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DEPARTMENT OF THE TREASURY
W ASHINGTON, D. C. 20220
OFFICE OF
December 2, 2024
INSPECTOR GENERAL
MEMORANDUM FOR JESSICA MILANO, CHIEF PROGRAM OFFICER, OFFICE OF
CAPITAL ACCESS, DEPARTMENT OF THE TREASURY
FROM: Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT: Desk Review of the Government of Guam’s Use of
Coronavirus Relief Fund Proceeds (OIG-CA-25-010)
Please find the attached desk review memorandum1 on the Government of
Guam’s (Guam) use of Coronavirus Relief Fund (CRF) proceeds. The CRF is
authorized under Title VI of the Social Security Act, as amended by Title V,
Division A of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
Under a contract monitored by our office, Castro & Company, LLC (Castro), a
certified independent public accounting firm, performed the desk review. Castro
performed the desk review in accordance with the Council of the Inspectors
General on Integrity and Efficiency Quality Standards for Federal Offices of
Inspector General standards of independence, due professional care, and quality
assurance.
In its desk review, Castro personnel reviewed documentation for a non-statistical
selection of 39 transactions reported in the quarterly Financial Progress Reports
(FPR) and identified a combination of unsupported and ineligible questioned costs
of $3,961,769 and $733 respectively, with total questioned costs across all
payment types of $3,962,502 (see attached schedule of monetary benefits).
Castro determined that the expenditures for Direct Payments greater than or equal
to $50,000, Aggregate Reporting less than $50,000,2 and Aggregate Payments to
1
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) assigned the Department of
the Treasury Office of Inspector General with responsibility for compliance monitoring and
oversight of the receipt, disbursement, and use of Coronavirus Relief Fund (CRF) payments. The
purpose of the desk review is to perform monitoring procedures of the prime recipient’s receipt,
disbursement, and use of CRF proceeds as reported in the grants portal on a quarterly basis.
2 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
grants portal. Transactions less than $50,000 can be reported as an aggregate lump-sum amount
by type (contracts, grants, loans, direct payments, and transfers to other government entities).
Page 2
Individuals3 did not comply with the CARES Act and Treasury’s Guidance. Also,
Castro identified grants portal reporting misclassifications related to the Direct
Payments greater than or equal to $50,000, Aggregate Reporting less than
$50,000, and Aggregate Payments to Individuals payment types, which Castro
considered to be noncompliant with Treasury’s Guidance. Additionally, Castro
determined that Guam’s risk of unallowable use of funds is high.
Castro recommends that the Department of the Treasury (Treasury) Office of
Inspector General (OIG) follow-up with Guam’s management to confirm if the
transactions noted as unsupported or ineligible expenditures within the Direct
Payments greater than or equal to $50,000, Aggregate Reporting less than
$50,000, and Aggregate Payments to Individuals payment types can be supported.
If support is not provided, Treasury OIG should recoup the funds or request that
Guam management provide support for replacement expenses, not previously
charged, that were eligible during the CRF period of performance. Further, based
on Guam’s responsiveness to Treasury OIG’s requests and its ability to provide
sufficient documentation and/or replace unsupported and ineligible transactions
charged to the CRF with valid expenditures, Castro recommends Treasury OIG
determine the feasibility of conducting an audit for the Direct Payments greater
than or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types.
Treasury OIG and Castro met with Guam’s management to discuss the questioned
costs. Guam management stated that they would provide additional
documentation to Treasury OIG to support the questioned costs or replace them
with other eligible expenditures.
At the time of fieldwork, Castro noted that Guam had findings in their Single Audit
reports for fiscal years 2020 and 2021. Castro recommends that Treasury OIG
follow-up with Treasury’s Office of Capital Access to ensure that management
decision letters are issued on the findings identified by the auditor in the Single
Audit reports, which Castro has summarized below.
x Guam’s fiscal year 2020 Single Audit report was published on
May 29, 2021. In this Single Audit report, the auditor identified $399,830 in
CRF related questioned costs.
x Guam’s fiscal year 2021 Single Audit report was published on
July 13, 2022. In this Single Audit report, the auditor identified $732,791 in
unsupported CRF related questioned costs.
3
Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the grants portal to prevent inappropriate disclosure of
personally identifiable information.
Page 3
Castro recommends Treasury OIG follow-up with Guam to obtain a copy of its
fiscal year 2022 Single Audit report as this was not available to Castro at the time
of Castro’s desk review planning procedures.
Castro also identified other matters throughout the course of the desk review and
recommends Treasury OIG follow-up with Guam’s management to 1) determine
the feasibility of performing additional testing to verify if unsupported disaster
relief payment errors identified were isolated errors or if it represents a systemic
issue across other disaster relief payments claimed by Guam; and 2) determine
the feasibility of performing additional testing on unsupported expenditures paid
to hotels for quarantining to determine eligibility and reasonableness.
In connection with our contract with Castro, we reviewed Castro’s desk review
memorandum and related documentation and inquired of its representatives. Our
review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to
express an opinion on the Government of Guam’s use of the CRF proceeds.
Castro is responsible for the attached desk review memorandum and the
conclusions expressed therein. Our review found no instances in which Castro did
not comply in all material respects with Quality Standards for Federal Offices of
Inspectors General.
We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Audit Director, at (202) 487-8371.
cc: Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital
Access, Department of the Treasury
David Morley, Director of Data and Reporting, Office of Capital Access,
Department of the Treasury
Wayne Ference, Partner, Castro & Company, LLC
Krystyna Ilagan, Federal Grants and Compliance Section, Department of
Administration, Government of Guam
Edward M. Birn, Director of Administration, Government of Guam
Page 4
Attachment
Schedule of Monetary Benefits
According to the Code of Federal Regulations, 4 a questioned cost is a cost that is
questioned due to a finding:
(a) which resulted from a violation or possible violation of a statute,
regulation, or the terms and conditions of a Federal award, including for
funds used to match Federal funds;
(b) where the costs, at the time of the review, are not supported by
adequate documentation; or
(c) where the costs incurred appear unreasonable and do not reflect the
actions a prudent person would take in the circumstances.
Questioned costs are to be recorded in the Department of the Treasury’s
(Treasury) Joint Audit Management Enterprise System (JAMES). 5 The amount will
also be included in the Office of Inspector General (OIG) Semiannual Report to
Congress. It is Treasury management's responsibility to report to Congress on the
status of the agreed to recommendations with monetary benefits in accordance
with 5 USC Section 405.
