*EPF309 06/07/00
GAO Report Calls for Better Accountability of U.S. Assistance
(Censures Interior Department on Micronesia, Marshall Islands)(530)
By Nadine Nigel Leavitt
Washington File Staff Writer

Washington -- The U.S. General Accounting Office (GAO) issued a report to Congress May 31 charging that the federal agency responsible for U.S. assistance to the Federated States of Micronesia and the Republic of the Marshall Islands has a poor record of accountability, and warned "this lack of reliable information could impact the Department of State" as the United States proceeds with negotiations on the Compact of Free Association that expires in 2001 between the United States and the islands.

The GAO reports that during fiscal years 1987 through 1999, the United States provided more than $2.6 billion in financial and other assistance to the Pacific islands. Under the 1986 Compact of Free Association, the U.S. Department of Interior (DOI) is the agency responsible for supervising, coordinating, and monitoring the federal assistance programs provided to the Federated States of Micronesia and the Republic of the Marshall Islands.

"Although [DOI] is identified as the agency responsible . . . it has not maintained reliable data on the amount of assistance provided. Numerous inconsistencies exist in [DOI]'s own records as well as between [DOI]'s records and those of both other U.S. federal agencies that provided assistance and figures in the annual audits conducted by Deloitte & Touche," the GAO reports.

"These inconsistencies call into question [DOI]'s ability to accurately report on assistance provided and the effectiveness of its coordination and monitoring responsibilities," the report continues.

The GAO report, entitled "Foreign Relations: Better Accountability Over U.S. Assistance to Micronesia and the Marshall Islands," states:

-- DOI's budget data shows that it reimbursed four federal agencies more than $124 million for services provided to the islands, while the four agencies report that they received only $53 million -- a $71 million difference.

-- DOI's data shows that another federal agency (the Department of Education) provided $17.5 million to the Marshall Islands, while data obtained from the agency shows that it provided about $31.9 million - a discrepancy of more than $14 million.

-- DOI's reporting by year on overall funding it provided to the Federated States of Micronesia is incorrect for 3 years, and is incorrect for 2 years regarding the Marshall Islands -- resulting in an overstatement of $404,000.

-- There were 13 incorrect amounts shown in DOI's data on sub accounts; for example, in fiscal year 1997, DOI showed the current account for the Marshall Islands at $5,460,000 and the capital account at $13,640,000 -- in fact, these amounts should have been $12 million and $7.1 million, respectively.

The GAO report said that since negotiations are currently under way on provisions of the Compact of Free Association, it recommended that the U.S. Secretary of State negotiate provisions that require that reliable data be maintained to ensure better accountability of the assistance provided.

The complete text of the report (reference: GAO/RCED-00-67) can be found on the Internet at http://www.gao.gov

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
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