ABOUT THE ADMINISTRATION OF CUSTOMS & TAX
The Division of Customs & Tax Administration (CTA), within FSM Department of Finance and Administration (DoF&A), was created pursuant to Title 54 of the FSM Code. Its primary responsibilities, among others, are to maximize tax collections; ensure compliance with all national tax laws; and offer recommendations for amendments to such laws, when appropriate. The FSM DoF&A’s Division of National Treasury (the Treasury) is responsible for the recording and distribution of customs and tax revenue shares to the State and National Governments. The Secretary of the DoF&A is required to comply with the Customs Act of 1996, the Financial Management Act of 1979, and the DoF&A’s Finance Office Procedures in managing, collecting, recording, and distributing customs and tax revenues to the National and State Governments.


FINDINGS
Customs and tax cash collections are not consistently deposited to the bank in a timely manner by the CTA Field Offices. In addition, the CTA Field Offices’ collections are not consistently receipted, recorded, and deposited to the bank by the Treasury in a timely manner.

Access to a CTA Field Office facility is not restricted to authorized personnel only in order to preserve the confidentiality of the CTA files and to adequately safeguard government assets.

There is a lack of proper monitoring and oversight of the CTA collections by the Treasury; thereby, causing discrepancies between the CTA collections and the Treasury’s General Ledger records. As a result, remittances of state revenue shares are not made in a timely manner.


RECOMMENDATIONS
All collections of customs and tax revenues should be promptly deposited to the bank or the Treasury. In addition, clear policies and procedures should be put in place to ensure that collections are deposited in tact and that they are timely. These policies and procedures should indicate the oversight responsibilities with respect to the timely depositing of cash collections.

The already configured facilities should be utilized by restricting access to only authorized personnel. The Deputy Assistant Secretaries should preserve the confidentiality of all CTA documents and adequately protect government assets at all times. Additionally, internal policies and procedures should be put in place to address the access privileges of all CTA facilities, and by extension, limiting access to records, and assets.

The Divisions of CTA and Treasury should perform frequent reconciliations of CTA collections with Treasury’s records in the General Ledger. In addition, clear policies and procedures should be put in place to ensure that all collections are receipted and recorded immediately upon receipt of the information from the CTA Field Offices. These policies and procedures should indicate the oversight responsibilities with respect to timely receipts, accounting, and reconciliation of customs and tax collections.

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