Recommendation Questioned Costs
Recommendation No. 1 $3,962,502
The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $3,962,502 is
Guam’s expenditures reported in the grant-reporting portal that were ineligible or
lacked supporting documentation.
4
2 CFR § 200.84 – Questioned Cost
5
JAMES is Treasury’s audit recommendation tracking system.
1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com
Desk Review of the Government of Guam
December 2, 2024
OIG-CA-25-010
MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT
FROM: Wayne Ference
Partner, Castro & Company, LLC
SUBJECT: Draft Desk Review of the Government of Guam
On September 7, 2023, we initiated a desk review of the Government of Guam’s
(Guam) use of the Coronavirus Relief Fund (CRF) authorized under Title VI of the
Social Security Act, as amended by Title V, Division A of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act). 1 The objective of our desk review
was to evaluate Guam’s documentation supporting its uses of CRF proceeds as
reported in the GrantSolutions2 portal and to assess the risk of unallowable use of
funds. The scope of our desk review was limited to obligation and expenditure
data for the period of March 1, 2020 through December 31, 2022, 3 as reported in
the GrantSolutions portal.
As part of our desk review, we performed the following:
1) reviewed Guam’s quarterly Financial Progress Reports (FPRs) submitted in
the GrantSolutions portal through December 31, 2022;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021; 4
1
P.L. 116-136 (March 27, 2020).
2
GrantSolutions, a grant and program management Federal shared service provider under the
United States (U.S.) Department of Health and Human Services, developed a customized and user-
friendly reporting solution to capture the use of CRF payments from prime recipients.
3
Guam fully expended their total CRF proceeds as of December 31, 2022. Castro set the scope end
date to December 31, 2022, which was the date of Guam’s last reporting submission within the
GrantSolutions portal.
4
Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf
1
Desk Review of the Government of Guam
3) reviewed Treasury Office of Inspector General’s (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;5
4) reviewed Treasury OIG’s monitoring checklists6 of Guam’s quarterly FPR
submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit Act reports, 7 and
those issued by the Government Accountability Office and other applicable
Federal agency OIGs for internal control or other deficiencies that may
pose risk or impact Guam’s uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations, the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee,8 and Treasury OIG Office of Counsel input on
issues that may pose risk or impact Guam’s uses of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying Guam’s
GrantSolutions portal quarterly FPR submissions, as well as officials
responsible for obligating and expending CRF proceeds;
8) made a non-statistical selection of Direct Payments, Aggregate Reporting, 9
and Aggregate Payments to Individuals10 data identified through
GrantSolutions portal reporting; and
5
Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently Asked
Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021.
6
The checklists were used by Treasury OIG personnel to monitor the progress of prime recipient
reporting in the GrantSolutions portal. GrantSolutions quarterly submission reviews were
designed to identify material omissions and significant errors, and where necessary, included
procedures for notifying prime recipients of misreported data for timely correction. Treasury OIG
followed the CRF Prime Recipient Quarterly GrantSolutions Submissions Monitoring and Review
Procedures Guide, OIG-CA-20-029R, to monitor the prime recipients on a quarterly basis.
7
P. L. 104-156 (July 5, 1996) The Single Audit Act of 1984, as amended in 1996, requires entities
who receive federal funds in excess of $750,000 to undergo an annual audit of those Federal funds.
The act was enacted for the purpose of promoting sound financial management, including
effective internal controls, with respect to Federal awards administered by non-Federal entities and
to establish uniform requirements for audits. This prime recipient was subject to those audit
requirements, and Castro reviewed applicable prior year single audit reports as part of our desk
review risk assessment procedures.
8
Section 15010 of P.L. 116-136, the CARES Act, established the Pandemic Response Accountability
Committee within the Council of the Inspectors General on Integrity and Efficiency to promote
transparency and conduct and support oversight of covered funds (see Footnote 16 for a definition
of covered funds) and the coronavirus response to (1) prevent and detect fraud, waste, abuse, and
mismanagement; and (2) mitigate major risks that cut across program and agency boundaries.
9
Prime recipients were required to report CRF transactions greater than or equal to $50,000 in
detail in the GrantSolutions portal. Transactions less than $50,000 could be reported as an
aggregate lump-sum amount by type (contracts, grants, loans, direct payments, and transfers to
other government entities).
10
Obligations and expenditures for payments made to individuals, regardless of amount, were
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.
2
Desk Review of the Government of Guam
9) evaluated documentation and records used to support Guam’s quarterly
FPRs.
Based on our review of Guam’s documentation supporting the uses of its CRF
proceeds as reported in the GrantSolutions portal, we determined that the
expenditures related to the Direct Payments greater than or equal to $50,000,
Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals
payment types did not comply with the CARES Act and Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $3,961,769 and $733
respectively, with total questioned costs of $3,962,502. We also determined
Guam’s risk of unallowable use of funds is high.
Castro recommends that Treasury OIG follow-up with Guam management to
confirm the transactions noted as unsupported or ineligible expenditures within
the Direct Payments greater than or equal to $50,000, Aggregate Reporting less
than $50,000, and Aggregate Payments to Individuals payment types are recouped
or replaced by other eligible expenditures, not previously charged to CRF, that
were incurred during the period of performance. Based on Guam’s
responsiveness to Treasury OIG’s requests and its ability to provide sufficient
documentation, we recommend Treasury OIG determine the feasibility of
conducting an audit for the Direct Payments greater than or equal to $50,000,
Aggregate Reporting less than $50,000, and Aggregate Payments to Individuals
payment types.
At the time of fieldwork, Castro noted that Guam had findings in their Single Audit
reports for fiscal years 2020 and 2021 and Castro recommends that Treasury OIG
follow-up with Treasury’s Office of Capital Access to ensure that management
decision letters are issued on the findings identified by the auditor in the Single
Audit report, which we have summarized below.
o Guam’s fiscal year 2020 Single Audit report was published on
May 29, 2021. In this Single Audit report, the auditor identified
$399,830 in CRF related questioned costs.
o Guam’s fiscal year 2021 Single Audit report was published on
July 13, 2022. In this Single Audit report, the auditor identified
$732,791 in unsupported CRF related questioned costs.
Additionally, Castro noted that Guam did not provide a fiscal year 2022 Single
Audit report during Castro’s planning procedures and indicated that this audit was
still ongoing. We recommend that Treasury OIG follow-up with Treasury’s Office
of Capital Access to ensure that the fiscal year 2022 single audit report is filed and
management decision letters are completed.
