The Office of the Public Auditor (OPA) received a series of tips alleging that employees of the Department of Parks and Recreation (DPR) were diverting fees collected for DPR-sponsored activities into the DPR Employees’ Association bank accounts and that the money was then distributed to DPR employees for personal purposes.
While the DPR Employees’ Association bank accounts are not government accounts, they are subject to audit because of the allegation that government funds were wrongfully deposited into these accounts by government employees.
The available evidence supports the allegations that DPR employees diverted in excess of $67,000 in DPR fees intended for the DPR Revolving Fund into the Employees’ Association bank accounts and used the money for personal purposes. In another case, evidence indicates a single employee collected and retained a DPR fee of $3,200 in cash for his own use.
Money deposited into the DPR Revolving Fund for the past five fiscal years has declined precipitously, going from $219,589 in FY1997 to $85,404 in FY 2001. There was no evidence to indicate that DPR management exercised appropriate oversight over the DPR Revolving Fund during this five-year period.
Under 21 GCA §77104(f), the Director has a duty to manage the Revolving Fund, which duty presupposes a constant awareness on his part of the receipts and expenditures for the Parks Fund and their fluctuations.
Under 21 GCA § 77114.2 the Parks Commission has a duty to submit annual audited financial statements of the DPR Revolving Fund to the Governor and to the Legislature. No such audited reports have ever been prepared.
During the 42-month period of January 1998 to June 2001, checks for approximately $65,784.43 were drawn on the Employees’ Association bank accounts. We were able to document only $22,020.74 of disbursements written to various vendors and Department employees. DPR employees informed us that the rest of the records had been either “stolen,” lost or discarded.
From the $22,020.74, 13 DPR employees received payments for such activities as funeral donations, administrative service, entertainment for night market, MIBT (Marianas Invitational Basketball Tournament) Saipan expenditures, reimbursement for pool activitiy, payment of aquatic class and a loan. The amounts paid to the 13 Department employees totaled $9,667.50. One employee received three payments totaling $2,800. Another employee received seven payments totaling $3,557.50; his wife received three payments totaling $3,500 and his daughter received $800. The combined payments to this employee and his family totaled $7,857.50.
Various employees informed us that no initial membership fee or regular dues had been collected by the Employees’ Association during the audit period. There was also no evidence of authorized Employees’ Association fund-raisers having generated any significant sum of money for the Association. The Director told us that some of the money deposited into the Employees’ Association appeared to him to have come from DPR activities that should have been deposited into the DPR Revolving Fund.
In the absence of any evidence that the $67,037.36 deposited into the Employees’ Association accounts came from membership fees or dues or authorized fund-raising activities, coupled with the evidence that DPR fees that should have gone to the DPR Revolving Fund went instead to the Employees’ Association and taking into consideration the precipitous decline in Revolving Fund income over the past five years, we have concluded that the source of all of the money received by the Employees’ Association was diverted from the Revolving Fund.
Recommendations
The draft report was provided to the Chief Prosecutor of the Attorney General’s Office. Based on the evidence that indicates that persons within the DPR diverted DPR fees intended for the Revolving Fund into the Employees’ Association’s bank accounts and used the money for personal purposes, we recommend that the Attorney General cause an investigation to be commenced to determine if the acts alleged warrant prosecution.
The draft report was provided to the Director and the Commission Chairman. We recommend that the Commission fulfill its duty under 21 GCA § 77114.2 and cause an audit of the DPR Revolving Fund to be performed at the end of each fiscal year for submission to the Governor and the Legislature.
The OPA sincerely appreciates and thanks the anonymous persons who stepped forward to provide information. Without these persons’ assistance, the diversion of DPR fees intended for the improvement of Guam’s Parks and Recreation facilities might not have been discovered.
Doris Flores Brooks, CPA
Public Auditor