American Samoa: Inadequate Management and Oversight Contribute to Financial Problems
NSIAD-92-64
Published: Apr 07, 1992. Publicly Released: Apr 23, 1992.
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Highlights
Pursuant to a congressional request, GAO reviewed American Samoa's financial practices and the Department of the Interior's oversight of budgetary assistance provided to the territory in light of growing deficits in the territory's General Fund.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress may wish to direct the Secretary of the Interior to condition the disbursement of operating assistance to American Samoa on the territorial government's implementation of sound financial management practices, including: (1) enforcing American Samoa's prohibition on obligations or expenditures in excess of budget appropriations; (2) adhering to procurement and contracting regulations; (3) improving management of the off-island medical referral program; (4) holding responsible officials accountable for violating laws and regulations governing these activities; and (5) promptly implementing the recommendations of Interior's Inspector General. The Secretary should be required to enforce this conditionally whether or not the multiyear funding concept is adopted by Congress. |
Closed – Implemented
|
Congress has not directed that conditionality be used as a means of fostering American Samoa government action; however, it has required an action plan and regular progress reports. These requirements are being met and positive steps have been taken or proposed to correct deficiencies in each of the five areas of the recommendations. |
| Congress may wish to require the Secretary of the Interior to report to the cognizant authorization and appropriation committees the status of corrective actions taken or planned regarding long-standing financial management weaknesses as identified by GAO and the Department's Inspector General and through the Single Audit Act. |
Closed – Implemented
|
Quarterly progress reports have been submitted on schedule. The next (third) report is due September 30, 1993. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Interior | The Secretary of the Interior should make greater use of existing authority to withhold disbursement of operating funds as a means of ensuring that the American Samoa government strengthens its revenue collection procedures. |
Closed – Implemented
Congress has not directed that conditionality be used as a means of fostering American Samoa government action; however, it has required an action plan and regular progress reports. These requirements are being met and positive steps have been taken or proposed to correct deficiencies in each of the five areas of the recommendations.
|
| American Samoa | The Governor of American Samoa should apply revenues in excess of budget estimates toward reducing and eliminating the General Fund deficit and thereafter build up a reserve to accommodate any future revenue shortfalls. |
Closed – Not Implemented
There will be no excess revenue that could be applied for FY 1994, and there will be none in FY 1995. The deficit is about $20 million and holding steady. No action is planned by American Samoa to significantly increase its revenue; therefore, it would appear that the government will continue to operate within a deficit for many years to come.
|
| American Samoa | The Governor of American Samoa needs to aggressively collect all delinquent income taxes owed the government and consider withholding taxes at the source as a means of collecting tax on miscellaneous income. |
Closed – Implemented
The American Samoa government has taken several actions including: (1) cross-checking tax returns against tax receivables; (2) cross-checking accounts payable against vendor lists; and (3) computer matches of Forms 1099 (miscellaneous income) with tax returns. Interior has provided grant money to hire 2 retired IRS agents to assist with tax collections and the cannery audits.
|
| American Samoa | The Governor of American Samoa should ensure that proper tax identification numbers are used on tax statements. |
Closed – Implemented
Social security numbers are now used as tax identification numbers and are required for each taxpayer and for each dependent claimed by the taxpayer on all statements and returns.
|
| American Samoa | The Governor of American Samoa should determine the personnel needs of the collection and audit branches in the Tax Office and provide any additional resources that are needed. In making this determination, the Governor should have reasonable assurance that the costs of adding personnel do not exceed the benefits of additional tax collection and audit efforts. |
Closed – Implemented
Steps have been taken to free existing revenue officers from extra duties, i.e., preparing individual tax returns so that they may focus on tax review and collection efforts.
|
| Department of the Interior | The Secretary of the Interior should make greater use of existing authority to withhold disbursement of operating funds as a means of ensuring that the American Samoa government strengthens its control over expenditure of government funds. |
Closed – Implemented
Interior's efforts to promote and monitor government efforts and to assist when needed continue to show results. For example, medical referral costs have dropped, training courses have been given and other means to control and monitor spending have been initiated or are under consideration.
