Government of GuamState Government

Finding No.: 2024-010 Federal Agencies: U.S. Department of Agriculture U.S. Department of the Interior AL Programs: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children 15.875 Economic, Social, and Political Development of the Territories Area: Cash Management Questioned Costs: $ Undeterminable Criteria: 2 CFR 200.305 states that payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR 205. Subpart A of regulations at 31 CFR Part 205 requires state recipients to enter into Treasury-State Agreements (TSA) that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing that meet the funding threshold for a major federal assistance program under the CMIA. TSA also specify the terms and conditions under which an interest liability would be incurred. Programs not covered by a TSA are subject to procedures prescribed by U.S. Department of the Treasury in Subpart B of 31 CFR Part 205, which at 31 CFR section 205.33(a) include the requirement for a state to minimize the time between the drawdown of federal funds and their disbursement for federal program purposes. GovGuam entered into TSA effective October 1, 2023 through September 30, 2024. The funding technique indicated in the TSA Section 6.3.2 for the program is Payment Schedule – Weekly, wherein, GovGuam shall request funds such that they are deposited in a State account on the median business day of the week. The request shall be made in accordance with the appropriate Federal agency cut-off time. The amount of the request shall be a prorated share of the lesser of (1) the annual grant divided by 52, or (2) the total amount of Federal funds expected to be paid out for program purposes during the year divided by 52. This funding technique is interest neutral. Condition: For nine (or 100%) of nine items tested under ALN 10.557 and for eight (or 100%) of eight items tested under ALN 15.875, the Department of Administration (DOA) drew funds in a manner that was inconsistent with the funding technique indicated in TSA. Specifically, DOA requested funds after expenditures have been incurred or on “as needed” basis.   Finding No.: 2024-010, continued Federal Agencies: U.S. Department of Agriculture U.S. Department of the Interior AL Programs: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children 15.875 Economic, Social, and Political Development of the Territories Area: Cash Management Questioned Costs: $ Undeterminable Cause: DOA did not enforce compliance with the requirements of the TSA due to inefficiencies caused by data migration during the year. Effect: GovGuam is in noncompliance with the applicable cash management requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: DOA should implement monitoring over compliance with the cash management requirements and enforce compliance with the TSA. Views of Responsible Officials: The Federal and Compliance section will establish a Standard Operating Procedure for draw downs. As well as, conducting drawdowns daily to minimize the time between the drawdowns of federal funds and the disbursement for federal program purposes.

Finding No.: 2024-011 Federal Agency: U.S. Department of Agriculture AL Program: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children Area: Period of Performance Questioned Costs: $217,035 Criteria: In accordance with applicable period of performance (POP) requirements, a State may only charge allowable costs incurred during a federal award’s period of performance as specified in the terms and conditions of the federal award or in the approved extension. Conditions: Of fifty-five items, aggregating $1,471,726 of $4,046,837 of expenditures subjected to period of performance test, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item #s 1 through 10, compliance with period of performance could not be determined as supporting documents (e.g., invoices, receipts, or time logs, check payment, etc.) were not made available for examination. For item #s 11 through 17, compliance whether liquidation of the obligation occurs within the allowable time period could not be determined as supporting documents such as canceled check or payment document was not made available for examination. Finding No.: 2024-011, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children Area: Period of Performance Questioned Costs: $217,035 Cause: The Department of Public Health and Social Services (DPHSS) did not provide supporting documentation to ensure compliance with period of performance requirements. The Department of Administration (DOA) additionally had limited staffing and resources during the review period that may have hindered their ability to obtain and compile documentation from DPHSS, resulting in incomplete submissions. Effect: GovGuam is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $217,035 based on the items identified in Conditions above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable period of performance requirements, specifically, ensuring all supporting documentation is on file. Views of Responsible Officials: The DPHSS WIC Program disagrees with the findings. All supporting documents related to the findings were provided promptly on March 3,2026 when request was received on February 26,2026. In accordance with WIC FY 2024 Closeout Guidance and the requirements under 2 CFR 200.344, the WIC Program is allowed 90 days after the end of the period of performance to submit all final financial reports, as well as 90 days to liquidate all obligations incurred during the period of performance. For FY 2024, the closeout timeline required that all obligations be liquidated no later than January 31, 2025. The program adhered to these federal requirements. All obligations were liquidated prior to the close of the fiscal year grant, and obligations were reported in the fiscal year in which they occurred, consistent with 7 CFR 246.17. Furthermore, the final closeout report was submitted within 120 days after the end of the fiscal year, fully complying with WIC closeout procedures. Based on the timely submission of all supporting documentation and adherence to federal closeout regulations, the DPHSS WIC Program maintains that the questioned costs were appropriately obligated, liquidated, and reported. Finding No.: 2024-011, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children Area: Period of Performance Questioned Costs: $217,035 Auditor’s Response: Our finding remains. Documents subsequently received by auditors on February 10, 2026 from the Department of Administration (DOA) are insufficient or incomplete to substantiate compliance with period of performance. There are no subsequent submissions or other documentations received to resolve remaining findings cited in the conditions above.

