The United States Accountability Office said agencies such as the U.S. Department of Health and Human Services (HHS) and the U.S. Department of the Interior (DOI) did not address “questioned spending “ of more than $3 million in grants given to Palau, RMI, and FSM.

The report released late last week said each country must get an annual audit of its use of funds and that within six months the granting agency must decide how the country should address any audit findings—including questions about grant spending. Then the agency must work with the country to resolve these questions.

“The Departments of Health and Human Services and the Interior were late issuing decisions for more than $3 million of questioned spending in FYs 2015-2019, and couldn’t show they’d resolved questions about other spending,” the report said.

Micronesia, the Marshall Islands, and Palau receive millions of dollars in U.S. grants from federal agencies under the Compact of Free Association agreements.

The report noted that HHS and DOI did not issue management decisions over the audit findings “within the time frame” specified by federal regulation.

The failure to address the issues timely, according to the report, was attributed to  “staffing gaps.”

“Taking appropriate action, such as devoting needed staffing resources, to ensure they issue management decisions in the required time frame would help the agencies reduce the risk that the countries will fail to implement timely corrective actions,” the report stated.

GAO found that HHS had not yet resolved several questioned costs, totaling almost $600,000, that were first reported in FY 2010 for RMI.

GAO also found that DOI  was unable to provide information showing the resolution of three questioned costs totaling more than $650,000 that were first reported for FSM and RMI in FYs 2008 through 2014.

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