 30-day period late last month to meet and discuss the payment plan with the hospital.

Riegel on Monday morning told Saipan Tribune they sent a letter last Wednesday to CHCC inviting them to meet. Riegel said yesterday that CHCC has since replied to the letter.

In June, CHCC chief executive officer Esther Muña proposed a minimum of $150,000 in monthly payments until CHCC completed a “renewable energy” system. However, CUC would like to know more about these renewable energy plans and determine exactly how much the hospital can pay them.

In an interview Monday, Riegel said there were “several deficiencies” in CHCC’s proposed payment plan and CUC wants to iron out some of those details and talk the terms of the agreement rather than just have a written document.

“They wanted to pay an amount that’s less than their monthly usage, which of course just continues to increase their” debts to CUC, he said. “Everybody should pay what they consume, and we would like to work out” a plan “that is amendable to both parties,” Riegel said.

CHCC’s 2012 and 2013 audits provided neither a clean, qualified, nor adverse opinion but rather a “disclaimer” of an opinion. In their audit, Muña explained they were unable to determine the propriety of receivables and inventories for 2013 and 2012 as they “could not substantiate general ledger balances due to inadequacies in accounting records.”

The “disclaimer,” among the identified 15 “material weakness” in the hospital’s internal control structure, prompted CUC chief financial officer Matthew Yaquinto to suggest to the CUC board last week that they think “out of the box” and help CHCC determine the state of their finances.

“Why don’t we tell them, you keep your $150,000 a month for three or four months, [and] procure a consultant to help you with your billing system, collections, and finances, etc.,” Yaquinto explained to Saipan Tribune.

Yaquinto said he could act as a project manager and oversee the work because it helps both companies.

Some of the CHCC audit’s material weaknesses included the lack of accounting policies and controls over the financial reporting process; lack of established monitoring control procedures to determine the accuracy and completeness of transactions; lack of established policies and procedures for revenue recognition; inadequate file maintenance and untimely recording of transactions; and the lack of control over monitoring and approval of purchases/disbursements, travel advances, adherence to procurement rules and regulations and proper systematic filing of relevant documents.