Freely Associated States:agencies Should Enhance Procedures to Address Millions of Dollars in Questionable Spending

Love-Grayer, Latesha (2023). Freely Associated States:agencies Should Enhance Procedures to Address Millions of Dollars in Questionable Spending (Report). Washington, DC: Government Accountability Office. p. 26.

• Has attachment: File:Z83VSM93.pdf

Abstract: Micronesia, the Marshall Islands, and Palau receive millions of dollars in U.S. grants from federal agencies.

Each country must get an annual audit of its use of these funds. Within 6 months, the granting agency must decide how the country should address any audit findings—including questions about grant spending. Then the agency must work with the country to resolve these questions.

The Departments of Health and Human Services (HHS) and Interior did not consistently issue management decisions for audit findings related to grants to the Federated States of Micronesia (FSM), Republic of the Marshall Islands (RMI), and Republic of Palau within the time frame specified by federal regulation. Each country must annually obtain an audit—known as a single audit—of its use of grant funds and submit a report of the findings. Within 6 months, the agencies must issue a management decision for each finding—including expenditures the auditor questioned, known as questioned costs—clearly stating any expected corrective action. For single audits in fiscal years (FY) 2015 through 2019, HHS failed to issue seven of 11 decisions and Interior failed to issue seven of 12 decisions within the 6-month time frame. Both agencies attributed their failure to issue timely decisions to staffing gaps. Taking appropriate action, such as devoting needed staffing resources, to ensure they issue management decisions in the required time frame would help the agencies reduce the risk that the countries will fail to implement timely corrective actions.