The Nitijela is calling on the RMI government to investigate the “Four Atolls,” which have consistently not produced timely audits or shown accountability over their funds.3
A 24-page Public Accounts Committee report to Speaker Kenneth Kedi recommends that the national government “investigate the accounts of the Four Atolls as to why they have financial systems and officers in place but still (are) unable to produce timely audits.” The committee, chaired by Utrok Nitijela Member Hiroshi Yamamura, further recommended that the Office of the Attorney General “pursue prosecution of individuals engaged in the mismanagement of the funds of the local governments.”
The report points out that most of the small local governments lack basic record keeping and control over their finances, a problem that has been pointed out in audits year after year. It said for FY2020, “at least some of these local governments are able to be audited even with no accounting systems in place.”
The report from the Public Accounts Committee, issued March 24, follows multiple public hearings conducted earlier this year to review each audit report for FY2020 and earlier.
Most outer island local governments showed they had no documentation that would be associated with a properly functioning accounting systems. Even the well-resourced nuclear-affected atolls “lacked adequate record keeping and internal control management measures,” said the committee.
“Even with the Four Atoll, there are ongoing findings and issues even with the accountants, city managers, and lawyers in place to perform the roles required for the auditing of these Four Atolls,” said the report. “Rongelap Atoll Local Government, for instance, could only produce delayed audit from 2016, and has a qualified audit for that year and previous years, including numerous questioned costs and control deficiencies. The same occurs to KBE Local Government with serious late audits. Utrok can only produce 2015 with a disclaimer audit opinion.” (“Disclaimer” in audit language means the entity being audited could not show required documentation so auditors did not issue an opinion that the funds were properly accounted for).
The Public Accounts Committee recommended that the Attorney General “investigate RALGov’s investments and other local government business ventures.” It also called on the Cabinet to “invoke Sections 140, 141 and 142 of the Local Government Act which empowers the Minister of CIA to appoint special investigations into these local governments and (if) financial discrepancies and irregularities are found to these local governments, to be held in receiverships.”
After reviewing multiple audits of local governments, the committee recommended a method to keep money away from unaccountable local governments. It recommended establishing “development authorities for the relevant local governments (to) divert funds for the developments to be managed by these development authorities with stringent measures to provide reports and audits on a timely manner to the Cabinet and the Nitijela.”
During the recently concluded Nitijela session, laws were passed establishing development authorities for both Enewetak and Rongelap.