For the third fiscal year in a row, the Leon Guerrero administration has racked up millions in questioned costs in its uses of federal funds. The Office of Public Accountability released the independent auditor’s Fiscal Year 2022 Report on Compliance and Management Letter.
The compliance report was significantly delayed in part because “certain GovGuam line agencies that receive federal awards did not provide requested documents to EY in a timely manner,” according to the highlights of the report prepared by OPA. “EY” stands for Ernst & Young, the independent auditors commissioned by OPA. “All agencies are put on notice that the FY 2023 Report on Compliance is expected to be issued by March 31, 2024, and should ensure all requested documents are provided to the independent auditors in order to meet this deadline. This will ensure the Guam Legislature and other stakeholders have audited information in time for the FY 2025 budget preparation.”
More than $11 million out of $750 million in federal funds expended in FY 2022 are questioned costs, according to the compliance report. Auditors reported 15 findings, 14 material weaknesses related to GovGuam’s internal controls, and 12 significant deficiencies.
As a result, “GovGuam did not qualify as a low risk auditee,” the report states.
Excerpts of deficiencies:
According to the auditors, a deficient practice of the past – interfund borrowing – has returned, with $2.7 million due to special revenue funds because of overspending from federal grant accounts. Auditors propose the Guam Department of Administration repay these accounts through the General Fund, which already has been tapped out according to a separate audited financials for Fiscal Year 2022 released simultaneously with the compliance report.
The DOA Division of Accounts also failed to reconcile several account balances to the tune of millions of dollars in accruals and balances that are up to seven years old.
Auditors also found that DOA failed to escheat $6.6 million in unclaimed checks that had gone beyond the statutory waiting period. “The understatement was included in the Summary of Uncorrected Misstatements,” the report states.
About $1.5 million of invoices for bus operations were not recorded by the close of the fiscal year. More than 21,700 transaction receipts were missing receipt number sequences.
“When a transaction is cancelled, reversed, or corrected, the (Transaction Processing System) automatically generates a new receipt number and replaces the previously assigned receipt number,” the report states. “The previously assigned receipt number is not searchable and receipt number sequences are not monitored by management.”
DOA also listed 322 vehicles, equipment, and fixtures that were fully depreciated and more than 20 years old in the government’s capital asset register as of September 30, 2022, overstating the government’s financial position by $28 million.
DOA proposed to write off $7.8 million in debt due from Guam Memorial Hospital to the General Fund, which the auditors recommend the government collects.
A major accounting error between two financial management systems used by the child support division has led to a $2.2 million unreconciled difference in unclaimed checks and aged balances.
The Guam Fire Department failed to provide DOA $431,781 worth of proof of unpaid night differential, hazardous and overtime pay for accrual.
The court probation office has a $5.3 million balance due from people on probation who owe fines, some of which include expired probation cases that have had no movement for more than 10 years.
A lack of documentation from Department of Corrections about its costs related to providing medical care to inmates has led to $2.8 million of unbudgeted and unrecorded liabilities from current and previous years.
One hundred percent of tax credits sampled for the audit showed no trace of compliance to the monitoring schedule of tax credit and abatements redeemed during Fiscal Year 2022.
The auditors also issued noncompliance reports for certain aspects of the food stamps program, federal expenditures dealing with the economic, social, and political development of Guam, unemployment insurance, the emergency rental assistance program, the homeowner assistance program, Coronavirus State and Local Fiscal Recovery Funds, the Education Stabilization Fund, Epidemiology and Laboratory Capacity for Infectious Diseases fund, the Community Services Block Grant, the Child Care and Development Block Grant, and the Child Care Mandatory and Matching Funds of the Child Care and Development Fund.