Office of Public Accountability Annual Report
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Office of Public Accountability Annual Report Calendar Year 2011 April 2012 Office of Public Accountability Annual Report Calendar Year 2011 April 2012 Distribution: Governor of Guam Lt. Governor of Guam Speaker, 31 st Guam Legislature Senators, 31 st Guam Legislature U.S. Department of the Interior, Office of Inspector General Guam Media via E-Mail Table of Contents 1 Message from the Public Auditor 2 Performance Audits Media Coverage 3 Financial Audits Media Coverage 4 The Office of Public Accountability 5 Year in Review 8 Performance Audits Overview 13 Financial Audits Overview 15 Procurement Appeals Overview 20 Legislative Mandates, OPA Website & OPA Hotline 21 Staff & Time Composition 23 Public Outreach & Others 25 Appendix 1: 2011 Peer Review Report 26 Appendix 2: OPA Financial Statements 28 Appendix 3: Performance Audits Financial Impact 29 Appendix 4: FY 2010 Financial Audits Statistics 30 Appendix 5: Procurement Appeals Synopsis 37 Appendix 6: Legislative Mandates 42 Appendix 7: Website in Review 48 Appendix 8: Hotline Tips Statistics 49 Appendix 9: Organizational Chart Integrity • Independence • Impartiality • Accountability • Transparency Message from the Public Auditor We reviewed, monitored, and oversaw the timely issuance of 19 financial audits one more than prior years with the addition of the Department of Chamorro Affairs’ (DCA) Non Appropriated Funds. These financial audits identified $854 thousand in questioned costs, 40 audit findings, and 74 management letter comments. All but DCA received un- qualified or clean opinions on their financial statements. Improvements can still be made in compliance, as there were five qualified opinions on compliance due to material weaknesses. Another area needing improvement is the issuance of the Comprehensive Annual Fi- nancial Report (CAFR) as nearly all audits have clean opinions. The Organic Act re- quires GovGuam to submit a CAFR to Con- Hafa Adai to the People of Guam, gress and the Department of the Interior. This is my 11th annual report of my steward- The ever-increasing deficit, which now ship of the Office of Public Accountability stands at $336M, continues its unabated for the year 2011. This past year we experi- growth. Upon taking office, Governor Calvo enced setbacks in rebuilding the staffing lev- suspended the implementation of the updated els of OPA. Just as we were beginning to Hay Study salaries of classified employees at grow again, we lost three senior auditors. line agencies, froze salary increments, and We went from a full-time staff of 15 at the imposed other cost saving measures. Con- beginning of 2011 to just 12 in March 2012. versely, rate increases continue to fund sal- While seeds of accountability and transpar- ary increments at autonomous entities with ency are being transplanted at other govern- their own version of the Hay Study. Despite ment agencies, we must begin the process a these cost-saving measures, the 2011 deficit new of hiring, training, and developing a is expected to increase as GovGuam contin- new cadre of auditors. ues to expend more than what it takes in. Despite this personnel setback, we issued 12 audit reports that identified $14.5 million Senseramente , (M) in questioned costs, potential savings, lost revenue opportunities, and other finan- cial impact. These reports collectively made 39 recommendations to improve the account- ability, effectiveness, and efficiency of gov- ernment programs. We also administered 21 procurement appeals, the highest ever since Doris Flores Brooks, CPA, CGFM OPA was given this responsibility in 2006. Public Auditor 1 Performance Audits Media Coverage Performance 2 Financial Audits Media Coverage Financial 3 The Office of Public Accountability Our Motto “Auditing for Better The Office of Public Accountability (OPA) was established by Public Law (P.L.) 21-122 Government” on July 20, 1992. The OPA is an instrumen- tality of the Government of Guam Our Mission (GovGuam), independent of the executive, To improve the public trust, legislative, and judicial branches. we audit, assess, analyze, and make recommendations for OPA seeks to: (1) achieve independent and nonpartisan assessments that promote ac- accountability, transparency, countability and efficient, effective manage- effectiveness, efficiency, and ment throughout GovGuam; and (2) serve economy of GovGuam, the public interest by providing the Governor independently, impartially, and of Guam, the Guam Legislature, and the Peo- with integrity. ple of Guam with dependable and reliable information, unbiased analysis, and objective Our Vision recommendations on how best to use govern- ment resources in support of the well being “Guam is the model for good of our island and its constituents. governance in the Pacific.” The Office of Public Accountability Public of The Office The OPA Staff. First row, from L-R: Jerrick Hernandez, Vincent Duenas, Public Auditor Doris Flores Brooks, Franklin Cooper-Nurse and Travis Carbon. Second row, from L-R: Jocelyn Untalan, Clariza Roque, Rodalyn Marquez, Llewelyn Terlaje, Rachel Field and Joy Bulatao. 