U.S. Insular Areas: Interior's Management and Oversight of Insular Area Grants Page: 3 of 18
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Madam Chairwoman and Members of the Subcommittee:
I am pleased to be here today to participate in your hearing to discuss
technical assistance grants to the U.S. insular areas. U.S. insular areas-
which include American Samoa, the Commonwealth of the Northern
Mariana Islands (CNMI), Guam, the U.S. Virgin Islands (USVI), and three
Freely Associated States (the Federated States of Micronesia, Palau, and
the Republic of the Marshall Islands)-face serious economic and fiscal
challenges. Consequently, these insular areas, some of which are under
U.S. sovereignty, and some of which are independent nations that have
signed Compacts of Free Association with the United States, rely on
federal funding to support their governments and deliver critical services.
The Department of the Interior, through its Office of Insular Affairs (OIA),
provides approximately $400 million annually in financial assistance to
insular area governments-roughly $70 million of which is awarded
annually as grants to insular areas for capital improvement projects,
operations and maintenance improvement projects, technical assistance,
and other purposes, to increase the self-sufficiency of the insular areas.
For example, technical assistance grants are used to conduct feasibility
studies or train government staff.
Although OIA grants are essential in supporting insular areas' economies,
we and others-including Interior's Office of Inspector General-have had
long-standing concerns with insular area governments' internal control
weaknesses, which increase the risk of fraud, waste, abuse, and
mismanagement.' These internal control weaknesses have been
documented in several reports between 2000 and 2009. Internal control is
an integral component of an organization's management that provides
reasonable assurance that operations are effective and efficient, financial
reporting is reliable, and applicable laws and regulations are complied
with. Internal control also serves as the first line of defense in
safeguarding assets and preventing and detecting errors and fraud. Under
the federal standards for internal control, federal agencies are to employ
internal control activities-the policies, procedures, techniques, and
mechanisms that enforce management's directives-that are integral to
the accountability for stewardship of government resources and achievingGAO-10-917T Insular Area Grants
'GAO, U.S. Insular Areas: Economic, Fiscal, and Financial Accountability Challenges,
GAO-07-119 (Washington, D.C.: Dec. 12, 2006). Department of the Interior, Office of
Inspector General, Report on Grants Administered by the Office of Insular Affairs,
Report No. 2003-1-0071 (Washington, D.C.: September 2003).Page 1
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United States. Government Accountability Office. U.S. Insular Areas: Interior's Management and Oversight of Insular Area Grants, text, July 15, 2010; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc292846/m1/3/: accessed April 24, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.