Guam legislature to probe $22M in questioned federal fund expenditures

By Pacific Island Times News Staff

A legislative committee is seeking an investigation into $22.6 million in questioned costs identified in the government of Guam's fiscal 2024 single audit, which flagged contract irregularities and procurement anomalies.

The Committee on Finance and Government Operations introduced a resolution on Tuesday to convene a special investigative subcommittee.

Christopher Duenas

In response, the Office of the Governor accused the legislature of distorting technical details and "trying to politicize" the audit, which administration officials argued did not allege fraud, corruption or misuse of funds.

The resolution is sponsored by all committee members except Sen. Tina Muña, a Democratic candidate for lieutenant governor as Lt. Gov. Josh Tenorio's running mate, and Sen. Joe San Agustin, who is also seeking the Democratic Party's nomination for governor.

Sen. Christopher M. Dueñas, committee chairman, will head the subcommittee.

"This is not about politics. This is about $22.6 million in questioned costs, contracts that nobody can find, and federal money our government either could not document or could not be bothered to draw down before it expired," Dueñas said.

"The people of Guam are entitled to know exactly what happened, who is responsible, and what we are going to do to make sure it stops," he added.

The subcommittee will include four additional members, equally represented by both parties, and will be vested with blanket subpoena power over witnesses and documents.

It will operate on a $150,000 budget for professional investigative and legal advisory services, and is required to conclude its investigation and produce a report within 120 days of formal convening, unless extended by majority vote.

"The people of Guam work hard for every dollar that funds this government, and they deserve a government that follows the law it imposes on everyone else," Dueñas said.

Under federal and local laws, the FY 2024 single audit was due by June 30, 2025. However, because of the administration's failure to comply with the law, the audit reports were not issued until April 27, 2026, a full 298 days past the statutory deadline.

"Instead of receiving timely accountability, our community has been kept in the dark while federal grant money sat undocumented, unsupported, or, in some cases, drawn down with nothing to show for it. That is unacceptable, and it is the reason this subcommittee is being convened," Duenas said.

He noted that this was the most delayed single audit issuance in at least four fiscal years, continuing a deteriorating trend: 20 days late in FY 2021, 144 days late in FY 2022, 228 days late in FY 2023, and now nearly 10 months late for FY 2024.

The governor's office acknowledged that the audit in question identified documentation gaps, internal control weaknesses and compliance issues that must be addressed.

"We take the findings seriously and have already been acting on them," the governor's office said in a statement. "We welcome any honest, fact-driven review. We will cooperate fully with auditors, oversight bodies, and any legitimate effort to strengthen compliance and accountability across government."

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The audit, conducted by independent auditors Ernst & Young LLP, examined 16 major federal programs encompassing more than $604 million in federal expenditures.

The findings include:

• Five disclaimer opinions, meaning auditors could not obtain sufficient evidence to determine whether funds were spent in compliance with federal requirements, on programs including ARPA capital projects, the Homeowner Assistance Fund, FEMA public assistance, epidemiology and laboratory capacity and economic, social and political development of the territories.

• Seven qualified opinions, including on Medicaid, the Children's Health Insurance Program, and ARPA State and Local Fiscal Recovery Funds.

• Only four of 16 major federal programs received clean opinions.

• 53 audit findings, with $22.6 million in questioned costs and an additional 16 findings for which questioned costs could not even be determined because records were missing.

• 18 repeat findings from prior audits, indicating that corrective actions previously committed to by responsible agencies were never implemented or sustained.

• Eight material weaknesses in internal control over financial reporting.

• The Department of Administration alone accounted for 31 findings and $11.8 million in questioned costs; the Department of Public Health and Social Services accounted for 10 findings and $10.8 million.

The audit also found that $17 million in federal Medicaid funding drawn down without documentation showing it reflected actual allowable expenditures; $5.6 million in ARPA expenditures booked as "Miscellaneous" with no supporting purchase orders, contracts, or invoices; $4.6 million in costs questioned under the territorial development program for missing procurement and debarment documentation; and approximately $15 million in federal funds the Government simply failed to draw down before grants lapsed.

The subcommittee will focus its initial inquiry on the five major federal programs that received disclaimer opinions, while reserving authority to examine other findings, qualified opinions and government contracts that come to its attention during the course of its work.

Under Resolution 175, the subcommittee will skip any contract, document, or transaction that is the subject of a federal indictment or a pending federal criminal prosecution to avoid interference with any ongoing federal investigation.

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