NMC submits report to WASC

Northern Marianas College has submitted a report updating its accrediting agency on NMC’s progress in addressing deficiencies noted in the college’s fiscal year 2006 financial reports.

The audit findings were part of the concerns raised by the Accrediting Commission for Community and Junior Colleges, which placed NMC on “show cause” status in January 2008.

NMC’s special report, dated March 15, 2008, lists the 14 financial statement findings and states the steps taken to address each of them.

One audit finding relates to NMC’s numerous account balances which have been outstanding for many years with little or no collection activity. Auditors have found that the receivables, approximating $2.1 million, cause misstatements in interim financial reports due to a lack of adequate provision for doubtful receivables.

In February 2008, the college decided to write off roughly $1.95 million of the longstanding receivables—dating back to 1999—against which there has been little or no payment activity. The receivable balances have been outstanding for too long that NMC, for the most part, cannot take legal action to pursue their payment.

Nonetheless, NMC said it had referred some of the balances to attorneys and collection agencies for further action.

Another major issue found in NMC’s financial reports relates to its retirement contributions. In FY2006, the NMI Retirement Fund increased the rate of contribution for employers participating in the plan from 24 percent to 36 percent. NMC did not comply with the increased rate and chose not to reflect the new rate in its financial statements.

The college cited two reasons for its decision: paying the increased rate would have caused to incur and an additional $1.2 million shortfall in FY2006, and the central government advised NMC to continue to contribute at the old rate.

NMC said it is finally getting help from the Legislature with regard to the pension contribution issue. Lawmakers are now considering legislation to exempt NMC from any increases in the contribution rate to the Fund for five years. The bill is seen as a solution to the audit finding.

The college also reported progress in addressing audit findings concerning its bookstore inventory, fixed assets, employees’ annual leave, equipment and real property management, and federal grants, among other things.