U.S. Insular Areas: Economic, Fiscal, and Financial Accountability Challenges

The U.S. insular areas1 of American Samoa, Commonwealth of the Northern Mariana Islands (CNMI), Guam, and the United States Virgin Islands (USVI) face key economic, fiscal, and financial accountability challenges. The three Pacific insular areas—American Samoa, CNMI, and Guam—are between 4,100 and 6,000 miles from the U.S. mainland. The fourth insular area, the USVI, is located in the Caribbean Sea about 1,000 miles southeast of Miami. All four governments face common challenges to strengthening their economy, fiscal condition, and financial accountability. As you requested, we are reporting on the (1) economic challenges facing each government, including the effect of changing tax and trade laws on their economies; (2) fiscal condition of each government; and (3) financial accountability, including compliance with the Single Audit Act, as amended (Single Audit Act).2 The economic and fiscal conditions of these insular areas are affected by destructive climatic events such as typhoons, cyclones, and hurricanes, as well as their economies' general dependence on a few key industries and their governments' reliance on federal grants to provide basic services to their citizens. In addition, although progress has been made in improving financial accountability, the insular area governments continue to have serious internal control and accountability problems that increase their risk of fraud, waste, abuse, and mismanagement. The economic and fiscal conditions of these insular areas are affected by destructive climatic events such as typhoons, cyclones, and hurricanes, as well as their economies' general dependence on a few key industries and their governments' reliance on federal grants to provide basic services to their citizens. In addition, although progress has been made in improving financial accountability, the insular area governments continue to have serious internal control and accountability problems that increase their risk of fraud, waste, abuse, and mismanagemen.download