Independent audit of 2013 financials shows shrinking deficit, but lack of oversight
Following an audit of the government’s financial statements for fiscal year 2013, independent auditors Moss Adams has reported a deficit of $4.80million, a decrease from the $8.4million deficit at the beginning of FY2013.
According to the report, which was released in June, the overrun for the American Samoa Government, came up to $10.43 million with the Department of Education’s overrun the highest — at $979,210.
Second in line for the highest overrun is Miscellaneous Accounts at $859,242, followed by Fiscal Reforms at $576,896; Public Works at $482,457; and Port Administration at $431,717.
The report also states the overrun for “Transfer Out” at $2.66million.
(Samoa News has no information on what this account encompasses.)
Other observations in the audit report include:
GENERAL LEDGER (GL)
A portion of ASG’s accounting and financial functions continue to be decentralized, “and as a result, the territory’s monthly GL is incomplete throughout the year,” the auditors report, and note that the annual General Ledger is cumbersome and difficult to compile and close at the end of the year.
For example, it says the Territorial Office of Fiscal Reform (TOFR), as well as the Shipyard Services Authority, which maintains a separate GL in its own accounting system, maintain portions of the territory’s General Ledger outside of Treasury.
The audit states, “We believe that the decentralized functions and the lack of overall monitoring controls in place at Treasury over all the territory’s accounting transactions contributed to… material weakness.”
NEED A CPA WITH EXPERIENCE IN GOVN’T FINANCES IN TREASURY
The Treasury Department underwent several changes in 2013 with the new administration, however there is not a chief financial officer currently in place to oversee the territory’s accounting and financial reporting process, the audit reports.
The accounting policies, procedures and controls to ensure a robust internal control structure governing the general ledger maintenance, and the financial close and reporting process are not functioning as intended.
There is no formal close of the GL on a monthly basis, it says.
The auditors “strongly recommended” the hiring of a qualified individual to oversee the accounting and finance functions within Treasury.
“We recommended that this individual be a certified public accountant with prior experience in oversight and financial reporting of a government entity and who is familiar with Generally Accepted Accounting Principles (GAAP) as promulgated by the Government Accounting Standards Board (GASB).”
(Samoa News should point out that there is still no such individual currently employed at Treasury.)
TAX OFFICE NEEDS OVERSIGHT AND MONITORING
Based on the auditor’s analysis of the 2% wage tax liability, “We noted that the workers compensation loan was fully repaid by tax collection; excess of the loan balance has not been forwarded to LBJ hospital on a timely basis.
“The wage tax collected from the private sector was also not monitored and recorded properly as a liability.
“As a result, an audit adjustment of $4million was posted in order to properly accrue for the 2% wage tax due to LBJ.
“Further we noted that the territory did not consider or estimate the portion of the 2% wage tax that had been assessed but uncollected as of September 30, 2013 as a receivable.”
Of the tax office, the auditors observe there is a general lack of oversight and monitoring of the office, and material weakness regarding monthly reconciliation and management oversight also contributed to the office’s problems.
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