3
Desk Review of the Government of Guam
Non-Statistical Transaction Selection Methodology
Treasury issued a $117,968,258 CRF payment to Guam. As of December 31, 2022,
Guam expended all of its CRF funds. Guam’s cumulative obligations and
expenditures by payment type are summarized below.11
Cumulative Cumulative
Payment Type Obligations Expenditures
Contracts >= $50,000 $ - $ -
Grants >= $50,000 $ - $ -
Loans >= $50,000 $ - $ -
Transfers >= $50,000 $ - $ -
Direct Payments >= $50,000 $ 25,313,184 $ 25,313,184
Aggregate Reporting < $50,000 $ 53,530,643 $ 53,530,643
Aggregate Payments to Individuals
(in any amount) $ 39,124,431 $ 39,124,431
Totals $ 117,968,258 $ 117,968,258
Castro made a non-statistical selection of payments in the Direct Payments
greater than or equal to $50,000, Aggregate Reporting less than $50,000, and
Aggregate Payments to Individuals payment types. Selections were made using
auditor judgment based on information and risks identified in reviewing audit
reports, the GrantSolutions portal reporting anomalies12 identified by the Treasury
OIG CRF monitoring team, and review of Guam’s FPR submissions. Guam did not
obligate or expend CRF proceeds to Contracts greater than or equal to $50,000,
Grants greater than or equal to $50,000, Loans greater than or equal to $50,000, or
Transfers13 greater than or equal to $50,000; therefore, we did not make a
selection of transactions from these payment types.
The number of transactions (39) we selected to test were based on Guam’s total
CRF award amount and Castro’s overall risk assessment of Guam. To allocate the
number of transactions (39) by payment type (Direct Payments greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals), we compared the payment type total dollar amounts as
11
Castro’s review of Guam’s underlying general ledger (GL) detail resulted in identification of
reconciling reporting errors that Castro deemed to be misclassifications that did not comply with
Treasury’s Guidance. Since Guam had a significant amount of expenditures that should have been
reported in a different payment type as of our scope period of December 31, 2022, we subjected
Guam’s reported balances from the GL to our transaction selections. See Financial Reporting
Controls Issues within the Desk Review Results section below for a summary of these classification
changes that Guam made.
12
Treasury OIG had a pre-defined list of risk indicators that were triggered based on data
submitted by prime recipients in the FPR submissions that met certain criteria. Castro reviewed
these results provided by Treasury OIG for the prime recipient.
13
A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.
4
Desk Review of the Government of Guam
a percentage of cumulative expenditures as of December 31, 2022. The
transactions selected for testing were not selected statistically, and therefore
results could not be extrapolated to the total universe of transactions.
Background
The CARES Act appropriated $150 billion to establish the CRF. Under the CRF,
Treasury made payments for specified uses to States and certain local
governments; the District of Columbia and U.S. Territories, including the
Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa,
and the Commonwealth of the Northern Mariana Islands; and Tribal governments
(collectively referred to as “prime recipients”). Treasury issued a $117,968,258
CRF payment to Guam. The CARES Act stipulates that a prime recipient may only
use the funds to cover costs that—
(1) were necessary expenditures incurred due to the public health
emergency with respect to the coronavirus disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of
March 27, 2020; and
(3) were incurred during the covered period between March 1, 2020 and
December 31, 2021.14
Section 15011 of the CARES Act required each covered recipient 15 to submit to
Treasury and the Pandemic Response Accountability Committee, no later than 10
days after the end of each calendar quarter, a report that contained (1) the total
amount of large, covered funds16,17 received from Treasury; (2) the amount of
large, covered funds received that were expended or obligated for each project or
activity; (3) a detailed list of all projects or activities for which large, covered funds
were expended or obligated; and (4) detailed information on any level of sub-
contracts or sub-grants awarded by the covered recipient or its sub-recipients.
14
P.L. 116-260 (December 27, 2020). The covered period end date of the CRF was extended through
December 31, 2021 by the Consolidated Appropriations Act, 2021. The covered period end date for
tribal entities was further extended to December 31, 2022 by the State, Local, Tribal, and Territorial
Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act, Division LL of the Consolidated
Appropriations Act, 2023, P.L. 117-328, December 29, 2022, 136 Stat. 4459.
15
Section 15011 of P.L. 116-136, the CARES Act, defined a covered recipient as any entity that
received large, covered funds and included any State, the District of Columbia, and any territory or
possession of the United States.
16
Section 15010 of P.L. 116-136, the CARES Act, defined covered funds as any funds, including
loans, that were made available in any form to any non-Federal entity, not including an individual,
under Public Laws 116-123, 127, and 136, as well as any other law which primarily made
appropriations for Coronavirus response and related activities.
17
Section 15011 of P.L. 116-136, the CARES Act, defined large, covered funds as covered funds that
amounted to more than $150,000.
5
Desk Review of the Government of Guam
The CARES Act assigned Treasury OIG the responsibility for compliance
monitoring and oversight of the receipt, disbursement, and use of CRF proceeds.
Treasury OIG also has authority to recoup funds in the event that it is determined
a prime recipient failed to comply with requirements of subsection 601(d) of the
Social Security Act, as amended, (42 U.S.C. 801(d)).
Desk Review Results
Financial Progress Reports
We reviewed Guam’s quarterly FPRs through December 31, 2022, and found that
Guam timely filed its quarterly FPRs in the GrantSolutions portal in compliance
with Treasury OIG’s reporting requirements for the period of June 30, 2020
through December 31, 2022.
Financial Reporting Control Issues
Castro identified a number of financial reporting control issues detailed below that
impacted our desk review of Guam, including significant general ledger (GL) to
GrantSolutions portal reconciliation errors, and many GrantSolutions portal
payment type classification reporting errors that did not comply with Treasury’s
Guidance.
General Ledger to GrantSolutions Portal Reconciliation Errors
Castro’s review of Guam’s underlying GL detail resulted in the identification of a
significant number of reconciliation and misclassification errors that Guam made
in its GL related to its CRF expenditures after closing out its GrantSolutions portal
reporting as of December 31, 2022. When Castro asked Guam officials about the
discrepancies, Guam told Castro that it spent far more on COVID-19 related
expenditures than it claimed in its GrantSolutions portal submission, and as a
result, Guam made significant offline corrections in its GL after closing out its
GrantSolutions portal reporting, by replacing erroneous costs with other CRF
related expenditures. This resulted in GL population values that significantly
varied from the amounts originally reported within Guam’s December 31, 2022
GrantSolutions portal FPR submission. See below for a summary of these
classification changes made by Guam. Castro noted that these changes did not
result in a change to the overall total expenditures Guam claimed in the
GrantSolutions portal. Castro utilized Guam’s updated Cumulative Expenditures
Per GL Detail Population report as of December 31, 2022 for making our
transaction selections and completing desk review fieldwork procedures.
