A Territorial Audit Office performance audit of the Department of Port Administration for the three fiscal years ending September 30, 2020 concluded that Port Administration needs to do better in managing its billings, collections, depositing cash in a timely manner and writing off uncollectible accounts at the port and airport.
TAO has made 20 recommendations to address the audit findings.
The audit was to assess whether the department established an adequate system of internal controls over billings collections, cash remittances and write offs for its revenue generating activities at the ports and airports.
For the period of the audit, Port Administration collected about $5.8 million annually from shipping operations and rents at the airport: $4.3 million annually from shipping operations and $1.5 million annually from airport operations.
The audit found that Port Administration uses Quickbooks which is not integrated into ASG’s financial system.
Consequently revenues collected from port operations are not reported to Treasury.
Moreover the use of a separate accounting system heightens the risk of malfeasance because Treasury lacks information on revenues it expects to receive from port operations and cannot monitor accounts receivable to ensure all collections have been received.
Another finding was that the department was slow in billing ships leaving port, which also delays the time the department receives payments for services. ,
TAO said this increases the risk of shipping companies not paying the amount owed.
It said invoices should be prepared and issued to the shipping companies before ships leave port but of the 120 invoices reviewed, 30 or 25 percent were issued after the ships left port.
It was acknowledged that the delay is sometimes outside of Port’s control as it is dependent on ships to provide them information before they leave port.
Lack of supporting documents to back billing information was also found during the audit.
The audit found a “significant issue” involving a credit of $73,120 granted to a customer. Staff said the customer claimed that Port owned him $200,000 for work performed at the port, a claim which was not supported by any written documentation.
Although the customer’s claim could not be supported, a former director still issued the customer a credit totaling over $73,000, said the report.
The audit found that collection of account receivables was lacking.
Port’s account receivables ranged from $1.4 million to nearly $2.1 million for fiscal years 2019-2020 through to 2021 to 2022. Of those amounts, account receivables over 90 days old ranged from nearly $980,000 to over $1.5 million annually at the end of the years reviewed.
The audit found that two airlines have been delinquent in paying Port Administration. The two owed $967.857 as of September 30, 2022- $853,000 of this amount was more than 90 days old.
Both these airlines are no longer doing business in American Samoa and Port plans to write off these accounts as uncollectable.
The audit also pointed to delays in Port Administration submitting cash and checks to Treasury in accordance with ASG procedures. A payment of almost $19,000 was submitted to Treasury four days after it was received and another payment of nearly $22,000 was submitted three days after receipt.
