Pacific / Marshall Islands

Audits show Marshalls embassies lack accountability

15:38 pm on 30 August 2019

By Giff Johnson

The Marshall Islands government's 2018 annual audit shows that the country's embassies and consulates are not accountable for a large portion of the funding they receive.

The Marshall Islands Nitijela (parliament) in session in Majuro in this file photo. The latest Deloitte audit of the national government, including overseas embassies, was presented to parliament when it opened earlier this month. Photo: Hilary Hosia. Photo: Giff Johnson

This finding has been a repeated problem identified by Deloitte auditors for the past several years. All the embassy and consulate account reports for September 2018 "reported unknown variances or shortages," said the Deloitte audit.

A "variance" is when amounts in a bank account do not match with a previous audit or reconciled accounting report. The audit said these problems could result in "possible misappropriation (theft) of (government) assets by custodians and possible misstatement of cash, liabilities and expenditures pertaining to embassy impress accounts."

The Ministry of Finance said in February this year an "Imprest Fund Manual of Procedures" was produced and trainings conducted for all embassies in how to properly manage their accounts. Finance said it "will also enforce an internal control and compliance monitoring system."

The Deloitte audit, which was provided to the Nitijela (parliament) earlier this month, lists over US$2.5 million in accounting items "that received neither investigation nor proper accounting". The Marshall Islands Japan Embassy demonstrated the worst accountability of the seven embassies and consulates audited.

Among the audit discrepancies at the government's overseas missions (amounts in US dollars):

- Fiji Embassy: $180,330 unsupported spending ($119,544 from prior year); and $61,771 un-recorded spending ($56,166 from prior year).

- Japan Embassy: $313,048 unreconciled advances ($201,094 from prior year); $378,361 disallowed spending ($286,639 from prior year); $60,185 unknown withdrawals; and $137,550 unknown differences.

- Taiwan Embassy: $84,973 disallowed spending ($68,686 from prior year); and $6,107 unknown difference from prior year.

- UN Mission: $384,973 disallowed spending ($303,890 from prior year); and $16,815 unknown difference from prior year.

- Washington Embassy: $97,196 disallowed amounts ($50,648 from prior year); $12,595 unknown differences from prior year.

- Arkansas Consulate: $12,940 disallowed spending ($8,260 from prior year); $1,336 unknown differences from prior year.

- Honolulu Consulate: $13,306 disallowed spending ($12,299 from prior year); and $1,096 unknown differences ($1,075 from prior year).

In some of the overseas missions, an improvement can be seen in a reduction in current year "disallowed spending" - meaning spending that the Ministry of Finance rejected as not following approved budget. For example, both the Arkansas and Honolulu consulates reduced their FY2018 disallowed spending to relatively small amounts compared to the previous year.

Honolulu reduced its disallowed spending to $1,007 in FY2018, while Arkansas reduced it to $4,680. Of the embassies, Taiwan reduced its disallowed spending to the lowest amount: $16,287.

The audit said that requests from overseas embassies and consulates to the Ministry of Finance to send more money "should be supported by imprest account reconciliations, with reconciling items investigated and property accounted for." This was not done properly by most of these missions in FY2018, according to the audit.