6
Desk Review of the Government of Guam
Summary of Payment Type Reconciliation Classification Reporting Errors
Cumulative Total
Cumulative Expenditures Per Reconciliation
Expenditures GL Detail Misclassification
Payment Type per FPR Population Errors
Direct Payments >= $50,000 $ 25,313,184 $ 23,870,645 $ 1,442,539
Aggregate Reporting < $50,000 $ 53,530,643 $ 32,870,626 $ 20,660,017
Aggregate Payments to Individuals
(in any amount) $ 39,124,431 $ 61,226,987 $ (22,102,556)
Totals $ 117,968,258 $ 117,968,258 $ -
GrantSolutions Portal Payment Type Testing Classification Errors
Even after Guam’s GL classification changes noted above, Castro identified an
additional significant amount of classification reporting errors as a result of our
testing between the GrantSolutions portal payment types that did not comply with
Treasury’s Guidance. We identified misclassification testing errors that are
presented in the paragraphs immediately below.
Direct Payments Greater Than or Equal to $50,000 Testing Misclassifications
Castro identified the following misclassifications from our testing that we
considered to be reporting errors that did not comply with Treasury’s Guidance:
x Transactions were reported in Direct Payments greater than or equal to
$50,000 that should have been reported in the GrantSolutions portal as
Contracts greater than or equal to $50,000, Grants greater than or equal to
$50,000, Aggregate Reporting less than $50,000, and Aggregate Payments
to Individuals.
x Guam reported its component unit agencies as the sub-recipient in the
GrantSolutions portal. Since the component units were part of the prime
recipient's government for GrantSolutions portal reporting purposes,
Castro considered reporting expenditures in this manner the same as
reporting payments to the prime recipient’s government (which was not
allowed). Instead, Guam should have reported the vendor names of
underlying transactions incurred by its component unit agencies.
Aggregate Reporting Less Than $50,000 Testing Misclassifications
Castro identified transactions from our testing reported in Aggregate Reporting
less than $50,000 that should have been reported in the GrantSolutions portal as
Direct Payments greater than or equal to $50,000 and Aggregate Payments to
Individuals.
7
Desk Review of the Government of Guam
Aggregate Payments to Individuals Testing Misclassifications
Castro identified transactions from our testing reported in Aggregate Payments to
Individuals that should have been reported in the GrantSolutions portal as
Contracts greater than or equal to $50,000.
Summary of Testing Results
Castro found that the Direct Payments greater than or equal to $50,000, Aggregate
Reporting less than $50,000, and Aggregate Payments to Individuals payment
types did not comply with the CARES Act and Treasury’s Guidance because we
were unable to determine if all tested expenditures were necessary due to the
COVID-19 public health emergency, were not accounted for in the budget most
recently approved as of March 27, 2020, and were incurred during the covered
period. The transactions selected for testing were not selected statistically, and
therefore results could not be extrapolated to the total universe of transactions.
Within the table below, we have included a summary of unsupported and
ineligible expenditures identified as questioned costs, which did not comply with
the CARES Act and Treasury’s Guidance. See the Desk Review Results section
below this table for a detailed discussion of questioned costs and other issues
identified throughout the course of our desk review.
8
Desk Review of the Government of Guam
Summary of Expenditures Testing and Recommended Results
As of December 31, 2022
Cumulative
Expenditure
GL Detail Cumulative Unsupported Ineligible
Population Expenditure Questioned Questioned Total Questioned
Payment Type Amount18 Tested Amount Costs Costs Costs
Contracts >=
$ - $ - $ - $ - $ -
$50,000
Grants >= $50,000 $ - $ - $ - $ - $ -
Loans >= $50,000 $ - $ - $ - $ - $ -
Transfers >=
$ - $ - $ - $ -
$50,000 $ -
Direct Payments
>= $50,000 $ 23,870,645 $ 1,280,370 $ 122,032 $ 733 $ 122,765
Aggregate
Reporting <
$50,000 $ 32,870,626 $ 2,144,877 $ 2,092,378 $ - $ 2,092,378
Aggregate
Payments to
Individuals (in any
amount) $ 61,226,987 $ 4,400,956 $ 1,747,359 $ - $ 1,747,359
Totals $ 117,968,258 $ 7,826,203 $ 3,961,769 $ 733 $ 3,962,502
Direct Payments Greater Than or Equal to $50,000
We determined Guam’s Direct Payments greater than or equal to $50,000 did not
comply with the CARES Act and Treasury’s Guidance. We tested 14 transactions
totaling $1,280,370 and identified two exceptions. The transactions tested
included expenditures for small business assistance grants to reimburse costs of
business interruption caused by required closures resulting from COVID-19; a
school food program; cleaning and disinfecting supplies; personal protective
equipment; janitorial services; air purifiers; and advertising expenses. We
identified unsupported and ineligible questioned costs of $122,032 and $733
respectively, as detailed below.
18
Due to significant misclassification errors, Castro utilized Guam’s updated “Cumulative
Expenditures Per GL Detail Population” to make our transaction selections. Guam utilized the GL
detail as of as of December 31, 2022, but made the changes offline during Castro’s desk review.
See Financial Reporting Control Issues section for additional discussion.
9
Desk Review of the Government of Guam
Direct Payment Exception #1 – Small Business Assistance Grants
Guam claimed $17,000,000 in expenditures for payments made to the Guam
Economic Development Authority for transactions that should have been reported
as Grants greater than or equal to $50,000. Guam claimed these expenditures
were for a small business assistance grant to reimburse costs of business
interruption caused by required closures resulting from COVID-19. Castro tested
transactions totaling $184,803 related to this grant and questioned a total of
$50,733, which consisted of unsupported questioned costs of $50,000, and
ineligible questioned costs of $733 respectively, as described below.
