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Audit
Executive Summary
Report No. 01-02 October 2001 This report presents the results of our
investigation of the Barrigada, Chalan Pago-Ordot and Inarajan Mayors'
offices from October 1, 1999 to December 31, 2000. Early in 2001, the
newly elected Mayors in the three municipalities raised concerns about
the way their predecessors had performed their official duties. The allegations
included charges that the former Mayors:
1. Did not follow proper procurement practices;
2. Did not maintain sufficient control over fixed assets;
3. Did not properly control payment of humanitarian assistance; and
4. In the first quarter of FY 2001, which marked the last three months
in office for the three Mayors who had been defeated in their re-election
bids, disproportionately expended money allocated for the entire fiscal
year.
The available evidence gathered and analyzed supports allegations 1, 2
and 4, but does not support allegation 3.
As to the procurement issue, the OPA found numerous instances in which
the three former Mayors avoided procurement procedures by purchasing identical
or similar goods and services in increments of $500 or less. By artificially
dividing invoices under $500, the Mayors were able to issue their purchase
orders without obtaining competitive bids.
We were unable to obtain fixed asset schedules from the Mayors' offices
of Barrigada and Chalan Pago-Ordot. The fixed asset listing from the former
Inarajan Mayor showed many of the items listed as missing or stolen. The
three offices did not maintain an inventory listing of canopies, chairs
and tables. In the last three months of her term the former Mayor of Chalan
Pago-Ordot not only transferred out of her municipality all motor vehicles
and other essential equipment and supplies to other Mayors or to the General
Services Agency, she also transferred $4,000 of her office's FY 2001 funds
to the Inarajan Mayor's office and spent another $3,288.99 to attend a
conference in Tacoma WA.
The three former Mayors hindered the ability of their successors to operate
by spending significantly in excess of the first quarter allotment of
FY 2001 funds set aside for the Mayors' Operation and Stipend Funds during
the first quarter. The former Barrigada Mayor spent 58.2% of the annual
allotment; the former Inarajan Mayor spent 98.3% of the annual allotment
and the former Chalan Pago-Ordot Mayor spent 101.3% of the annual allotment
from their respective Operation and Stipend Funds. While the former Mayors
of Barrigada and Chalan Pago-Ordot kept close to or within the first quarter
allotment for the Village Streets Fund, the former Inarajan Mayor spent
98.7% of the annual sum set aside for that purpose.
During the course of the investigation a number of other concerns were
identified. These issues included the practice of the Department of Administration
of issuing cash advances to Mayors for the purchase of goods and services;
the lease of an office for the Mayor of Inarajan was made without procurement
regulations being followed; excessive use of fuel, including gas put into
private vehicles at government expense, by the former Mayor of Chalan
Pago-Ordot; the awarding of a service contract by the former Mayor of
Barrigada to an unlicensed vendor; shortcomings of the Department of Administration
in providing financial information to the Mayors' Council and the Mayors;
and weaknesses in the internal control framework governing the expenditure
of Mayors' funds. These collateral issues are set out in detail in the
report.
As to the issue of cash advances, the OPA is unaware of any law or regulation
that permits the government to disburse funds to a public official for
the purchase of goods and services and community activities. Nonetheless,
the Department of Administration developed a form to process such requests.
Despite DOA's informal policy to clear advances within 30 days with appropriate
documentation, the former Mayor of Inarajan was able to obtain five advances
totaling $16,000 without fully accounting for most of them. For the last
advance of $2,500 taken December 28, 2000, no documentation was provided
by the former Mayor. According to Department of Administration records,
the former Mayor of Inarajan owes the government $8,108.39 for advances
not documented.
Our recommendations are set out in detail in this report. The major recommendations
include:
1) The Legislature enact laws to prohibit the transfer of assets
out of mayoral offices in the lastthree months of a Mayor's term and prevent
a Mayor from spending more than one-fourth of the sum allotted to a Mayor's
office in the quarter beginning October 1 in the year in which Mayors
are elected;
2) The Legislature repeal the authority of the Mayors' Council to be custodian
of municipal funds because the Mayors' Council itself recognizes its personnel
have not been trained for such responsibility;
3) The Legislature review the five funds it has created at the municipal
level to determine whether they overlap or contradict one another and whether
sufficient safeguards are in place to assure accountability of funds;
4) The Legislature reconsider the scope of the exemptions it has granted
to the Mayors' Council, the Mayors and the Municipal Planning Councils to
engage in procurement activities without observing procurement laws that
apply in general to government procurement;
5) Mayors should not award contracts for road repairs without going through
competitive bidding procedures;
6) The Mayors' Council adopt and monitor procedures for control of fixed
assets at the municipal level and govern the award of humanitarian assistance
by the Mayors;
7) The Mayors' Council adopt and monitor procedures for control of the accepted
practice of Mayors loaning their constituents such items as canopies, tables
and chairs;
8) The Mayors' Council adopt a written policy governing the fundraising,
use and accountability of non-appropriated funds at the municipal level;
9) The Department of Administration abolish the practice of issuing cash
advances to Mayors for the purchase of goods and service and community activities;
and
10) The former Mayor of Inarajan be required to reimburse the government
for unsupported expenditures amounting to $8,108.39 and the former Mayor
of Chalan Pago-Ordot be required to reimburse the government $395.42 for
fuel purchased for private vehicles. This report was prepared in accordance
with generally accepted government auditing standards.The newly elected
Mayors of the three municipalities, the Mayors' Council of Guam, the Department
of Administration, the Bureau of Budget and Management Research and the
Department of Revenue and Taxation contributed information that materially
assisted the OPA in completing its work. The cooperation of these individuals
and agencies is gratefully acknowledged.
Doris Flores Brooks
Public Auditor
Report No. 01-02
October 2001
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