Finding No.: 2024-012 Federal Agency: U.S. Department of Agriculture AL Program: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children Area: Procurement and Suspension and Debarment Questioned Costs: $1,433 Criteria: 2 CFR 200.302 states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Moreover, the recipient’s and subrecipient’s financial management system must provide for maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. Conditions: 1. For 2 (or 50%) of four items, aggregating $4,618 of $223,728 expenditures subjected to procurement and suspension and debarment test, no procurement file was provided to substantiate whether the Department of Administration (DOA) complied with applicable procurement requirements for the following: See the Notes to the SEFA for chart/table. 2. Seven initially tested samples were later determined to be procured in prior years and are not procurements during fiscal year 2024. Consequently, remaining samples tested were insufficient to satisfy the minimum number of items to test.   Finding No.: 2024-012, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children Area: Procurement and Suspension and Debarment Questioned Costs: $1,433 Cause: DOA’s new financial management system implemented during the fiscal year has no capability to generate a report of all expenditures procured during the fiscal year and expenditure information from the old financial management system are not completely evident from the migrated expenditure information in the new financial management system, hence, there was difficulty in establishing population that will be subjected to procurement and suspension and debarment test. As there was no efficient alternative way of identifying whether or not costs charged to the program were procured during the fiscal year, and due to the timing of the audit and lack of staffing resources, DOA was unable to provide the procurement files of selected transactions by the agreed audit timeline. Effect: GovGuam is in noncompliance with applicable procurement and suspension and debarment requirements. The reportable questioned cost is $1,433 based on the items identified in Condition #1 above. Recommendation: DOA management should ensure that financial management system in place permits the preparation of reports of all expenditures procured during the fiscal year. Responsible personnel should ensure that documentation is adequate to comply with the applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. Views of Responsible Officials: GSA will continue to verify vendor eligibility through SAM.gov prior to contract award. Documentation of the verification will be retained in the procurement file for each transaction. GSA has revised IFB templates to include the required debarment and suspension certification language in accordance with 2 CFR 200.214. Effective immediately, all new contracts will include this clause prior to execution. For local vendors that may not appear in federal systems, GSA will require a debarment and suspension certification as part of the contracting process and maintain this documentation within the procurement record.