For one transaction related to this grant, Castro obtained the Guam Economic
Development Authority’s grant application, tax documentation such as W-9s, 19
and Guam's calculation of the grant award amount, which we agreed to the
expenditure amounts claimed within the GrantSolutions portal. Castro requested
that Guam provide external disbursement support, to include electronic funds
transfers and cancelled checks, or the equivalent to support the disbursements
made by Guam to the small business receiving the grant, but Guam did not timely
respond to Castro's requests. Without this disbursement support, Castro was
unable to verify the accuracy of the expenditures made using CRF proceeds, as we
were unable to confirm Guam paid the small business grant beneficiary as
claimed in its CRF quarterly reports. Castro questions $50,000 in grant payment
costs as unsupported.
For an additional transaction of $733 related to this grant, Castro reviewed the
Guam Economic Development Authority’s grant application, tax documentation
such as W-9s, check payments made to small businesses, and Guam's calculation
of the grant award amount, which we agreed to the expenditure amounts claimed
within the GrantSolutions portal. To be eligible to receive this grant, Guam
compared the average of the tax returns for the 12 months preceding the
COVID-19 pandemic to the tax returns from April 2020. Castro noted that Guam
provided a grant award to a business that reported $0 in revenue for the seven
months preceding the onset of the COVID-19 pandemic indicating that the
business was not operational prior to the start of the pandemic. To verify the
eligibility of these payments against Guam's eligibility requirements, Castro
requested evidence that the business remained operational and eligible for the
small business interruption grant during the covered period despite the absence
of reported revenue for the seven months preceding the onset of the pandemic.
Other than the Gross Receipts Tax Returns that verified the business reported $0
in revenue, Guam did not provide any evidence to support the determination that
19
A W-9 is a U.S. Internal Revenue Service document utilized to obtain the tax identification
number of an individual or business entity and was utilized by Guam for eligibility verification
purposes.
10
Desk Review of the Government of Guam
this small business grant recipient was eligible for the grant payment. Without this
support, Castro was unable to verify that the interruption for this business
occurred due to the COVID-19 pandemic as opposed to other factors that were
present before the start of the pandemic. Castro questions $733 in grant payment
costs as ineligible due to the determination to pay a business that appeared non-
operational prior to the start of the pandemic.
Direct Payment Exception #2 – Advertising and Graphic Design Expenditures
Guam claimed expenditures for payments made to the Guam Waterworks
Authority, listed as a sub-recipient within the GrantSolutions portal. We tested
nine transactions totaling $95,567, and Castro questioned a total of $72,032 in
costs as unsupported, as detailed below.
For four out of the nine transactions tested totaling $8,390 related to the Guam
Waterworks Authority, Castro noted that the support provided included expenses
related to advertisements and graphic design, but did not contain any final
advertising and creative results needed to verify whether the advertisements
publicized the resumption of activities and steps taken to ensure a safe experience
due to the public health emergency as required by Treasury’s Guidance.
Castro reviewed invoices, which we agreed to the expenditure amounts claimed
within the GrantSolutions portal. However, without these final advertising results,
Castro could not verify whether the expenditures incurred were eligible and
related to the COVID-19 pandemic in accordance with Treasury’s Guidance. 20
Additionally, Guam did not provide their most recently approved budget as of
March 27, 2020; therefore, Castro could not verify whether these expenditures
were accounted for prior to the start of the COVID-19 pandemic. Castro questions
$8,390 as unsupported.
For one transaction tested totaling $35,761, also related to the Guam Waterworks
Authority, Guam claimed expenditures for personal protective equipment. Castro
requested Guam provide invoices for the items listed in the general ledger detail
to support the expenditures claimed. Guam did not provide the requested
documentation to sufficiently support the $35,761 claimed in the GrantSolutions
portal, therefore Castro questions this amount as unsupported.
20
Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf
Treasury FAQ #A.45 May recipients use Fund payments to remarket the recipient's convention
facilities and tourism industry? Yes, if the costs of such remarketing satisfy the requirements of the
CARES Act. Expenses incurred to publicize the resumption of activities and steps taken to ensure a
safe experience may be needed due to the public health emergency.
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Desk Review of the Government of Guam
For one transaction tested for $27,881 related to the Guam Waterworks Authority,
Guam claimed expenditures related to utility bills charged by the Guam
Waterworks Authority to other Guam departments for water and wastewater
services. These charges reflected inter-governmental charges for utilities between
government entities that were part of Guam’s prime recipient government. Castro
reviewed invoices paid on the utility statements provided and determined that the
total supported expenditure amount of $16,551 differed from the reported amount
of $27,881 claimed in the GrantSolutions portal, resulting in a variance of $11,330.
Castro requested additional documentation to support the total amount of $27,881
such as an agreement between Guam and the Guam Waterworks Authority.
Guam indicated that there was no agreement between the Government of Guam
and the Guam Waterworks Authority, and instead, that it was the discretion of the
Governor as to how to spend these funds and that Guam did not require an
agreement. Castro also requested documentation showing Guam’s rationale in
determining that these transactions were related to the COVID-19 pandemic in
accordance with Treasury’s Guidance, and Guam’s most recently approved
budget as of March 27, 2020. Guam did not provide the requested support,
therefore Castro questions the full transaction amount of $27,881 in utility
payments as unsupported.
Aggregate Reporting Less Than $50,000
We determined Guam’s Aggregate Reporting less than $50,000 did not comply
with the CARES Act and Treasury’s Guidance. We tested 10 transactions totaling
$2,144,877. The transactions tested included expenditures by Guam agencies to
absorb credit card fees for the purpose of encouraging its businesses to make
online tax payments during the pandemic; payroll expenses for Guam’s nursing
resources command and public health and safety payroll expenses; quarantine
safety payroll; non-congregate shelter relief units for social distance mandates
due to COVID-19; and grants awarded under Guam’s healthcare system
stabilization grant program. We identified unsupported questioned costs of
$2,092,378, as detailed below.
For two transactions tested totaling $2,040,859, Guam used CRF proceeds to
reimburse its departments for amounts paid in credit card fees. Guam encouraged
business taxpayers to make tax payments online instead of in person by waiving
the 3.4 percent credit card fees. Castro reviewed two journal vouchers (JV) and
found that these JV amounts agreed to the expenditure amounts claimed in the
GrantSolutions portal. Guam personnel did not provide a listing of waived online
taxpayer credit card fee payments or any underlying credit card or tax statements
showing detailed credit card fee tax charges that had been waived. Without this
information, Castro could not determine whether the credit card fee transactions
12
Desk Review of the Government of Guam
were incurred before or after the covered period that began on March 1, 2020 and
ended on December 31, 2021.
