Guam attorney general urged to look into possible fraud, fund abuse at GDOE
OPA's probe uncovers illegal overtime payments
By Mar-Vic Cagurangan
The Office of Public Accountability is asking Attorney General Douglas Moylan to take action on potential fraud and abuse of public funds involving the Guam Department of Education’s overtime payments made to ineligible employees.
The OPA’s investigation found that in fiscal 2021 the department incurred over half a million dollars in overtime payments to employees of the Federal Programs Division.
“As a result, OPA questioned $640,055 in OT payments, all of which were supposed to be reimbursed by federal funding for the Covid-19 response,” the OPA’s investigation report released today.
“Because of the nature of the improprieties, reimbursement from the U.S. Department of Education was never requested,” the OPA said.
The OPA raised “serious concerns” about the approval processes and OT payments at the department.
“Due to the sensitivity of this audit, we will be forwarding a copy of this report to the Office of the Attorney General for his review and disposition on the potential fraud and abuse by the Federal Programs Division and their management,” Public Auditor Benjamin Cruz said.
The OPA launched an investigative audit in response to the findings by independent auditors at Deloitte and Touche, who found that “program payroll expenditures, documentation was not sufficient to substantiate that the cost was allowable under the program.”
The finding in GDOE’s FY 2021 single audit tested three payroll expenditures and questioned $17,131 in OT costs for two employees that were exempt from receiving overtime pay.
“Despite these conditions, management, including the previous superintendent and previous deputy superintendent was aware of these issues as far back as July 2020, given that concerned employees alerted them through an inter-office memorandum, which included recitations of local law, rules, regulations, and GDOE’s standard operating procedures,” OPA said.
GDOE’s Internal Audit Office also conducted a risk assessment of the department's overtime payments in May 2022, prior to the resignation of Superintendent Jon Fernandez.
"Our audit made several recommendations, among them seeking the recovery of local funds paid to ineligible exempt employees and payments given as a result of an unauthorized certifying officer,” Cruz said,
Cruz questioned the GDOE’s approval processes, noting that the unauthorized certifying officer was identified as the federal programs administrator, who requested overtime and at the same time certified the funds.
“There was a complete lack of segregation of duties as this one person signed for four different approvals, and was later identified as a direct beneficiary having received the highest amount in OT and benefits paid out,” Cruz said.
“As a result, we also recommended GDOE examine removing the federal programs administrator from oversight and management of federal grants,” Cruz added.
Cruz said the department has been in communication with the U.S. Department of Education to sort out "this very serious matter."
He said the OPA's investigation found evidence that a third-party fiduciary agent "may have played a role in the breakdown of internal controls through approving a request from the Federal Programs Division that essentially removed the Finance Division from the approval processes."
"A formal engagement is needed to identify if this was the cause for payments going through the process," Cruz said.
"As of the date of this report, no federal funds were used to cover the OT payments, however, there remains a receivable on the local side for these OT payments,” he added.
The OPA’s audit found the following internal control deficiencies:
· Federal Programs Division employees incurred OT hours almost a year prior to submitting plans and receiving approval for overtime worked;
· Payments of OT from local funds shorted local appropriations;
· Exempt employees received OT;
· The disparity in OT payments received by the FPD while essential workers received differential pay authorized by executive order; and
· Improper payments occurred due to an unauthorized certifier of funds.