Finding No.: 2024-013 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Allowable Costs/Cost Principles Area: Procurement and Suspension and Debarment Questioned Costs: $4,594,214 Criteria: 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. 2 CFR 200.439(b) states that: (1) Capital expenditures for general purpose equipment, buildings, and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity. (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $10,000 or more have the prior written approval of the Federal agency or pass-through entity. (3) Capital expenditures for improvements to land, buildings, or equipment that materially increase their value or useful life are allowable as a direct cost, but only with the prior written approval of the Federal agency or pass-through entity. 2 CFR 180.300 requires entities entering into a covered transaction with another person at the next lower tier to verify that the person with whom they intend to do business is not excluded or disqualified. Such verification can be made by (a) checking SAM.gov Exclusions, or (b) collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. 2 CFR 180.220 (b) (1) states that a contract for goods and services is a covered transaction if the contract is awarded by a participant in a nonprocurement transaction covered under 2 CFR 180.210, and the contract amount is expected to equal or exceed $25,000.   Finding No.: 2024-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Allowable Costs/Cost Principles Area: Procurement and Suspension and Debarment Questioned Costs: $4,594,214 Criteria, continued: 2 CFR 200.302 states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Moreover, the recipient’s and subrecipient’s financial management system must provide for maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. Conditions: 1. For four (or 11%) of thirty-eight items, aggregating $7,792,207 of $11,505,805 in total non-payroll expenditures subjected to allowable costs/cost principles compliance test, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item #s 1 through 4, there is no Authorization to Proceed (ATP) document on file to support that expense was approved prior to being incurred.   Finding No.: 2024-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Allowable Costs/Cost Principles Area: Procurement and Suspension and Debarment Questioned Costs: $4,594,214 Conditions, continued: 2. For seven (or 88%) of eight items, aggregating $4,061,890 of $4,681,768 of expenditures subjected to procurement and suspension and debarment compliance test, we noted the following: See the Notes to the SEFA for chart/table. For item #s 1 through 3, the General Services Agency (GSA) represented that it performed verification of suspension or debarment from SAM.gov. However, no formal documentation is kept on file to demonstrate compliance at the time of procurement. For item #s 4 through 7, no procurement file was provided to substantiate whether the Department of Administration (DOA) complied with applicable procurement and suspension and debarment requirements. 3. Schedule of Expenditures of Federal Awards (SEFA) was revised subsequently after expenditures were initially determined and tested for suspension and debarment. Based on the revised SEFA, the number of items tested were insufficient to satisfy the minimum required number of items to test. Cause: The Department of Administration (DOA) did not obtain ATP documentation from federal grantor agency as they represented that it is not required since the requirement to obtain such is not explicitly indicated in the grant award.   Finding No.: 2024-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Allowable Costs/Cost Principles Area: Procurement and Suspension and Debarment Questioned Costs: $4,594,214 Cause, continued: DOA’s new financial management system implemented during the fiscal year has no capability to generate a report of all expenditures procured during the fiscal year and expenditure information from the old financial management system are not completely evident from the migrated expenditure information in the new financial management system, hence, there was difficulty in establishing population that will be subjected to procurement and suspension and debarment test. As there was no efficient alternative way of identifying whether or not costs charged to the program were procured during the fiscal year, and due to the timing of the audit and lack of staffing resources, DOA was unable to provide the procurement files of selected transactions by the agreed audit timeline. This limitation resulted to repeated replacement of sample selections to meet the minimum sample size required for testing. DOA also does not have a formal policy requiring documentation of procedures performed to verify that the person in a covered transaction with whom they intend to do business is not excluded or disqualified. Effect: GovGuam is in noncompliance with applicable allowable costs/cost principles and procurement and suspension and debarment requirements. The reportable questioned cost related to allowable costs/cost principles requirements based on the items identified in Condition #1 above is $3,850,177. The reportable questioned cost related to procurement and suspension and debarment requirements based on the items identified in Condition #2 above is $4,054,514. Only $4,594,214 total questioned cost is reported at this finding as $3,310,477 is reported and included in both Condition #s 1 and 2 above. Identification as a Repeat Finding: 2023-012 Recommendation: DOA management should obtain clarification from federal grantor agency regarding ATP requirement and/or exemption of capital expenditures of the program.   Finding No.: 2024-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Allowable Costs/Cost Principles Area: Procurement and Suspension and Debarment Questioned Costs: $4,594,214 Recommendation, continued: DOA management should ensure that financial management system in place permits the preparation of report of all expenditures procured during the fiscal year. Responsible personnel should ensure that documentation is adequate to comply with the applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. DOA management should establish formal policy requiring retaining documentation of procedures performed to verify that the person in a covered transaction with whom they intend to do business is not excluded or disqualified. Views of Responsible Officials: Agency disagrees with 2 out of the 3 findings. • Condition 1 regarding the Authorization To Proceed (ATP), as per the Grant and Cooperative Agreement and the Grant Terms and Conditions, it did not state that an ATP is required to begin work on the grant for D20AP00048 and D21AP10145.The Government complies with ATP requirements for grants which mandate such compliance. If the grant is silent, no ATP is required.. • Condition 2 GSA will continue to verify vendor eligibility through SAM.gov prior to contract award. Documentation of the verification will be retained in the procurement file for each transaction. • Condition 3 The necessary controls will be strengthened when the updated Federal Grant module is fully implemented. Auditor’s Response: Our finding remains. Although no ATP may be required, the selected samples did not demonstrate compliance related to obtaining the required written pre-approval as mentioned in the criteria above.

Finding No.: 2024-014 Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. 2 CFR 200.313(d) states that regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO.  Finding No.: 2024-014, continued Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Conditions: 1. Bureau of Budget and Management Research (BBMR) lacks adequate internal policies and procedures over compliance with the applicable federal property rules and regulations. 2. BBMR’s capital asset records do not meet the criteria above and lacks certain information such as: a. Serial number or asset tag number b. Funding source, including the FAIN c. Title holder d. Percentage of Federal participation in the project costs for the Federal award under which the property was acquired e. Location f. Use and condition g. Date of disposal, if any h. Sale price of the property 3. BBMR’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2024, the required biannual physical inventory and reconciliation were not performed. 4. As capital asset records are not effectively maintained, it does not appear that BBMR has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. We are unable to assess the overall cumulative monetary value of these deficiencies. However, the table below summarizes total capital outlays over the past five years. See the Notes to the SEFA for chart/table.   Finding No.: 2024-014, continued Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. BBMR requires additional funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-011 Recommendation: BBMR should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system that will help automate the tracking and reporting of Capital assets, is near completion with final testing in progress. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. Review of Assets acquired in FY2024 was completed, with FY2025 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.