|
| American Samoa | The Governor of America Samoa should require the Director of Health Services to: (1) strictly adhere to procedures for authorizing off-island medical referrals; (2) document off-island patient files showing that authorizing procedures have been followed and that the rationale for sending patients to facilities other than Tripler Army Medical Center is appropriate; (3) collect from patients requesting and receiving care at facilities other than Tripler the difference in cost; (4) fully describe in authorization letters the services and treatment for which American Samoa will be paying; and (5) institute procedures to require patients to demonstrate that they have received the medical treatment authorized. |
Closed – Implemented
According to Interior officials and available data, these recommendations are an area of major focus and attention. Followup by Interior and the Public Health Service noted marked improvement in adherence to policy and procedures.
|
| American Samoa | The Governor of America Samoa should enforce section 10.0601 of the American Samoa Code, which prohibits creating obligations and making expenditures that exceed appropriations. |
Closed – Not Implemented
The action plan lists a number of positive actions, plus technical assistance requirements which, if implemented, would provide adequate financial procedures and controls to prevent and/or detect unauthorized expenditures in excess of appropriations. However, no department head has been held accountable for expending dollars in excess of budget. For example, one department exhausted its budget by June 1994, but the department head was not held accountable. The department continues to function with funds coming from other accounts. Nothing will happen in this area until the Governor holds department heads accountable, and he has no incentive to do so. This situation will not change in the near future, thus GAO is dropping the recommendation.
|
| American Samoa | The Governor of America Samoa should require the Director of Human Resources to implement personnel reduction goals as outlined in the governor's cost containment plan and strictly adhere to personnel budget ceilings by limiting the use of temporary appointments. |
Closed – Implemented
American Samoa has implemented a RIF terminating 387 employees, including those occupying unbudgeted positions and temporary emergency hires. Other actions, including new directives, legislative changes, and technical assistance, are planned.
|
| American Samoa | The Governor of America Samoa should require the Procurement Officer to follow procurement regulations and implement recommendations by Interior's Inspector General to: (1) limit the award of sole-source procurements; (2) maintain complete and accurate records of procurement actions; and (3) ensure that all department directors are aware of their responsibilities to adhere to the procurement policies and to subject persons to disciplinary action when the rules are violated. |
Closed – Implemented
Actions proposed include new directives, development of new Code of Conduct for procurement personnel, and enforcement of violations. Training has been provided, however there are no plans for any additional action.
|
| Department of the Interior | The Secretary of the Interior should make greater use of existing authority to withhold disbursement of operating funds as a means of ensuring that the American Samoa government strengthens its financial management practices. |
Closed – Implemented
Congress has not directed that conditionality be used as a means of fostering American Samoa government action; however, it has required an action plan and regular progress reports. These requirements are being met and positive steps have been taken or proposed to correct deficiencies in each of the five areas of the recommendations.
|
| American Samoa | The Governor of American Samoa should fill vacant positions in the Territorial Audit Office. |
Closed – Implemented
The vacant Territorial Auditor position has been filled and an Interior grant of $46,000 provided to fund the position for 2 years.
|
| American Samoa | The Governor of American Samoa should submit monthly revenue and expenditure reports to Interior that provide complete, accurate, and meaningful information about the territory's financial condition. |
Closed – Implemented
Interior has analyzed the reports initiated format changes and instructed the American Samoa Treasurer to use the new format effective March 1993.
|
| American Samoa | The Governor of American Samoa should initiate action to empower the hospital authority to charge residents for health care services and require the hospital authority to institute procedures to recover health care costs. |
Closed – Implemented
American Samoa is drafting legislation to increase the power of the Hospital Authority. Effective April 1993, the patient fee structure will be changed to produce an estimated additional $60,000 in revenue per month.
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Topics
Deficit financingFinancial managementGeneral fund accountsHealth care cost controlIntergovernmental fiscal relationsIntergovernmental relationsIrregular procurementPersonnel managementTax expendituresTerritories and possessions