Procedure For Awarding Of Palau Audit Contract Questioned

admin's picture

Competency of firm to perform duties also queried

By Aurea Gerundio-Dizon

KOROR, Palau (Island Times, Aug. 24, 2012) – Questions of validity arise following the Republic of Palau’s awarding of contract to Fortenberry and Ballard as the new auditor for Fiscal Year 2011.

The $325,000 audit fee that was agreed by the government and the auditing firm was reportedly a reduced amount from the original fee offered at the bidding.

Vice President and Finance Min. Kerai Mariur confirmed that the firm offered to lower the price before the contract was signed.

However, according to a source, this is a violation of Procurement Laws because amounts must not be adjusted after the opening of sealed bids. Otherwise, same opportunity must be given to other bidders to make offers.

Meanwhile, a Yap State official who is currently on island attending a conference yesterday gave his opinion on the auditing firm Fortenberry and Ballard, stating that he finds the firm’s audit to be lacking in quality.

The official disclosed that Fortenberry and Ballard was awarded a three-year contract to do the audit for Yap State. The firm did the audit for Fiscal Years 2009, 2010 and 2011.

For the 2009 audit, Yap officials reportedly discovered some issues with the audit. Since it was the first time with Fortenberry and Ballard, the firm was allowed to give explanation.

There were reportedly certain conditions that the auditor was not able to follow. "There were discrepancies with how he (the auditor) was adhering to the standards OMB which he would be auditing in accordance with and in accordance to. There is also what we call the yellow book - the auditing standards- there were discrepancies there as well, going all the way to issues with some of the component units that he audited. From our perspective, the auditor would take the numbers without fully understanding where they should go and then plugged them in into other line items," the official said.

Instead of asking for more information, the auditor reportedly proceeded to just get the audit done on time.

After 2009 audit, some issues were reportedly resolved. But in 2010 audit, some issues were carried over.

"For those two years, in our eyes and judgment, maybe Fortenberry is not really suitable to do the audit of the state. We let his works speak for himself. The audit is lacking in quality," the official said.

The official said Yap State used to be audited by Deloitte and Touche. Previous audits reportedly received qualified opinions. But when Fortenberry and Ballard started auditing FY 2009, Yap has been getting unqualified opinion, which means a "clean bill of health."

Although any entity being audited would want an unqualified opinion, some Yap officials are reportedly surprised and wondering what has the state done.

The official said he did a background checking of Fortenberry and Ballard and he found out that the firm had been auditing a component only of a larger entity. Yap was the first state that it has audited and now it jumped into a bigger client that is the national government of Palau.

"I’m not into letting strangers come in but if I do I’ll have background check and find out who else this person has been working for," he said.

The official disclosed that Palau’s acting public auditor tried to get information from the Office of the Public Auditor in Yap State. The state’s OPA reportedly provided information to Palau’s OPA regarding Fortendberry and Ballard.

Earlier reports showed Acting Public Auditor Satrunino Tewid expressed his opposition to the awarding of contract to Fortenberry and Ballard. Besides the audit fee, which is reportedly higher than Deloitte and Touche, Tewid felt that the Republic settled for paying more for less.

With the contract signed, Fortenberry and Ballard is anticipated to start the audit of the Republic of Palau for Fiscal Year 2011.

Rate this article: 
No votes yet

Add new comment