Finding No.: 2024-015 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Reporting Questioned Costs: $0 Criteria: 2 CFR 200.302(a) states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 300.302(b) states that recipient’s financial management system must provide for the following: 1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in 2 CFR 200.328 and 200.329. 3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 2 CFR 200.328(c) states that recipient must submit financial reports as required by the Federal award. Condition: Bureau of Budget and Management Research (BBMR) was unable to provide a complete listing of financial reports required to be submitted for each of grant awards effective during the fiscal year.   Finding No.: 2024-015, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Reporting Questioned Costs: $0 Cause: BBMR did not maintain an internal monitoring of financial reports required to be submitted for each of grant awards effective during the fiscal year and did not ensure compliance with applicable reporting requirements. Effect: We are unable to determine compliance with applicable reporting requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-013 Recommendation: BBMR management should enforce monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain a monitoring of financial reports required to be submitted for each of grant awards effective during the fiscal year. Views of Responsible Officials: BBMR will work with DOA to keep soft copies of submitted and approved Federal Financial Reports (FFR) on hand.

Finding No.: 2024-016 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Subrecipient Monitoring Questioned Costs: $ Undeterminable Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity (PTE) must: a) Identify the Award and Applicable Requirements – Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)). b) Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). c) Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). Condition: Schedule of subrecipients were received past the deadline, and copies of related subaward documents including the terms and conditions of the subawards were not provided during the audit. Total amount passed through to subrecipients during the fiscal year is $713,822.   Finding No.: 2024-016, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Subrecipient Monitoring Questioned Costs: $ Undeterminable Cause: Bureau of Budget and Management Research (BBMR) management did not respond to audit requests in a timely manner. Effect: We are unable to verify compliance with the requirements for subrecipient monitoring. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: BBMR management should establish internal policies and procedures over timely response to audit-related matters. Views of Responsible Officials: BBMR will create Standard Operating Procedures as well as a checklist, to assist in the monitoring of subrecipient compliance.

Finding No.: 2024-017 Federal Agency: U.S. Department of Labor AL Program: 17.277 Workforce Investment Act (WIA) National Emergency Grants Federal Award No: 23A60DW000007 Area: Eligibility Questioned Costs: $23,715 Criteria: Section 189(h) of the Workforce Innovation and Opportunity Act (WIOA) requires individuals receiving any assistance or benefit under WIOA, that they not violate section 3 of the Military Selective Service Act (50U.S.C. app. 451) by not presenting and submitting to registration as required in (686.420) and TEGL 11-11, Chg. 2. Condition: For one (or 3%) of forty items, aggregating $784,344 of $4,820,337 in total participant benefits, no supporting document was provided to substantiate that the participant (employee # 62966) was compliant with WIOA Section 189(h) and was registered on the Selective Service System. Cause: Department of Labor (DOL) did not have adequate procedures to ensure that the participant was registered under the Selective Service System as required for men who were born on or after January 1, 1960 (i.e. 30 days before or 30 days after their birthday.) Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $23,715 based on the item identified in Condition above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable eligibility requirements, specifically, retaining sufficient documentation to support eligibility determination. Views of Responsible Officials: In June 2024, GDOL established a policy workgroup to modernize internal procedures. Consequently, the AJC-024-Selective Service Registration policy was updated and formally approved on August 12, 2024. This updated guidance was distributed to all American Job Center (AJC) staff and case managers on August 15, 2024, to ensure future consistency in documentation and eligibility overrides.

