Review of Selected Financial Management Activities of the Government of American Samoa, Office of Territories, Department of the Interior

B-114870: Published: Jun 16, 1966. Publicly Released: Jun 16, 1966.

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The General Accounting Office has made a review of selected financial management activities of the Government of American Samoa, Office of Territories, Department of the Interior. The review was undertaken in accordance with our plans for periodically reviewing the activities of the Government of American Samoa and because of the increased amount of grant-in-aid funds provided the Territorial Government in recent years. Our review was made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), and the Accounting and Auditing Act of 1950 (31 U.S.C. 67). Our examination was conducted at the offices of the Government of American Samoa on the Island of Tutuila. We examined, to the extent we deemed necessary, the transactions affecting Federal funds, but we did not make an audit of transactions affecting local revenues and grant-in-aid funds because the General Accounting Office does not have audit authority or settlement responsibility regarding such transactions. However, we did examine into the effectiveness of selected financial management procedures and controls over such funds. Our review was not intended to include all aspects of the financial management system of the Territorial Government. During the course of our review, we also examined into the status of matters previously reported to the Congress and the Governor of American Samoa and interviewed responsible officials of the Territorial Government.

Our review disclosed that the Territorial Government withdrew from the United States Treasury and retained in its possession grant-in- aid funds which were substantially in excess of amounts needed to finance current operations. On the basis of financial records and other documents available during our review in American Samoa, we estimate that the United States Treasury in fiscal year 1963 may have incurred interest costs of as much as $154,000 because of additional borrowings necessary as a result of the premature withdrawal of funds. Also, we noted that, at June 30, 1963, the Territorial Government had accumulated grant-in-aid funds which were about $8 million in excess of amounts needed to liquidate its current obligations. We believe that this situation occurred because the Governor followed the practice of withdrawing grant-in-aid funds as the funds became available rather than as needed to finance current operations and because the Territorial Government, in its annual budget justifications did not recognize that prior years' unused funds would be available to meet current needs, overstated the prior year obligations, and continually underestimated local revenues which would be available to reduce the amount of grant-in- aid funds needed to finance current operations. Our review also disclosed a number of areas related to accounting and fiscal practices and procedures which were in need of improvement. These matters were brought to the attention of the Director, Office of Territories, in a separate report in January 1966 because we believed that they indicated the need for the Office of Territories to assist the Governor in improving and strengthening the accounting and fiscal practices and procedures of the Territorial Government.

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