Chuuk not tracking and collecting money due under US Federal grant programs for more than 20 programs

By Bill Jaynes

The Kaselehlie Press

 

January 31, 2020

Chuuk—The Office of the Chuuk State Public Auditor has discovered that Chuuk State Finance Funds Division failed to collect over $396,000 in reimbursements for funds the Chuuk government advanced in order to run U.S. government funded programs for fiscal years 2016 through 2018.  According to the auditor, some of those funds may now be uncollectible.

“Aside from the Sector grants that Chuuk receives as its share of Compact money, it is also receiving different federal grants from US federal agencies to fund various federal programs such as Special Education, the Substance Abuse & Mental Health (SAMH) program and the Comprehensive Cancer Control (CCC) program. These federal grants are the main source of funding for the twenty-plus programs that provide valuable services to the citizens of Chuuk. The nature of these federal grants is generally reimbursable; this means that Chuuk government must first expend its own money before collecting the reimbursement for its expenditures from the different federal agencies. Whenever advances by the Chuuk government were not fully collected at fiscal year-end, an accounts receivable is recorded. Close monitoring of accounts and prompt resolution of issues should allow Chuuk government to be able to fully reimburse its advances the following fiscal year or before the expiry of grant.”

The auditor recommended that the Funds Division Accountant in charge of federal grants should establish an accounts receivable subsidiary ledger for each of the federally funded programs and maintain their own record of collections to reconcile the billed amounts and its subsequent collections with that of the national government.

They also recommended that the Federal Grants Fund Accountant or the Director of the Department of Administrative Services’ designee should study the collectability of the accounts receivable and initiate collection if still collectible. Otherwise, they should initiate a write-off of uncollectible accounts.

“We conclude that the monies advanced by the Chuuk Government for the purpose of running different reimbursable federally funded program were not fully recollected back. Uncollected amounts were dated as far back as 2015.  The old uncollectible amounts from the Accounts Receivable from Federal Agencies/Grants were explained as due to expiry of the grant, amount reimbursed was less than the actual expenditures advanced and some expenditures were not allowable,” the audit said.

“…Non-collection of money advanced by the Chuuk government to run federal programs may also result in a loss of precious local funds for local operational budget purposes. In this case, the possible loss of about $300,000 is material enough for local budget purposes,” it said.