4 Year in Review Year Year in Review 2. Department of Public Works’ (DPW) Building Permits and Inspection Section; In 2011, OPA continued its commitment and 3. Guam Professional Engineers, Architects dedication to “Auditing for Better Govern- and Land Surveyors (PEALS) Board’s ment” by: Funds and Financial Practices; and • Issuing 12 performance audits that identi- 4. General Services Agency (GSA) Small fied over $14.5M in financial impacts; Purchase Procurement. • Making 39 recommendations to improve government accountability, effectiveness, Two Foresight Reviews and efficiency; 1. OPA Austerity Plan and GovGuam Cost • Providing oversight for the issuance of Reduction and Revenue Enhancement 19 financial audits; Recommendations; and • Issuing nine Requests for Proposals 2. Guam Fire Department (GFD) Non- (RFP) for financial audit services; Productive Pay on Leave and Other • Administering 21 procurement appeals Compensation. (highest number of appeals in six years); and Who Audits the Auditor? • Undergoing a quality control review. Government Auditing Standards require an Performance Audits audit organization to undergo a quality con- trol review every three years. OPA was au- Performance audits are audits that improve dited for the fifth time by the Association of the effectiveness and efficiency of govern- Pacific Islands Public Auditors (APIPA) in ment operations. Of the 12 performance au- October 2011. The Peer Review team was dits we completed in 2011, we provided: comprised of Haser Hainrick, the Federated States of Micronesia National Public Audi- Six Oversight Reviews tor; Junior Patrick, the Republic of the Mar- 1. GovGuam Oversight of American Re- shall Islands Auditor General; and Charles covery and Reinvestment Act (ARRA) Hester, the Peer Review team’s Technical Funds; Consultant. Refer to Appendix 1 for more 2. GovGuam Liabilities Assessment; details. 3. GovGuam Annual Leave Lump Sum Payments; Additionally, independent auditors Deloitte 4. Government-Wide Submission of Citi- & Touche audit OPA’s financial statements zen-Centric Reports (CCR) Pursuant to as part of the annual Government-Wide fi- P.L. 31-77; nancial audit. 5. GovGuam Income Tax Refund Efficient Payment Trust Fund Pursuant to P.L. 31- 74; and 6. GovGuam Health Benefit Costs Account Pursuant to P.L. 31-74. Four Insight Reviews 1. Guam Police Department (GPD) Review of Bid No. GSA-081-10 Police Patrol 2011 Peer Review. Guam OPA received a “Full Vehicles; Compliance” rating and it was the first time no management letter was issued. 5 Financial Audits Financial audits are a key element in assess- ing the overall performance and financial health of government entities to determine the accuracy, completeness, and fair repre- sentation of the entity’s operations. Year in Review Year We have seen continuous improvements in the area of financial reporting. Of the FY Silver Award. Judges found the website to be 2010 financial audits issued in 2011, 14 exceptional by providing current and easily ac- agencies issued their reports within six cessible information, demonstrating an excellent months after year end and only two compo- use of graphics, and its sections were among nent units had questioned costs. However, other areas that caused it to stand out. As one improvements are still needed as five agen- judge commented, "It's slick." cies received qualified opinions and 23 audit findings on compliance. OPA Hotline Performeter and A.F.T.E.R. Analysis The OPA Hotline (47AUDIT or 472-8348) The Performeter and A.F.T.E.R. Analysis is continues to be an effective confidential ave- a tool commissioned by the Department of nue for citizens to communicate questions the Interior, Office of Insular Affairs (DOI- and/or concerns about possible government OIA) to gauge the financial performance of waste, abuse, or fraud. We assure the public 11 insular areas to include: American Samoa, that all hotline information provided to OPA Commonwealth of the Northern Mariana Is- is held in the strictest confidence. Of the 30 lands, Federated States of Micronesia, tips in 2011, the OPA staff addressed 25 tips. Guam, Marshall Islands, Palau and the Vir- gin Islands. For FY 2010, Guam received a Staff and Time Composition score of 1.27, the lowest in nine years and the lowest among the insular areas analyzed. As of December 31, 2011, OPA had 14 full- time staff and one part-time staff. The OPA Procurement Appeals staff spent most of the 31,400 available hours