An independent audit has given the Northern Marianas College a favorable audit opinion on its financial statements, although it also found some deficiencies such as non-compliance with NMC’s travel and payroll procedures. Still, the auditor considers NMC a “low risk” auditee
This is the 13th consecutive year that NMC received a favorable audit opinion—an unqualified opinion—on its financial statements.
The auditor—Burger, Comer, and Magliari, which was hired by the Office of the Public Auditor to audit NMC’s financial statements for the year ended Sept. 30, 2019—identified no material weaknesses and no questioned costs from prior year audits.
NMC interim president Frankie Eliptico said yesterday that they remain committed to ensuring that NMC’s financial management processes and procedures are adhered to.
“I commend our team at the Finance Office and other departments for their diligence,” Eliptico said.
As a “low risk” auditee, NMC said this designation means less administrative burden for the institution in applying for and administering grants, fewer audit requirements, and higher confidence in the institution by federal agencies and the community.
Eliptico is happy with the auditor’s unqualified opinion on its financial statements. An unqualified opinion means that the financial statements present fairly, in all material aspects, the financial position of NMC, and conform with accounting principles accepted in the United States.
According to NMC chief financial officer David Attao, the independent auditor gave recommendations to help improve NMC’s finance and procurement procedures and that NMC is committed to and has taken appropriate measures for continuous improvement.
The auditor reviewed NMC’s financial position as of Sept. 30, 2019 and 2018.
In their audit report dated Dec. 24, 2020, BCM stated that in their opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
BCM said they did not identify any deficiencies in internal control that they consider to be material weaknesses, but they, however, did identify certain deficiencies in internal control that they consider to be significant deficiencies.
For instance, travel reports should be submitted within 10 days after travel is completed. BCM said that four of 90 items tested, or 4% of the sample, showed that the trip report was submitted late.
BCM recommended that in order to ensure that the travel transactions comply with travel policies and procedures, NMC should consider imposing penalties for failing to submit trip reports on time.
In another instance, where the pay rate paid to an employee should match the latest employment contract or approved notice of personnel action, three of 90 items tested, or 3% of the samples selected for testing, showed that employees were paid at a rate higher than what is stated on their contract, BCM said. The auditor said the cause is that the most recent pay rate was not verified by NMC staff who was preparing the payroll. BCM said there is a possibility that incorrect salary is being paid to employees and that this could overstate NMC’s expenses. BCM recommends 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 in the system.
On another criteria, the auditor said, personnel action form must be reviewed and approved prior to employment.
BCM said that for 52 of 90 items tested, or 58% of the sample, they noted that the personnel action forms were signed after the effective date. BCM said the cause cited was that there was not enough time for review and approval of the personnel action form by the authorized personnel. With this situation, BCM said, the employee is already working without proper approval from authorized personnel. BCM recommends that enough time to process employment documents should be given to achieve proper documentation and approvals.
On another criteria, BCM said employment contract must be reviewed and approved prior to employment. The auditor said for 45 of 90 items tested, or 50% of the sample, they noted that employment contract was signed after the effective date. BCM said NMC did not comply with their payroll internal control requirements. With this situation, the auditor said, the employee is already working without proper approval from authorized personnel. BCM recommends that ample time to process employment documents should be given to achieve proper documentation and approvals.
The last criteria is that personnel action form must be reviewed and approved prior to employment.
Auditor said for 103 of 120 items tested, or 86% of the sample, they noted that personnel action form was signed after the effective date. BCM said the cause was that there was not enough time for review and approval of the personnel action form by the authorized personnel. This meant the employee is already working without proper approval from authorized personnel. BCM recommends that ample time to process employment documents should be given to achieve proper documentation and approvals.
According to NMC, its total assets as of Sept. 30, 2019, amounted to $27,721,401, a $1,117,543 or 4.2% increase from $26,603,858 as of Sept. 30, 2018.
Cash decreased by $2,935,905 in fiscal year 2019 as NMC absorbed personnel and other costs due to the devastating effects of Super Typhoon Yutu on the college’s physical campus and the subsequent economic effects of Yutu on the entire CNMI.
NMC’s total liabilities increased by $30,715 or 0.09% due to the increase in accrued payables in salaries and benefits as for recovery efforts as a result of Yutu.
NMC’s net position increased by $819,781 or 3.58% during fiscal year 2019.
NMC reported that Yutu’s devastation in October 2018, resulted to NMC losing 37 out of 39 classrooms, which translate to total damage estimated at over $20 million.