The Commonwealth has completed its long-delayed fiscal year 2022 single audit, revealing a disclaimed opinion and $257 million in questioned costs that could jeopardize federal funding and strain local finances.
Gov. David Apatang and Finance Secretary Tracy Norita delivered the findings during a press conference Thursday, part of the administration’s push for transparency and fiscal accountability.
“This administration inherited these challenges, but we take full responsibility for addressing them,” Apatang said. “Completing this audit is a difficult but necessary step toward restoring trust and protecting our island’s financial future.”
The audit, conducted by Ernst & Young, identified major deficiencies including unallowable costs, procurement weaknesses, and inadequate monitoring of federal sub-recipient funds. The disclaimed opinion indicates auditors were unable to obtain sufficient documentation to verify the accuracy of financial statements.
Norita said the audit confirms longstanding warnings about systemic financial disarray.
“We are facing unprecedented financial noncompliance,” she said, noting that the Department of Finance has been coordinating with the Office of the Public Auditor, the Attorney General’s Office, and the White Collar Crime Task Force for the past three years.
Among the most immediate concerns is the potential repayment of $11 million in CARES Act funds spent between 2020 and 2022. Federal agencies have requested the CNMI return the funds voluntarily, though the administration plans to appeal.
Norita said the questioned costs could delay federal reimbursements, trigger stricter grant conditions, or lead to termination of federal programs. In a worst-case scenario, she warned, the U.S. Treasury could automatically collect funds from other federal reimbursements, increasing pressure on local cash reserves.
“This outcome affects our ability to access bond markets, which is essential to address the CNMI’s pension obligations,” she added.
Despite the findings, officials framed the audit’s completion as a turning point. The administration is developing corrective action plans, strengthening internal controls, and coordinating with federal partners to stabilize operations and prevent future lapses.
“This is not the end of the process,” Norita said. “It is the beginning of much tougher work ahead.”
