Poor Fiscal Management Cost GovGuam Nearly $79 Million Between 2012-2015

Public auditor report points to numerous deficiencies which should be rectified

By Mar-Vic Cagurangan

HAGÅTÑA, Guam  (Marianas Variety, Dec. 30, 2016) – Inefficient fiscal management at several agencies cost the government of Guam $78.8 million between 2012 and 2015, the Office of Public Accountability said in a report released Thursday.

The millions in public funds that have been jeopardized were identified in 30 audit reports, in which the OPA made 64 recommendations to improve accountability and operational effectiveness and efficiency.

“As this is our fourth report on the status of OPA recommendations, we have continually observed that government managers have not recognized the importance and benefits of implementing effective internal controls (checks and balances),” Public Auditor Doris Flores Brooks stated in the report.

Overall, OPA said it has issued 151 reports since 2001 with 646 recommendations of which 619, or 96 percent, have been closed while 27, or 4 percent, remain open.

While the law allows OPA to file actions in the Superior Court of Guam to force the implementation of the recommendations, Brooks said the OPA “has yet to exercise this arduous and costly remedy.”

Among the deficiencies identified in the reports from 2012 to 2015 include ineffective billing and collection systems, loss of government revenues, deficient control procedures over non-appropriated funds, and lack of monitoring and oversight over government programs, such as non-productive and special payroll payments, and procurement procedures.

The reports collectively identified financial impacts of $78.8 million, among them $20.7 million in unrealized revenues and $6.0 million in questioned costs. The remaining $52.1 million were other financial impacts that resulted from significant costs from special lifetime annuities, unverifiable Hotel Occupancy Tax receivables, lost savings if inactive tax credit programs were implemented, and lost savings due to purchase of fuel at a higher cost, among others.

“Until a general understanding is embraced, audit findings such as insufficient monitoring and noncompliance with laws and regulations, will continue along with the financial impacts,” OPA said. “A key factor in improving accountability in achieving an entity’s mission is to implement an effective internal control system.”

While Gov. Eddie Calvo maintains “fiscal discipline has been a hallmark of my administration,” Fitch Ratings observed in its Dec. 22 report that Guam’s strong economic growth is offset by the government’s “very long trend of weak financial operations and high debt levels.”

Among the compromised funds were:

  • GovGuam’s other financial impact of $42.9 million and lost savings of $960,000 pertaining to special lifetime annuities for governors, lieutenant governors, judges/justices, and senators;
  • Department of Revenue and Taxation’s unrealized revenue of $15.7 million pertaining to current market values of properties not being used, and questioned costs of $858,000 mainly on anomalies found in the tax roll database;
  • DRT’s other financial impact of $5.3 million consisting of $3.1 million in unverifiable Hotel Occupancy Tax receivables, and $2.2 million in unverifiable HOT exemptions claimed by eight tax payers;
  • Guam Customs and Quarantine Agency, Department of Administration and DRT’s unrealized revenue of $4.9 million due to lack of follow-up on outstanding use tax receivables;
  • The General Services Agency’s questioned costs of $3.7 million from not awarding to the lowest construction bidder, escalating contract costs for food, missing procurement documentation, and the use of sole-source procurement for transportation services; and
  • DRT and DOA’s potential savings of $2.8 million if six inactive tax credit programs are not implemented and questioned costs of $476K in unreconciled amounts.

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