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The North Pacific US congressional model of governance

By Doris Flores Brooks, Director (North Pacific), PASAI

Historical background

Ten of our member SAIs follow the United States (US) congressional model of governance. They are from three US territories (American Samoa, Guam and the Northern Mariana Islands) and the freely associated countries of the Marshall Islands, Palau and the Federated States of Micronesia (plus the SAIs of each of its states: Chuuk, Kosrae, Pohnpei, and Yap). 

Guam and American Samoa became US possessions at the end of the Spanish–American War in 1898. The rest of the island governments were dominated by Germany and after World War I became part of the Japanese empire.  

At the end of World War II, the United Nations established the Trust Territory of the Pacific Islands (TTPI) administered by the US. The TTPI included the Carolinian islands of Chuuk, Kosrae, Pohnpei and Yap, the Marshall Islands, Palau and the Northern Mariana Islands. The US dollar became the common currency and English the official language throughout the TTPI.

Beginning in the 1970s and continuing into the 1980s, these islands petitioned the US to become independent countries in free association with the US. Three Compacts of Free Association with the US were established, the Federated States of Micronesia (FSM), the Marshall Islands and Palau. The Northern Mariana Islands instead voted to become a Commonwealth of the US rather than an independent country.

In their respective compacts, the FSM, Marshall Islands and Palau developed their own constitutions modelled after the US form of government to include legislative, executive and judicial branches. In the executive branch the head of state is the President and/or Governor. Within the legislative branch each has a bicameral legislature with one house equally represented by area and the other house elected by population. Within the judicial branch each has a Supreme Court where the judges are nominated by the Chief Executive and confirmed by the Legislature. 

Funding from the compacts provide significant revenues to these governments which is used to fund infrastructure and general operations. The compacts of the FSM and the Marshall Islands with the US expire in September 2023 and Palau’s in September 2024. As negotiations for new compacts are ongoing the outcome, particularly from a financing perspective, is unknown.  

Financial audits and Government Auditing Standards

The US provides federal funding to each of the freely associated governments in varying amounts over the life of the compacts.

The three US territories of American Samoa, Guam and the Northern Mariana Islands are eligible to receive grants from various federal agencies, similar to those available to the 50 US states. 

Entities who receive federal grants in excess of $750,000 must have a financial audit and a compliance audit (referred to as the ‘Single Audit’) in accordance with the Government Auditing Standards (GAS) issued by the Comptroller General of the US. The GAS are also known as the ‘yellow book’.

Source: United States Government Accountability Office

The Governmental Accounting Standards Board (GASB) issues accounting standards for US states and local governments. Additionally, federal grant recipients must comply with the Office of Management and Budget Compliance Supplement for the different federal grants received.

The various standards require a US licensed, certified public accountant (CPA) to sign the financial audit opinion which must be issued no later than nine months after fiscal year end. As most of these SAIs do not have a CPA on staff, they contract out their financial audits to independent accounting firms.

Whole of Government financial statements

With these federal grant requirements, these 10 SAIs generally issue their whole of government (or  financial statement of government – FSG) audits in a timely manner. For the latest fiscal year 2020, six SAIs have issued their financial audits. As the overseeing agency, the US Department of the Interior has granted extensions for the remaining four SAIs due to COVID-19 delays. 

The departments of finance of these 10 governments prepare their respective financial statements for the whole of government in accordance with the US generally accepted accounting principles (GAAP).

Audits conducted by SAIs

As the majority of financial audits are contracted out to independent accounting firms, most of the North[1] Pacific SAIs conduct performance audits, compliance audits, investigations, inspections and other reviews. The standards used in the issuance of these reports don’t necessarily comply with the GAS, the Quality Standards for Inspections and Evaluations issued by the Council of the Inspectors General of Integrity and Efficiency and/or constitutional authority.

PASAI training and development

Our member SAIs in the North Pacific avail themselves to a variety of capability development programmes and technical assistance we provide.

Almost all have now undergone SAI Performance Measurement Framework (PMF) assessments. By collaborating with us to complete these reports, we identify organisational weaknesses to improve upon and strengths to maintain and enhance. Post-assessment, several SAIs have updated or are in the process of receiving PASAI technical assistance to update their strategic plans, operational plans, stakeholder engagement strategies, human resource strategies, independence strategies and other policies. 

Our most recent annual report outlines the assistance we provided in the last financial year. This year, we enhanced our ability to cater to the unique needs of these SAIs with the appointment of a director based in Guam.

Overall, the trajectory of our member SAIs in the North Pacific is positive and we are committed to partnering with them on their journeys to become model public audit offices into the future.

What’s next?

Future topics in our series include:

  • The role of PASAI

  • Engaging civil society organisations

We welcome feedback and look forward to hearing about your areas of interest. Please email secretariat@pasai.org.

End notes

[1] Our Micronesian member SAIs from Nauru and Kiribati follow the parliamentary model.


The Pacific Association of Supreme Audit Institutions (PASAI) is the official association of supreme audit institutions (SAIs) in the Pacific region, promoting transparent, accountable, effective and efficient use of public sector resources in the Pacific. It contributes to that goal by helping its member SAIs improve the quality of public sector auditing in the Pacific to recognised high standards. Our blog includes topics that may help auditors think about some implications to service delivery because of the global coronavirus pandemic (COVID-19).