08 Feb 2018
- By Cherrie Anne E. Villahermosa – [email protected] – Variety News Staff
SENATORS Justo Quitugua and Paul Manglona expressed concern about the termination of the Division of Revenue & Taxation performance audit due to lack of data from the Department of Finance.
During the Senate session on Friday, Quituga said the termination is “quite alarming,” and the Senate should take a look at this issue as it will impact the Office of the Public Auditor’s ability to audit agencies and ensure that taxes are being collected.
He said the Office of the Public Auditor “wanted to audit Revenue and Taxation and find out whether it has internal controls to detect unlicensed businesses and unreported business gross revenue and hotel occupancy tax payments for the years 2015 and 2016. The audit came to a stop for the reason that the secretary of Finance prohibited OPA from examining the documents requested, and OPA’s inability to access tax data will also impact the commonwealth audit which will start shortly.”
Manglona said, under the law the Department of Finance is obligated to come up with the data on a regular basis.
“Six years ago,” he added, “the chairman of the fiscal committee did a report on revenue generation and controls and made recommendations — these included hiring a director of Revenue and Taxation and increasing the salary for that position. Now they have had to stop an audit simply because they didn’t have the necessary data. This body should come up with a report on this issue.”
In a letter to the Legislature, the secretary of Finance and the special assistant for the Office of Management and Budget, Public Auditor Michael Pai stated that on Dec. 4, 2017, OPA terminated the ongoing audit of Revenue and Taxation due to the division’s delay in providing OPA with requested tax data.
“OPA conducted an audit entrance conference on Aug. 10, 2017 with the secretary of Finance and DRT management to communicate the audit objectives and discuss our request for specific tax data which was to be provided by Aug. 25, 2017,” Pai said.
“DRT provided OPA with the requested tax data on Oct. 13, 2017. However a review of the tax data revealed that specific information was not included as requested and prevented OPA from adequately conducting test procedures,” Pai added.
He said at a meeting with the secretary of Finance on Nov. 1, 2017 to discuss the insufficiency of the tax data, Finance Secretary Larrisa Larson informed him that her department had determined it would not provide additional tax information to OPA due to possible disclosure provisions enforced by the U.S. Internal Revenue Service.
Pai said Larson further informed him that Finance would obtain an opinion first from the Office of the Attorney General regarding the matter.
“As of Dec. 4, 2017 and to date, OPA has not received an update from the secretary of Finance or an opinion from the Office of the Attorney General. OPA believes that the law is very clear as to OPA’s access to all government records, including tax documents per 1 CMC Section 7844. We cannot move forward without the information; therefore, we cannot continue the current audit,” Pai said.
“In accordance with Generally Accepted Government Auditing Standards, an audit once started that is subsequently terminated should be reported to those parties charged with governance and other appropriate officials. We hope the attorney general can resolve this matter quickly. OPA’s inability to access data will impact the preparation of the commonwealth’s financial audit which will be starting shortly,” Pai said.
Asked for comment, Finance Secretary Larrisa Larson said:
“The Department of Finance is held to specific mandates to protect taxpayer data. We asked to seek legal guidance on the issue to determine what we can and cannot release. I was in the process of formally requesting that opinion when I received OPA’s letter. I was in the process of asking the (AG). We had informal talks and they asked me to submit a written formal request but then I got the letter. I still plan to seek a legal opinion. I think audits are excellent tools for evaluating a program and identifying areas that need improvement. We suggested alternative procedure to OPA that would have met their requirements, but they disagreed. We are sworn to a lifetime of confidentiality on tax matters and there are consequences if we fail to honor that. So I would prefer to have counsel tell us if we can or cannot comply with the request by OPA. It delays the audit procedure, but taxpayers are protected as is their right.”
Source: Marianas Variety : http://www.mvariety.com/cnmi/cnmi-news/local/102104-rev-tax-audit-terminated-due-to-lack-of-data