Castro met with Guam personnel and explained that we considered JVs alone to
be insufficient expenditure support, because it lacked individual transaction detail.
Guam management verbally confirmed that they would be able to provide both a
population of the underlying credit card fees absorbed by the Guam agencies and
disbursement support between Guam and the financial institution responsible for
charging these credit card fees to the Guam business taxpayers. Castro requested
a copy of the agreement between Guam and the financial institution detailing the
terms of this arrangement. Guam management did not provide any additional
support prior to the end of fieldwork. Therefore, Castro considered the
expenditures for the credit card fees to be unsupported, and questions $2,040,859.
In addition, Castro noted that the auditor in Guam’s fiscal year 2020 Single Audit
Act Report questioned $324,812 out of the $2,040,859 tested by Castro for the
same reasons Castro questioned the amount above. The finding also repeated in
Guam’s fiscal year 2021 Single Audit Act Report.
For four transactions tested totaling $14,236, Guam claimed payroll expenses for
non-public health and safety personnel from the Guam Department of Chamorro
Affairs, Guam Department of Parks and Recreation, Guam Election Commission,
and Guam’s Office of the Governor. Castro requested payroll documentation from
Guam to recalculate the overtime/hazard pay amounts, however adequate support
was not provided. Without this information, Castro could not determine whether
the work performed was necessary due to COVID-19, and if the amounts paid out
could be accurately re-calculated. Therefore, Castro questions the $14,236 in
expenditures as unsupported.
For one transaction tested for $37,283, Guam claimed expenditures for grants
awarded under Guam’s healthcare system stabilization grant program to provide
direct assistance to healthcare facility medical providers. This direct assistance
was designed to assist the entities in offsetting financial hardship they had
incurred as a result of the COVID-19 pandemic. Castro reviewed a JV summarizing
hardship and check payments made to individual grant recipients, which we
agreed to the expenditure amounts claimed within the GrantSolutions portal.
Guam did not provide documentation necessary to verify eligibility of these
payments against Guam's eligibility requirements, such as completed grant
applications and other documentation reviewed by Guam to confirm eligibility of
the grant applicant and of this expenditure. Therefore, Castro questions $37,283 in
costs as unsupported.
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Desk Review of the Government of Guam
Aggregate Payments to Individuals
CRF payments made to individuals, regardless of amount, were required to be
reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information. Castro notes that the Aggregate
Payments to Individuals payment type consisted of the below broad types of
potential costs, which we have defined from Treasury’s guidance as published in
the Federal Register.21 Prime recipients may or may not have claimed all of these
types of expenditures.
Public Health and Safety Payroll22 – consisted of payroll costs for public
health and safety department personnel.
Substantially Dedicated Payroll23 – consisted of payroll costs for non-
public health and safety personnel who were substantially dedicated to
mitigating or responding to the COVID-19 public health emergency.
Non-Substantially Dedicated Payroll24 – consisted of payroll costs for
personnel who performed COVID-19 related tasks on a part-time basis.
Non-Payroll Expenditures – consisted of financial assistance payments to
citizens due to hardship or loss of income, unemployment claims, and
other non-payroll related expenditures made to individuals.
21
Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf
22
Treasury’s Federal Register guidance provided the following examples of public health and
safety employees: “police officers (including state police officers), sheriffs and deputy sheriffs,
firefighters, emergency medical responders, correctional and detention officers, and those who
directly support such employees such as dispatchers and supervisory personnel…employees
involved in providing medical and other health services to patients and supervisory personnel,
including medical staff assigned to schools, prisons, and other such institutions, and other support
services essential for patient care (e.g., laboratory technicians) as well as employees of public
health departments directly engaged in matters related to public health and related supervisory
personnel.”
23
Substantially dedicated payroll costs meant that personnel must have dedicated over 50 percent
of their time to responding or mitigating COVID-19. Treasury’s Federal Register guidance
indicated: “The full amount of payroll and benefits expenses of substantially dedicated employees
may be covered using payments from the Fund. Treasury has not developed a precise definition of
what "substantially dedicated" means given that there is not a precise way to define this term
across different employment types. The relevant unit of government should maintain
documentation of the "substantially dedicated" conclusion with respect to its employees.”
24
Payroll costs that were not substantially dedicated were payroll costs that were not public health
and safety, and which were not substantially dedicated to performing COVID-19 related tasks.
Treasury’s Federal Register guidance defined more stringent tracking requirements for these types
of payroll costs. Specifically, Treasury’s Federal Register stated: “track time spent by employees
related to COVID-19 and apply Fund payments on that basis but would need to do so consistently
within the relevant agency or department. This means, for example, that a government could
cover payroll expenses allocated on an hourly basis to employees' time dedicated to mitigating or
responding to the COVID-19 public health emergency.”
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Desk Review of the Government of Guam
Guam’s Aggregate Payments to Individuals balance consisted of the following
types of claimed costs.
Aggregate Payments to Individuals Total Expenses
Category Types25 Claimed
Public Health and Safety Payroll $ 7,968,015
Substantially Dedicated Payroll $ 561,447
Non-Payroll Expenditures26 $ 15,352,869
Misclassifications: Hotel Quarantine Expenditures $ 37,344,656
Totals $ 61,226,987
Castro noted that public health and safety payroll transactions were subject to
Treasury’s administrative accommodation,27 and therefore, were subject to less
detailed documentation requirements. Castro tested public health and safety
payroll transactions by reviewing itemized payroll distribution reports to support
these balances. Substantially dedicated payroll balances were not subject to this
administrative accommodation, and therefore, Castro tested these transactions by
reviewing the prime recipient’s documentation of the "substantially dedicated"
conclusion with respect to its employees and payroll distribution files, and by
performing tests over specific employee timesheet submissions.
We determined Guam’s Aggregate Payments to Individuals did not comply with
the CARES Act and Treasury’s Guidance. We tested 15 transactions totaling
$4,400,956. The transactions tested included expenditures related to Guam’s
Disaster Relief program, public health and safety payroll transactions,
substantially dedicated payroll transactions, and hotel quarantine expenses
incurred by Guam. Castro tested all public health and safety payroll transactions
without exception; however, we identified unsupported expenditure questioned
costs of $1,747,359 within each of the remaining categories of Aggregate
Payments to Individuals provided within Guam’s GL detail. See summary of total
25
Guam did not report any non-substantially dedicated payroll within its Aggregate Payments to
Individuals payment type, and so these were not included within the Aggregate Payments to
Individuals Category Types.
