However, local  conditions limited the effectiveness of 9 of the 13 programs. We found that programs  designed for the United States faced a variety of problems because of  geographic, economic, and social conditions in the FSM and the RMI. Most Programs Have Accountability Problems

We found that the FSM and the RMI’s administration of most of the 13  programs we reviewed did not ensure accountability. Nine of the programs had poor accountability, and five of the nine had  instances of theft, fraud, or misuse of federal funds. We are sending copies of this report to interested congressional  committees and to the secretaries of the Departments of the Interior, State,  Agriculture, Commerce, Education, Health and Human Services, and Labor,  as well as to the administrator of the Federal Emergency Management  Agency, the Postmaster General, and the presidents of the Federated States  of Micronesia and the Republic of the Marshall Islands.
Why GAO Did This Study

The United States has extended to Micronesia and the Marshall Islands a number of domestic programs in such critical areas as health care, education, job training, and telecommunications.

What GAO Found

GAO found that geographic, economic, and social conditions in both countries have limited the effectiveness of nine of the 13 programs, which were originally designed for the United States. Nine of the 13 programs experienced accountability problems, including theft or misuse of program funds. The two island nations lacked the administrative skills to meet the federal government's complex accountability requirements, and federal managers did not provide the necessary training. Although some federal agencies tried to provide oversight, their efforts at ensuring accountability fell short because of several factors, including time, distance, and travel costs and the relatively small size of the programs in the region.