The U.S. insular areas of American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, and the U.S. Virgin Islands (USVI) face serious economic and fiscal challenges and rely on federal funding to deliver critical services. The Department of the Interior (Interior), through its Office of Insular Affairs (OIA), provides roughly $70 million in grant funds annually to increase insular area self-sufficiency. GAO and others have raised concerns regarding insular areas' internal control weaknesses, which increase the risk of grant fund mismanagement. GAO was asked to determine (1) whether previously reported internal control weaknesses have been addressed and, if not, to what extent they are prevalent among OIA grant projects; (2) the challenges, if any, insular areas face in implementing OIA grant projects; and (3) the extent to which OIA has taken action to improve grant project implementation and management. GAO reviewed a random sample of 173 OIA grant files, conducted site visits, and interviewed OIA and insular area officials.
Recommendations for Executive Action
|Department of the Interior||1. To improve OIA's ability to require insular areas to efficiently complete projects and expend funds, the Secretary of the Interior should direct Interior's Office of the Solicitor to prepare a detailed written evaluation of OIA's existing authorities that could be used to ensure the more efficient use of funds by insular areas, and work with OIA officials to use such authorities as appropriate and to identify the need, if any, for additional authority. If the evaluation identifies the need for additional authorities, the Secretary should submit the evaluation to the Congress.|
|Department of the Interior||2. To ensure that OIA's staffing needs are clearly and accurately communicated to key decision makers, the Secretary of the Interior should direct OIA to create a workforce plan and reflect in its plan the staffing levels necessary to adopt a proactive monitoring and oversight approach.|
|Department of the Interior||3. To reduce the impact that frequently shifting insular area priorities have on insular areas' incentives to complete projects and efficiently use federal funds, the Secretary of the Interior should direct OIA to develop criteria that establish when project redirection requests should be approved and when they should be denied and update its financial assistance manual with these criteria to clarify OIA policy on redirection. In developing these criteria, OIA should adopt guidelines that minimize ineffective project redirection. In addition, the Secretary should direct OIA to develop criteria that establish when offset or disallowed costs should be pursued.|