By Pacific Island Times News Staff
The Host Community Benefit Fund or HCBF, which is administered by the Mayors’ Council of Guam, was not properly managed, resulting in unauthorized spending and undocumented expenditures from 2017 to 2021, according to the Office of Public Accountability.
"OPA determined that the overall management and usage of the HCBF was not entirely in accordance with applicable laws, regulations and best practices," states the audit report released today.
OPA found that Chalan Pago-Ordot spent $201,000 of the HCBF during a five-year period on staff and Municipal Planning Council recognition, sponsorship, equipment, donations, reimbursements and other purchases.
"Minimal expenditures were recorded during the five-year period, as the Chalan Pago-Ordot mayor’s office is working on leveraging the HCBF funds to construct a multipurpose recreation/emergency center and a new mayor’s office," OPA said.
OPA said the law requires that projects funded by the HCBF must be identified by the planning council of the host community and funding must be approved by the council through a resolution.
"However, in our testing of 20 sample transactions from the Chalan Pago-Ordot mayor’s office, we found that 17 transactions totaling $67,000 were not specifically approved through a resolution pursuant to the HCBF’s enabling legislation," the OPA said.
The audit also found that during the same period, Inalåhan spent $960,000 of the HCBF on employee bonuses, community functions, donations, equipment, food and catering, permits and licenses, prizes and awards, repairs and maintenance, supplies and materials among others.
"In our testing of 60 sample transactions from the Inalåhan mayor’s office, we noted 18 transactions totaling $47,000 that were not specifically approved via a resolution pursuant to the HCBF’s enabling legislation," the report states.
The OPA's review of the two villages' HCBF disbursements also noted the following deficiencies:
· Unauthorized expenditures from the HCBF
· Lack of adequate documentation for expenditures
· Commingling of HCBF with non-appropriated fund revenues
· Non-issuance of Form 1099 for non-employee compensation
· Non-compliance with the open government law for Host Community Municipal Planning Council meetings
"Our results of testing for Chalan Pago-Ordot and Inalåhan’s compliance with the MCOG’s standard operating procedures for appropriated funds for the procurement of supplies, materials and services found that several disbursements lacked adequate documentation for certain purchases," the OPA said, noting that multiple transactions did not have three quotations solicited prior to purchase.
Auditors found that bank statements for both villages indicated that proceeds from the HCBF and village non-appropriated fund revenues were deposited into the same bank account, in violation of the law against commingling of funds.
The usage of the HCBF primarily consists of payments to third-party vendors to provide services to the host community. Services performed by third-party vendors exceeding $600 require the issuance of a Form 1099-NEC for non-employee compensation for tax purposes.
However, OPA found that Inalåhan and Chalan Pago-Ordot did not comply with the Form 1099 requirement.