Ernst & Young unable to give opinion on CNMI general fund, flags millions in questioned costs

Ernst & Young could not give an opinion on the CNMI government’s general fund for fiscal year 2023 because auditors said they did not have enough reliable records to verify many of the government’s financial figures.

The audit also found millions of dollars in questioned costs involving federal money for disaster aid, education, economic development, and nutrition programs.

The findings are in the CNMI’s fiscal year 2023 financial audit and a separate report on internal controls and compliance. EY issued the reports July 17, 2026, nearly three years after fiscal year 2023 ended.

EY issued what is called a disclaimer of opinion on the CNMI’s governmental activities, general fund, Grants Assistance Governmental Fund, and American Rescue Plan Act Governmental Fund.

Simply put, EY said it did not have enough evidence to give an opinion on whether those financial statements were fairly presented.

That does not mean EY found the numbers to be false.

Among the problems, auditors said the CNMI could not back up transactions involving cash, money owed to the government, capital assets, accounts payable, tax and recovery rebates, other liabilities, revenues, and expenditures because of problems with its accounting records.

Some problems were not new.

EY found several accounts that had the exact same ending balances for three straight fiscal years—2021, 2022, and 2023. These included $58.4 million in tax rebates payable, $25.3 million due to the NMI Settlement Fund, and $15.2 million for landfill closure and post-closure costs.

The Department of Finance agreed with the finding. It pointed to staff turnover and the move from its old financial system to the Tyler Munis system as among the challenges.

EY also found that a Tyler Munis control meant to stop spending from going over budget was not turned on during the first three months of fiscal year 2023.

The audit also took a closer look at federal money handled through CNMI agencies and programs.

One of the largest findings involved $7.35 million in questioned costs under the federal Disaster Grants-Public Assistance program. The finding involved the CNMI’s monitoring of subrecipients, or groups that received federal money through the Commonwealth.

Another $6.64 million in questioned costs involved the Education Stabilization Fund. EY said the CNMI did not provide documents showing that required monitoring was done during fiscal year 2023 for two subrecipients covering the entire $6.64 million examined by auditors.

The Office of Planning and Development and Department of Finance were tied to another finding involving nearly $3.7 million in questioned costs under the Economic Adjustment Assistance program.

EY said the CNMI did not properly enforce rules for keeping records and documents. OPD partly agreed with the finding and said it later located supporting documents for several transactions.

The Office of Management and Budget was tied to another finding involving $972,335 in questioned costs over how federal cash was managed. OMB agreed with the finding and laid out steps to fix the problem.

The Nutrition Assistance Program also had findings.

EY identified $684,138 in questioned costs involving federal purchasing rules. Procurement Services disputed part of the finding, but acknowledged the need to make sure CNMI procurement rules are clear and follow federal requirements.

Another $16,635 in questioned costs involved Pandemic EBT benefits. NAP agreed with that finding and said it lacked proper monitoring and filing procedures for eligibility records.

Despite the problems found by auditors, the CNMI reported that its overall financial picture improved in fiscal year 2023.

The government-wide deficit dropped by $119.7 million, or 17.3%, to $460.3 million.

The general fund remained deep in the red, however. Its unassigned deficit stood at $275.7 million, compared with $271.1 million the year before.

Auditors said there is an important distinction in reading the audit.

Questioned costs do not mean the money is missing, stolen or proven to have been misspent. They are costs flagged by auditors because of problems such as missing documents or failure to follow federal requirements. Those findings still have to go through the proper federal resolution process.

Likewise, EY said the disclaimer does not mean the CNMI’s financial figures are false. It means auditors said they did not have enough reliable evidence to give an opinion on them.