Audit report: 3 MVA purchases did not comply with procurement rules

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THE Marianas Visitors Authority did not comply with its procurement policies and procedures when it made three purchases for the 2018 Christmas in the Marianas event, according to an audit report conducted by Burger & Comer, P.C., for the MVA financial statements ending Sept. 30, 2019 and 2018.

The purchases were:

  • $14,635 for the Paseo de Marianas Christmas Light Towers on Dec. 13, 2018.
  • $9,566 for Christmas cube, ornament and tree on Nov. 11, 2018.
  • $4,014 for the disassembly of Christmas tree, cube and ornament on Jan. 17, 2019.

“In our testing of compliance with MVA procurement regulations,” the audit report stated, “we found three separate purchase orders that appear to be related to one project.  Added together, the three projects total $28,215.  If these purchase orders were aggregated, they would require the issuance of an invitation to bid, or a request for proposal, or justification for a sole source contract.   MVA did not issue a request for proposal, an invitation to bid, or provide a sole source justification related to these three purchase orders.”

The audit report recommended the designation of an MVA staff member who “should monitor compliance with existing procurement policies and procedures and should maintain a log sheet for small purchases.”

The log should contain the following information:

  1. a) The date of purchase.
  2. b) The name of the vendor.
  3. c) The goods or services purchased.
  4. d) The purpose of the purchase.
  5. e) The amount of the purchase order.

“A person at a higher level than the preparer of the log sheet should review the log sheet periodically to ensure that multiple purchase orders issued to the same contractor are for distinct projects that are not susceptible to being aggregated,” the audit report stated.

In her response to the auditing firm, MVA Managing Director Priscilla M. Iakopo, who assumed her post in May 2019, said the three purchase orders were not for one project.

“We approved the first purchase order for the Christmas Cube, Ornament, and Tree once we received the approval that the electrical requirements were met in time for the official lighting ceremony,” she said.

The third purchase order was for Christmas in the Marianas and the Lunar New Year, she added. “These purchase orders should be reviewed separately; however, it was not fully documented in detail that it was for two events. Considering our procurement regulations, we solicited price quotations, but we did not get a response from other construction companies.”

Iakopo said MVA “adheres to its established policies and procedures,” and “works diligently to strengthen internal control over its procurement activities by monitoring the log sheet for small purchases to prevent and distinguish potential circumvention of such policies and procedures.”

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