CNMI single audit flags $257M in questionable costs

10/17/2025 - The CNMI faces nearly $257 million in questionable costs through fiscal year 2022, raising the risk that the CNMI will have to repay large amounts of federal funds.

Finance Secretary Tracy Norita called the results “deeply concerning,” saying the findings confirm the financial chaos her team inherited. 

“The outcome of this audit proves that we are facing unprecedented financial noncompliance. And the Department of Finance has been communicating this situation and providing information to the Office of the Public Auditor and the Office of the Attorney General for the past three years to the White-Collar Crime Task Force,” she said during a press conference held last Oct. 16 at the Governor’s Office conference room on Capitol Hill.

She added that the collection process has already begun, with CARES Act funds the first target, as the CNMI has been asked to voluntarily return $11 million spent between 2020 and 2022.

The single audit issued a disclaimed opinion and identified major failures in procurement, federal grant monitoring, and compliance. Norita said the outcome threatens the CNMI’s access to federal grants and bond markets—crucial for addressing pension obligations. 

In the worst case, the U.S. Treasury could claw back funds directly from reimbursements due to the CNMI, cutting into programs and straining local cash.

Gov. David M. Apatang acknowledged that the problems date back years but said his administration accepts the responsibility of fixing them. 

“This administration inherits these challenges, but we take full responsibility for addressing them. Completing this audit is a difficult but necessary step toward transparency and accountability. Now, our focus turns to solutions.”

In fact, Apatang said they are developing corrective action plans, strengthening financial controls, and working closely with the CNMI’s federal partners to fix issues brought about by the audit and prevent them from happening again. 

“To the people of CNMI, I want you to know that we take this seriously. We will be transparent. We will be accountable. We will do the hard work to restore trust and protect our islands’ financial future,” he said.

Office of the Public Auditor legal counsel Ashley L. Kost underscored the potential fallout, confirming that criminal charges could arise if wrongdoing is proven. 

She explained that “questioned costs” often stem from missing receipts or documentation, and many can be cleared once proper records are produced. Finance officials noted that more than $27 million in previously flagged costs have already been resolved in earlier audits.

She also explained the nature of the CNMI being flagged for questionable costs.

“Questionable cost is something, whether it's allowable or not, right? And so that could be for various reasons, right? If it's allowable under federal regulations, if it's allowable under law, if proper documentation is provided, including invoices and receipts, all of those things are why it's questionable. And something that hasn't really been pointed out, but questionable costs can be addressed,” said Kost.

Norita stressed that the government is developing corrective action plans, strengthening financial controls, and working closely with federal partners to prevent future findings. She also said the audit process is catching up: the FY2023 audit is expected next year, with the goal of being current by FY2027.

“Again, completing this audit is not the end of the process. It is the beginning of a much tougher work ahead of us. We have the support of the Single Audit Committee here today, the Office of Grants Management, the Office of Management and Budget, and the Office of the Public Auditor.”

Report by Mark Rabago