A new audit from the Government Accountability Office raises questions about whether federal agencies have been doing their jobs to hold Micronesian grantees accountable.

Federal auditors say U.S. agencies need to do a better job of tracking how government grant money is spent in the Federated States of Micronesia, Palau and the Marshall Islands after finding millions of dollars in questionable expenditures over a five-year period. 

The Government Accountability Office released a report last week outlining various failures by the U.S. Department of Health and Human Services and the Interior Department when it comes to monitoring federal grants the agencies give out to the Freely Associated States. 

Specifically, the GAO found that when auditors flagged millions of dollars in suspect spending by the countries, agency officials often delayed taking action for many months if not years to resolve the problem. 

Micronesia is a region of the Pacific that’s west of Polynesia. (Civil Beat graphic)

The result, according to the GAO, is a lack of accountability that could ultimately end up costing taxpayers millions of dollars. 

“Federal agencies are expected to exercise appropriate oversight of these grants and if they do not do so then we can have expenditures that are improper,” said Latesha Love-Grayer, GAO’s director of international affairs and trade. “What we saw was that that oversight was not happening and the result is that these questioned costs can continue to go unresolved and federal money could continue to be used inappropriately.” 

The GAO’s findings come as Congress is set to renew a series of treaties with the FSM, Palau and the Marshall Islands — the Compacts of Free Association nations — that allow U.S. military access to the countries in exchange for tens of millions of dollars in financial assistance each year. 

The GAO’s review focused specifically on annual single audit reports that each country is required to submit to the U.S. government to ensure that they are complying with federal rules and regulations related to the use of the grant funds.

According to the GAO, it analyzed 35 single audit reports that were submitted by the governments of the FSM, Palau and the Marshall Islands between 2015 and 2019. 

Those audits found at least $3.4 million in questionable expenditures that agency officials did not immediately resolve as required by federal rules. 

The GAO report did not detail the facts surrounding each questionable expenditure, but noted that some involved programs revolving around immunizations, public health and bioterrorism preparedness.

Under federal rules, agency officials are supposed to address single audit report concerns within six months of receiving the findings. 

But the GAO found HHS and Interior officials often missed that mark and in some cases didn’t respond to the troublesome findings until many years later. The delay essentially allowed the countries the opportunity to keep the money even if it was believed to be spent inappropriately, because there is only a two-year window for taking corrective action. 

“It is definitely a responsibility of a federal agency to ensure that it is following up on these questionable costs in a timely manner so that we’re able to ensure U.S. funds are being spent correctly,” Love-Grayer said. 

She said that questionable expenditures could range from a simple paperwork problem, such as a lack of proper documentation, to more serious concerns about fraud, waste and abuse. 

These problems are found government-wide, and according to the GAO, federal agencies in fiscal year 2022 reported an estimated $247 billion in improper payments. 

Officials from HHS and the Interior agreed with the GAO’s findings and acknowledged that the agencies need to do better when it comes to overseeing federal grants.

Both agencies blamed the problems on a lack of staffing. 

Read the GAO’s full report here:

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