Marshall Islands audit questions $6.8 million in grant spending as oversight gaps persist

The Marshall Islands' latest federal compliance audit identifies US$6,795,269 in questioned grant costs tied to weaknesses in how the government monitored recipients of United States Compact assistance. The auditors classified the weakness as a repeat of a problem reported for fiscal 2023. The figure represents costs whose compliance was questioned, not a finding that US$6.8 million was stolen, lost or ordered repaid.

The audit covers the year ended 30 September 2024. Independent auditors issued their report on 1 September 2026, and the national Office of the Auditor-General published it online in October. Finding 2024-016 concerns the federal assistance programme numbered 15.875, under the amended Compact of Free Association, for which the US Department of the Interior is the relevant federal agency.

Auditors reported US$4,474,569 in questioned costs associated with tested sub-grant agreements, another US$92,078 associated with timing and documentation of selected payments, and US$2,228,622 linked to grants passed to a recipient even though the underlying award conditions barred sub-granting. These components total US$6,795,269. The audit expressly avoids counting certain transactions twice where the same payments were examined under more than one condition.

One finding concerned four federal grant awards, identified as D23AF000740, D24AF00030, D24AF00071 and D24AF00369. The auditors said US$2,228,622 charged to those awards was passed to a subrecipient omitted from the government's monitoring schedule, despite conditions prohibiting that transfer. This is an audit finding about grant compliance; it does not establish that the recipient committed a crime or that the government suffered a loss of the same amount.

The auditors attributed the recurring problems to inadequate procedures for assessing and supervising subrecipients, checking their financial reports and ensuring compliance with grant agreements. The 2024 finding expressly identifies fiscal-2023 finding 2023-019 as its predecessor.

There is a separate development in the audit's historical follow-up schedule. It records that the US Department of the Interior issued a management decision letter dated 8 May 2026 on the earlier fiscal-2023 finding 2023-019, with the matter subject to cost recovery. That statement concerns the earlier finding, not a decision to recover the new US$6,795,269 questioned in fiscal 2024. The amount, schedule and actual outcome of any recovery under the 2023 decision were not established in the records reviewed.

The Marshall Islands government provided a response within the 2024 audit. It said a pre-award risk-assessment tool was introduced on 31 July 2026 for use in fiscal 2027, and that training on enhanced grant monitoring took place in Majuro and Ebeye on 29 July, 31 July and 5 August. It also said transactions under the Enewetak grant had been routed through the national procurement and payment process since the third quarter of fiscal 2025.

Those are reported corrective steps, not independent proof that every affected grant now meets the rules. The report does not provide a subsequent completed audit of their effectiveness, and the US Interior management decision on the 2024 finding was not established. The next accountability tests are whether the government can document compliant sub-grants and whether US officials formally accept, disallow or recover particular questioned costs.