The audit report, which covers the fiscal year that ended on Sept. 30, 2019, stated that there were no unresolved audit findings and questioned costs from the prior year audits of NMC.
NMC continues to be designated as a “low risk” auditee.
This is the 13th year in a row that NMC has received an unqualified, or favorable, audit opinion.
Deficiencies
The audit did identify deficiencies in internal control. The first pertained to payroll.
According to the report, for three of 90 items tested, or 3% of the samples selected for testing, “employees were paid at a rate higher than what was stated on their employment contract.”
The reason for this is because “the most recent pay rate was not verified by NMC staff preparing the payroll.”
The report said “there is a possibility that incorrect salary is being paid to employees. This could overstate NMC’s expenses.”
The report recommended that in order to properly pay employees, the person in charge of payroll should secure a copy of the contract and personnel action forms and verify the rate before entering it to the system.
The report likewise noted that personnel action forms were signed after the effective date.
There should be ample time to process employment documents to achieve proper documentation and approvals, the report added.
Regarding travel authorization, the report found that for four of 90 items tested, or 4% of the sample, “the trip report was submitted more than 10 days after the travel was completed.”
Hence, in these samples, “NMC is not in compliance with its travel policies and procedures.”
NMC’s response
According to NMC’s Chief Financial Officer David Attao, the college is committed to and has taken appropriate measures for continuous improvement.
He said the college has identified and implemented corrective action plans.
Regarding payroll, NMC said “due to the devastating and traumatic effects of Super Typhoon Yutu on the College’s physical and human resources including the total destruction of offices, buildings, lack of power, water, and full displacement of employees at the College…processing of contracts and personnel actions were subject to delays.”
NMC said “an additional review by staff and responsible entities will be added to cross-check and verify pay rates with contracts and personnel actions. Employees with verified information will be paid according to what is listed on their approved contracts and corresponding personnel actions. Payments for inaccurate, incomplete contracts or personnel actions will be held until such documents are completed with the most updated and accurate information.”
NMC said it will “reinstate the prior approval and decentralized decision-making processes to further assist with obtaining the necessary signatures from the authorized personnel in a planned and timely manner.”
Regarding the deficiency on travel authorization, “NMC partially agrees with this finding as filing of such reports were subject to delays as in some cases documents needed to close out were inaccessible and the remaining individuals were off island and/or were unable to file on time.”
The college, however, notes that “NMC Procedure No. 7006.2 allows for 10 working days upon completion of the travel to file and submit the trip report with supporting documents….”
NMC said it will “strictly enforce and require travelers who fail to close out travel by the set deadline to be subject to a forfeiture of the remaining 10% due; be processed for payroll deduction for the full amount; and be suspended from travel until such funds are recovered and/or a combination of such remedies.