26
Guam’s non-payroll expenditures consisted primarily of disaster relief hardship payments to
citizens.
27
Treasury’s Federal Register guidance indicated that an administrative accommodation was, “In
recognition of the particular importance of public health and public safety workers to State, local,
and tribal government responses to the public health emergency, Treasury has provided, as an
administrative accommodation, that a State, local, or tribal government may presume that public
health and public safety employees meet the substantially dedicated test…This means that, if this
presumption applies, work performed by such employees is considered to be a substantially
different use than accounted for in the most recently approved budget as of March 27, 2020. All
costs of such employees may be covered using payments from the Fund for services provided
during the period that begins on March 1, 2020, and ends on December 31, 2021.”
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Desk Review of the Government of Guam
tested values per GL detail, total questioned costs, and amounts reviewed without
exception within the table below.
Cumulative Total Amount
Aggregate Payments to Individuals Tested Unsupported Reviewed
Exceptions by Category Type Expenditure Questioned Without
Amount Costs Exception
Public Health & Safety Payroll $ 2,402,304 $ - $ 2,402,304
Substantially Dedicated Payroll $ 47,636 $ 4,534 $ 43,102
Non-Payroll Expenditures: Disaster Relief
Programs $ 3,300 $ 3,300 $ -
Misclassifications: Expenditures: Hotel
Quarantine Expenditures $ 1,947,716 $ 1,739,525 $ 208,191
Totals $ 4,400,956 $ 1,747,359 $ 2,653,597
Hotel Quarantining Expenditures Incurred
Background
Castro tested transactions totaling $1,947,716, for the procurement of rooms at
five different hotels to provide a safe place for people to quarantine during the
COVID-19 pandemic. Castro noted that in Guam’s fiscal year 2020 and 2021 Single
Audit Act reports, the auditor also tested CRF hotel quarantining expenditures
stating that, "there were no Guam monitoring efforts and analytics to more
accurately project the required number of room reservations and to minimize
costs for unoccupied rooms as experience with the pandemic progressed." Castro
requested a vacancy analysis from Guam to determine the extent of any
monitoring efforts that Guam may have performed over these hotel transaction
balances; however, Guam personnel indicated that they did not perform a room
vacancy analysis over any of these hotel transaction balances. For the below
transactions tested, Castro noted that we weren’t provided the overall timeframe
that Guam reserved these hotels, the purchase orders provided did not contain
information about any hotel specific COVID-19 requirements for reserving the
rooms, or sufficient explanations for why some hotels had a very high or 100%
vacancy rate. As a result, Castro noted that Guam did not provide enough
information to determine whether the hotel expenses claimed were reasonable.
Guam management stated that there were COVID-19 specific hotel requirements
such as reserving blocks of hotel rooms to prevent cross-contamination, but we
did not receive documentation to corroborate these responses. Without this
information, we couldn’t make a determination on the reasonableness of these
expenses.
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Desk Review of the Government of Guam
Hotel Quarantining Testing Results
Castro reviewed invoices for the four hotel transaction selections, which we were
able to agree to expenditures claimed in the GrantSolutions portal. Castro
reviewed the occupied and vacant hotel rooms on the invoices provided and
noted that the vacancy percentages for each of these hotel rooms appeared to be
unreasonably high, and we have included detailed calculations within the table
below. Castro questions the full transaction selection amounts tested of $337,714
as unsupported because Guam did not provide sufficient documentation for us to
make a determination whether these expenses were reasonable. See detailed
calculations within the table below:
Hotel Vacancy Calculations
A B C
D = (B/C)
Hotel Occupied Vacant Total
% Vacancy
Rooms Rooms Rooms
Hotel A 92 718 810 89%
Hotel A 150 300 450 67%
Hotel A 100 710 810 88%
Hotel B 117 332 449 74%
For two of the hotel transaction selections where Guam reserved rooms for
quarantine at one hotel totaling $164,450, Castro reviewed hotel invoices, which
we were able to agree to expenditures claimed in the GrantSolutions portal.
Castro reviewed the occupied and vacant hotel rooms on the invoices provided
and noted that the vacancy percentages for these two hotel expenditure claims
were 100 percent and 42 percent, as detailed within the table below.
Hotel Vacancy Calculations
A B C
D = (B/C)
Hotel Occupied Vacant Total
% Vacancy
Rooms Rooms Rooms
Hotel C 0 1,152 1,152 100%
Hotel C 1,934 1,378 3,312 42%
This resulted in what appeared to be an unusually high vacancy rate. Additionally,
Guam provided only two out of four of the related invoices for these hotel
transactions. With only two out of four data points, Castro could not perform a full
vacancy analysis assessment. Guam personnel indicated that they did not
perform a vacancy analysis over any of these hotel transaction balances and that
the hotels required a certain number of rooms to be reserved to prevent cross
contamination. Castro questions the full transaction tested selection amounts of
$164,450 as unsupported, because we did not receive sufficient responses to
determine if the costs were reasonable.
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Desk Review of the Government of Guam
For three hotel transaction selections totaling $1,001,800 where Guam reserved
rooms for quarantine at two hotels, Castro reviewed invoices, which we were able
to agree to expenditures claimed in the GrantSolutions portal. However, the
invoices provided did not include sufficient details over the occupied and vacant
rooms for Castro to determine the vacancy rate of the rooms. Castro requested a
vacancy analysis from Guam to determine the extent of any monitoring efforts
that Guam may have performed over these hotel transaction balances; however,
Guam personnel indicated that they did not perform a vacancy analysis over any
of these hotel transaction balances or provide evidence of hotel requirements to
reserve blocks of rooms to prevent cross contamination. Castro questions
$1,001,800 as unsupported because we did not receive sufficient responses to
determine if the costs were reasonable.
For one hotel transaction selection from Guam’s general ledger detail totaling
$235,561 Guam reserved rooms for quarantine at a hotel and did not provide any
documentation to support the expenditures claimed within the GrantSolutions
portal. Castro questions $235,561 in expenditures as unsupported.
Other Matter for Treasury OIG Consideration – Additional Potential Unsupported
Hotel Quarantining Transaction Costs
Castro identified $37,344,657 in total hotel quarantining transactions; of this
balance, we tested $1,947,716 in hotel expenses, with a remaining $35,396,941 in
hotel expenses that we identified but which we did not subject to testing. We
recommend Treasury OIG determine if the hotel transaction exceptions identified
were an isolated instance or if this represented a systemic issue across other hotel
payments claimed by Guam.
