OPA tracks 36 unresolved audit, inspection recommendations

The Office of the Public Auditor OPA has tracked 36 unresolved audit and inspection recommendations as of Dec. 31, 2021, which includes two new recommendations issued to the Department of Lands and Natural Resources and seven new recommendations issued to the Commonwealth Healthcare Corp.

OPA audit manager Dora Deleon Guerrero said that OPA tracked 36 audit and inspection recommendations from June 30, 2021 to Dec. 31, 2021, and that most of the unresolved recommendations are with the Department of Finance at 20, followed by CHCC with eight. DLNR has five unresolved recommendations, while the Commonwealth Election Commission has three.

An unresolved recommendation is one where the client cannot take immediate action or OPA has not been informed by the agency or department of any action taken to address the recommendation.

For Finance, the unresolved recommendations are nine from an OPA audit of the Hotel Occupancy Tax, two from an audit of the CNMI Government Travel Policy, two from an audit on government vehicles, five from an audit of fuel contracts, and two from an audit of excise taxes.

For CHCC, the unresolved recommendations are seven from an audit of the CNMI Medical Referral Service Office, and one from the audit of patient revenue cycle.

With respect to DLNR, the unresolved recommendations include two from an audit of the Outer Cove Marina Facility and three from the audit of the Outer Cove Marina.

CEC has three unresolved recommendations from an inspection of ballot accountability.

Deleon Guerrero informed members of the Interagency Coordinating Advisory Group, Legislature, Finance Secretary David DLG Atalig, and Office of Management and Budget about OPA’s report on CNMI agencies’ implementation of audit recommendations.

On the nine recommendations on the audit of the Division of Revenue and Taxation Hotel Occupancy Tax issued Sept. 2, 2020, OPA said DRT did not provide a status update on its corrective actions as of Dec. 31, 2021.

OPA audit’s first recommendation is to adopt regulations that interpret the HOT Law’s use of the term accommodations and enable DRT’s uniform enforcement of HOT.

On Feb. 24, 2021, DRT informed OPA that it is currently developing draft regulations for review and approval. DRT has determined that audit procedures will be for internal use only and not for publication. The proposed completion date was Sept. 30, 2021.

OPA’s second recommendation was to adopt a procedures manual for auditing HOT. On Feb. 24, 2021, DRT informed OPA that programming development is ongoing and that a draft procedure manual will not be published. The proposed completion date was Sept. 30, 2021.

OPA’s third recommendation was to conduct tax audits of HOT that involve examination of operator revenue records.

On Feb. 24, 2021, DRT has same response to the third and fourth recommendations. DRT informed OPA that programming development is ongoing and a draft procedure manual is in development for review and approval and for internal use only and therefore will not be published. The proposed completion date was Sept. 30, 2021.

OPA’s fourth recommendation was to implement procedures using the automation capabilities of the tax system for initiating tax audits of HOT.

OPA’s fifth recommendation was to implement procedures using the automation capabilities of the tax system to routinely identify non-filings or non-filers of HOT and Business Gross Revenue Tax.

On Feb. 24, 2021, DRT has the same response to the fifth to eighth recommendations. DRT informed OPA that program development and finalization of taxpayer guidance is ongoing. Proposed completion date was Sept. 30, 2021.

OPA’s sixth recommendation was to implement procedures for staff to immediately notify and request operators to file all missing HOT and BGRT filings.

OPA’s seventh recommendation was to formally require operators to report revenues that are subject to both HOT and BGRT under a specific business activity code(s) in the monthly BGRT.

OPA’s eighth recommendation was to implement the automation capabilities of the tax system to streamline the verification of revenues reported in HOT and BGRT forms.

OPA’s last recommendation is to promptly review the rules and regulations and laws that impact DRT’s enforcement of the HOT Law, and implement appropriate procedures for uniformly enforcing business license requirements and the HOT Law on all operations of short-term lodging, including operations conducted at private residences.

On Feb. 24, 2021, DRT’s response is that development of enforcement procedures is ongoing and will be for internal use only. Proposed completion date was Sept. 30, 2021.

On audit of the government travel policy issued in August 2020, OPA’s first recommendation is adopt a uniform travel policy by regulation and restrict the purchase of first class, business class, or any other premium class designation as required by law.

On June 30, 2021, Finance informed OPA that they are in the process of amending the language of the travel regulations to specifically prohibit the purchase of non-economy travel tickets, and to prevent any ambiguity. Proposed completion date was Sept. 30, 2021.

On Dec. 31, 2021, Finance informed OPA that it has not amended the travel regulations to prohibit first class travel. Finance informed OPA that they will update the travel regulations by Jan. 7, 2022.

OPA noted that it was unable to locate any publication of proposed amendments to the travel regulations within the Commonwealth Register as of Jan. 24, 2022.

OPA’s second recommendation is that the Legislature review current travel laws and address any conflicts over official government travel.

On Nov. 16, 2021, the Senate president informed OPA that Senate Bill 22-16 was filed to address the matter and the bill has been referred to the Senate Committee on Judiciary, Government, Law, and Federal Relations on Oct. 28, 2021. The legislation is pending.

OPA recognized the Senate for its effort at resolving the recommendation by introducing Senate Bill 22-65 in which section 3 aims to address the conflict between Public Law 15-86 and Public Law 20-87. However, OPA considers the recommendation unresolved until any conflicts within current trave law (s) are addressed through the Senate’s enactment of law(s).