October 19, 2026
PALIKIR, Pohnpei—The FSM Office of the National Public Auditor has identified more than $126,000 in public projects in Kosrae that government officials could not adequately account for, along with procurement practices involving the Kosrae Congressional Delegation Office that auditors said violated an FSM Supreme Court ruling restricting Congressional involvement in the implementation of public projects.
The findings appear in Report No. 2026-12, dated September 30, 2026, which examined public projects funded through FSM Congress appropriations for Kosrae between October 1, 2022, and March 31, 2025.
The inspection covered $4.67 million in expenditures, of which auditors selected approximately $950,000 for detailed testing. The report identified $126,234.59 in equipment and other public project purchases that could not be satisfactorily verified.
Among the questioned items were fishing boats, outboard motors, cellular phones, a laptop computer, solar streetlights, a riding mower, and two trucks.
The auditors did not conclude that all of the equipment had been stolen or that the entire amount represented a financial loss. Rather, they found that officials responsible for the projects could not produce sufficient evidence to establish that the items had been delivered to their intended recipients or otherwise properly accounted for.
In several instances, people identified in government disbursement records as beneficiaries told inspectors that they had never received the equipment.
The report listed six 19-foot fiberglass boats among the questioned purchases. According to the auditors, beneficiaries identified in the records said they had not received the boats. Another intended recipient reported not receiving a 40-horsepower outboard engine.
Five people listed as recipients of cellular phones said they had never received them. Another beneficiary reported not receiving a laptop computer.
The auditors also questioned $23,400 in solar streetlights. During the inspection, three municipal governments reported receiving none of the equipment, while one municipality confirmed receiving 30 lights. Of those, five had been installed at Kosrae Airport, and the remaining 25 were in storage.
In Utwe Municipality, inspectors were unable to reconcile records for a riding mower costing $5,920.49. Two riding mowers found during the inspection were inoperable and did not match the specifications of the equipment purchased under the project.
Records also showed the purchase of two 2007 Mazda Titan cargo trucks costing $30,178, but the vehicles identified by municipal officials did not match the project documentation.
The report attributed the problems to inadequate oversight by officials assigned to manage and inspect the projects.
Under FSM financial management regulations, designated project inspection officials are responsible for ensuring that public funds are properly accounted for and projects are completed as intended.
The auditors found that those responsibilities had not been adequately carried out.
A second finding raised questions extending beyond missing or unverified equipment.
The auditors found that the Kosrae Congressional Delegation Office had participated directly in procurement and distribution activities for certain projects, particularly those involving fishing equipment and sewing machines.
According to the report, the delegation office participated in obtaining price quotations, coordinating with suppliers, selecting project recipients, and handling payments.
Although the Department of Finance and Administration issued checks in vendors’ names, delegation office personnel routinely collected the checks from the Finance Field Office before passing them to the vendors.
Finance personnel told auditors that the delegation office explained the practice as necessary to make copies for its records.
The auditors questioned whether those activities went beyond recordkeeping and amounted to the Congressional office assuming responsibilities legally assigned to project allottees and implementing officials.
The report cited the FSM Supreme Court’s 2001 decision in Udot Municipality v. FSM, which prohibited Congressional involvement in deciding which projects receive funding after Congress has already appropriated the money.
The auditors said the Kosrae delegation office’s participation in procurement and recipient selection violated that ruling.
The inspection also found inconsistent procurement documentation. Some price quotations were issued in the name of the Congressional Delegation Office, while others carried individual names. Certain records failed to identify intended recipients.
In other instances, recipient names had been crossed out and replaced without documentation explaining the changes or showing that they had been authorized.
The auditors said those practices created risks of favoritism, weakened financial controls, and made it more difficult to establish whether public funds had been used for their intended purposes.
The report recommended that FSM Congress ensure its members do not participate in implementing or administering public projects after the relevant appropriations become law.
It also called on project allottees and implementing officials to strengthen procurement procedures, maintain accurate asset records, obtain signed acknowledgments from recipients, and conduct proper inspections.
Kosrae Governor Tulensa W. Palik responded to the draft findings in a letter dated August 27.
The Governor’s Office acknowledged shortcomings in project oversight and agreed that officials had failed to adequately account for the $126,234 in questioned projects.
However, the Governor’s Office also offered explanations for several of the items.
It said changes in project managers over the years, including transitions between administrations, had made it difficult to maintain accurate records.
Regarding the riding mower, the Governor’s Office reported that the equipment had been located.
It also explained that the two cargo trucks had been changed to dump trucks through a change order because of circumstances involving the original order and a change from an outside dealership to a local vendor.
For the solar streetlight project, the Governor’s Office said one municipality had located four lights distributed to its office under a previous mayor. It also said another municipality had received 30 lights, while individuals in other municipalities had received equipment directly.
The Governor’s Office provided lists identifying recipients of solar lights, boats, and outboard motors, and said officials would continue working to locate and account for the remaining equipment.
It agreed with the second finding concerning procurement and documentation practices and promised stricter monitoring of future public projects.
The Tafunsak Municipal Government also responded to the report, agreeing with the findings and recommendations. Its response suggested that Congress appoint a separate allottee for public projects rather than assigning that responsibility to a mayor or the state government.
The National Public Auditor reviewed the responses but concluded that the additional explanations and documentation did not resolve the first finding.
Regarding the mower, auditors said the Governor’s Office had not provided serial numbers, photographs, inventory records, or other evidence demonstrating that the equipment reportedly located was the same mower purchased with public funds.
The two mowers inspected remained inoperable and did not match the purchase specifications.
The auditors also rejected the explanation concerning the trucks as insufficiently documented. They said a change from cargo trucks to dump trucks required an authorized change order and corresponding changes in procurement, payment, and project records.
Without those records, they could not verify that the dump trucks represented properly authorized replacements for the vehicles originally purchased.
The additional lists of solar light recipients and custodians of boats and outboard motors were also insufficient to resolve the findings.
Although auditors were able to verify some of the individuals identified in the new records, others could not be located or their receipt of the equipment confirmed.
The report said that providing lists after an inspection does not establish that officials maintained adequate accountability records when the projects were implemented.
Consequently, the auditors left the $126,234 finding unresolved pending further documentation and verification.
National Public Auditor Haser H. Hainrick called for stronger oversight and better training for officials responsible for managing public projects.
The Kosrae inspection is the first of a planned four-part series examining FSM Congress-funded public projects in each of the four FSM states.
The Office of the National Public Auditor said the remaining states will be reviewed sequentially under its annual audit plan.
The full report, Inspection Review Identifies Accountability Issues and Weaknesses in the Implementation of Public Projects, Report No. 2026-12, is available from the Office of the National Public Auditor at www.fsmopa.fm.
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