Non-Payroll Expenditures Incurred (Disaster Relief Hardships)
Castro tested non-payroll expenditures totaling $3,300 where Guam issued
disaster relief hardship payments to its citizens. For all disaster relief hardship
transactions tested, Castro reviewed a JV summarizing hardship and check
payments made to individual disaster relief hardship recipients, which we agreed
to the expenditure amounts claimed within the GrantSolutions portal. Guam
indicated that disaster relief hardship recipients were not required to complete a
hardship application, and that Guam personnel automatically awarded hardship
payments to individuals who were receiving welfare assistance. To verify
eligibility of these payments against Guam's eligibility requirements, Castro
requested evidence that these disaster relief hardship recipients were receiving
welfare. Guam provided an Executive Order detailing the eligibility requirements
to receive the disaster/hardship payments, including:
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Desk Review of the Government of Guam
x Identifying victims of the disaster who shall be defined as those households
whose gross monthly income was equal to or less than 165 percent of the
federal poverty level.
x Ensured that every eligible household shall receive an amount equal to
$300 per eligible person not to exceed $1,200.
x Provided a system of reporting, to include auditable certification, to ensure
accountability.
x Allowed for application by victims until May 15, 2020.
Guam did not provide any additional evidence that these disaster relief hardship
recipients were receiving welfare. Without this support, Castro was unable to
verify the eligibility of the recipients. Castro questions $3,300 in disaster relief
hardship payments costs as unsupported.
Other Matter for Treasury OIG Consideration – Additional Potential Unsupported
Non-Payroll CRF Disaster Relief Program Costs
Castro identified 22,582 transactions totaling $16,094,100 in CRF disaster relief
program payments claimed by Guam; out of this balance, we tested $3,300 in
disaster relief hardship payments. We recommend Treasury OIG determine if the
remaining $16,090,800 in disaster relief payments that we did not subject to
testing are also unsupported.
Payroll Expenditures Incurred
Castro tested five substantially dedicated payroll transactions totaling $3,664 for
employees who worked within the Guam Department of Revenue and Taxation.
Castro reviewed timesheets, which we were able to agree to the claimed amounts.
However, Guam did not provide documentation of the substantially dedicated
conclusion with respect to its employees,28 any timesheet comments, activity logs
or any documentation to verify that the work performed was substantially
dedicated to performing COVID-19 related tasks. As Guam did not provide
sufficient evidence to support these tasks as relating to COVID-19, Castro
questions $3,664 as unsupported.
28
Treasury’s Federal Register guidance indicated: “The full amount of payroll and benefits
expenses of substantially dedicated employees may be covered using payments from the Fund.
Treasury has not developed a precise definition of what "substantially dedicated" means given that
there is not a precise way to define this term across different employment types. The relevant unit
of government should maintain documentation of the "substantially dedicated" conclusion with
respect to its employees.”
19
Desk Review of the Government of Guam
For one substantially dedicated payroll transaction tested, totaling $5,946, the
transaction was for an employee who worked in Guam’s Office of the Governor,
Castro reviewed timesheets and recalculated overtime costs by multiplying the
hourly rate by 1.5 (to represent overtime pay rate) and then multiplying overtime
hours claimed. Castro’s recalculated overtime costs did not agree to the amounts
claimed in the GrantSolutions portal and Guam did not provide sufficient
documentation to support the claimed amounts. Guam claimed $5,946, but only
provided support for $5,077. Castro questions the remaining $870 as unsupported.
Conclusion
We determined that the expenditures related to the Direct Payments greater than
or equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types did not comply with the CARES Act and
Treasury’s Guidance.
We identified unsupported and ineligible questioned costs of $3,961,769 and $733
respectively, with total questioned costs across all payment types of $3,962,502.
Also, we identified GrantSolutions portal reporting misclassifications related to
the Direct Payments greater than or equal to $50,000, Aggregate Reporting less
than $50,000, and Aggregate Payments to Individuals payment types, which we
considered to be noncompliant with Treasury’s Guidance.
Additionally, Guam’s risk of unallowable use of funds is high. As a result of this
desk review, we recommend Treasury OIG:
Confirm if the transactions noted as unsupported or ineligible
expenditures within the Direct Payments greater than or equal to
$50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types can be supported. If support is
not provided, Treasury OIG should recoup the funds or request that
Guam management provide support for replacement expenses, not
previously charged, that were eligible during the CRF period of
performance. Further, based on Guam’s responsiveness to Treasury
OIG’s requests and its ability to provide sufficient documentation and/or
replace unsupported and ineligible transactions charged to the CRF with
valid expenditures, we recommend Treasury OIG determine the
feasibility of conducting an audit for the Direct Payments greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals payment types.
At the time of fieldwork, Castro noted that Guam had findings in their
Single Audit reports for fiscal years 2020 and 2021. Castro recommends
that Treasury OIG follow-up with Treasury’s Office of Capital Access to
20
Desk Review of the Government of Guam
ensure that management decision letters are issued on the findings
identified by the auditor in the Single Audit report, which we have
summarized below.
o Guam’s fiscal year 2020 Single Audit report was published on
May 29, 2021. In this Single Audit report, the auditor identified
$399,830 in CRF related questioned costs.
o Guam’s fiscal year 2021 Single Audit report was published on
July 13, 2022. In this Single Audit report, the auditor identified
$732,791 in unsupported CRF related questioned costs.
We recommend Treasury OIG follow-up with Guam to obtain a copy of
its fiscal year 2022 Single Audit report as this was not available to Castro
at the time of our desk review planning procedures.
Castro also identified other matters throughout the course of our desk review,
which warrant recommendations to Treasury OIG for additional action. Castro
recommends Treasury OIG:
Determine the feasibility of performing additional testing to verify if
unsupported disaster relief payment errors identified were an isolated
instance or if this represented a systemic issue across other disaster
relief payments claimed by Guam.
Determine the feasibility of performing additional testing on the
unsupported hotel quarantining transactions to determine eligibility and
reasonableness.
21
Desk Review of the Government of Guam
*****
All work completed with this letter complies with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Federal Offices of
Inspectors General, which require that the work adheres to the professional
standards of independence, due professional care, and quality assurance to
ensure the accuracy of the information presented.29 We appreciate the courtesies
and cooperation provided to our staff during the desk review.
Sincerely,
Wayne Ference
Partner, Castro & Company, LLC
29
https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf
22