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Results of FSM National Government Exit Conference on FY 2008 Audit Report

Palikir, Pohnpei (FSM Information Services): August 19, 2009 - On July 24, 2009, an exit conference was held in Palikir, Pohnpei between the auditors of the FSM National Government (FSMNG), Deloitte & Touche LLP, President Mori, the Vice President, the Secretary of Finance & Administration, Finley Perman, and representatives of the Cabinet and the National Public Auditor's Office. The exit conference discussed the highlights of the 2008 audit report.

To begin, the President was congratulated by the auditors on the job done by the National Government as a whole and particularly the work of Secretary Perman and his department personnel in implementing a very challenging automated accounting system during the year, while simultaneously resolving and achieving corrective action on prior year matters, primarily capital asset accounting and questioned cost resolution. During the year ending September 30, 2008, approximately $11 million of questioned costs were resolved for the FSM as a whole. This effort involved people across the nation and the President was congratulated for effectively organizing the resolution of the issues under the specific direction of the Secretary of Finance & Administration with substantial assistance from the National Public Auditor. Another major effort was the performance of reconciliations with State Finance offices to clarify the balances due to or from those entities. The effort involved was substantial and the correction of these matters has been urged by the auditors for some time.

Despite the challenging economic environment, the FSMNG ended the year with a General Fund surplus as of September 30, 2008. This is despite investment losses sustained as a result of the world wide economic crisis and certain expenses that had to be taken into account for various prior year matters. Tax revenues actually increased by some 7% during the year and fishing fee revenues increased as well. The carrying value of investments however, had to be reduced to reflect the adverse economic factors pervasive in the world since the FSMNG must reflect the market value of its investments in its financial statements as this is a requirement of generally accepted accounting principles in the United States.

The auditors discussed the implication of the ongoing impact of the FSM National Fisheries Corporation joint ventures on the financial statements of the FSMNG and upon certain State governments, and various recommendations were offered to the President for future consideration in resolving these matters.

The audit reports of the National Government may be found online at the FSM Public Auditor's website at www.fsmopa.fm.