Finding No.: 2024-018 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Eligibility Questioned Costs: $20,769 Criteria: Pursuant to section 501(k)(3)(B) of Division N of the Consolidated Appropriations Act, 2021, and 2 CFR 200.403, when providing ERA1 assistance, the grantee must review the household’s income and sources of assistance to confirm that the ERA1 assistance does not duplicate any other assistance, including federal, state, or local assistance provided for the same costs. Per Emergency Rental Assistance Frequently Asked Questions Revised July 27, 2022, in all cases, grantees must document their policies and procedures for determining household eligibility to include policies and procedures for determining the prioritization of households in compliance with the statute and maintain records of their determinations. Condition: For twelve (or 30%) of forty participants tested, aggregating $53,639 of $7,141,800 in total participant benefits, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item #s 1 through 2, no documentation was on file to support eligibility determination. For item #s 3 through 10, no documentation (e.g. check stubs and/or 1040 forms) was on file to support whether the participant met the income eligibility requirement. Furthermore, for items #s 3 through 8, documentation that determines the eligibility period (e.g. Approved Financial Assistance Form or Continuance of Assistance Approval Form) was not on file.   Finding No.: 2024-018, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Eligibility Questioned Costs: $20,769 Condition, continued: For item # 11, supporting documentation on file to support whether all members in the household of the participant met the citizenship requirement (e.g. government issued identification card) was incomplete. For item # 12, inconsistent information was identified in the supporting documents such as the date of birth and familial relationships. Cause: The Department of Administration (DOA) could not locate records while physical files are currently being scanned and saved electronically due to the closure of the program. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $20,769 based on the items identified in Condition above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable eligibility requirements, specifically, retaining sufficient documentation to support eligibility determination. Views of Responsible Officials: The Agency is reviewing the management of Federal Grants to ensure robust handover and succession plans are in place for future programs. The sudden passing of the ERA Program Coordinator directly impacted overall management of the program.

Finding No.: 2024-019 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with applicable matching, level of effort, earmarking requirements, under Emergency Rental Assistance (ERA) 1, a grantee may use up to 10 percent of the total award amount for direct and indirect administrative costs. Under ERA 2, a grantee may use up to 15% percent of the total award amount for direct and indirect administrative costs and 10 percent of the total award amount for housing stability purposes. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The Department of Administration (DOA) was unable to demonstrate and provide evidence of compliance with the applicable earmarking requirement due to closure of the program during the fiscal year and expiration of employment contract of personnel responsible for compliance. Cause: DOA lacks established internal control policies and procedures relating to proper turn-over of documents. Remaining DOA personnel managing the program did not have access to internal files of the Program Coordinator whose employment contract expired. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance.   Finding No.: 2024-019, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Recommendation: DOA management should establish internal control policies and procedures relating to turnover of documents to ensure that all required and supporting documentation are properly maintained and retained for purposes of demonstrating compliance over applicable matching, level of effort, and earmarking requirements. Views of Responsible Officials: The Agency is reviewing the management of Federal Grants to ensure robust handover and succession plans are in place for future programs. The sudden passing of the ERA Program Coordinator directly impacted overall management of the program.

Finding No.: 2024-020 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, GovGuam is required to submit quarterly performance report, specifically, ERA Compliance Report (PRA 1505-0270 (ERA 2)). 2 CFR 200.329(a) states that recipient is responsible for the oversight of the Federal award. The recipient must monitor its activities under Federal awards to ensure it is compliant with all requirements and meeting performance expectations. Monitoring by the recipient must cover each program, function, or activity. 2 CFR 329(c)(1) states that recipient must submit performance reports as required by the Federal award. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Grant award terms and conditions state that records shall be maintained by recipient for a period of five years after the period of performance. Condition: For four (or 100%) of four reports tested, records that accumulate and summarize reported data/ key line items such as 1) Administrative Costs Ratio; and 2) Housing Stability Services Ratio were not provided for the following: See the Notes to the SEFA for chart/table. Cause: The Department of Administration (DOA) lacks established internal control policies and procedures relating to proper turn-over of documents. DOA was unable to provide sufficient supporting records to substantiate the reported data/ key line items due to closure of the program during the fiscal year and expiration of employment contract of personnel responsible for compliance with reporting requirements. Additionally, DOA did not maintain records for a period of five years after the period of performance.  Finding No.: 2024-020, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Reporting Questioned Costs: $0 Effect: We are unable to verify accuracy of reported data/ key line items. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-014 Recommendation: DOA management should establish internal control policies and procedures over retention of grant-related documents after period of performance for a period specified by the grant terms and conditions. Views of Responsible Officials: The Agency disagrees with this finding. Please refer to a letter dated March 31, 2026, regarding Reports on Compliance September 30, 2024. Auditor’s Response: Our finding remains because we were unable to determine compliance with applicable requirements.

Finding No.: 2024-021 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $7,874 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Conditions: 1. For one (or 3%) of twenty-nine items, aggregating $24,864 of $554,280 in total non-payroll expenditures, vendor invoice was not on file: See the Notes to the SEFA for chart/table. 2. For six (or 55%) of eleven items, aggregating $11,179 of $200,650 in total payroll expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item #s 1 through 4, there were no supporting documents (e.g. timesheet, payroll register, personnel action file) on file to substantiate whether such expenditures were allowable cost of the underlying grant.   Finding No.: 2024-021, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $7,874 Conditions, continued: For item # 5, there was no labor cost distribution report on file to substantiate whether such expenditure was allowable costs of the underlying grant. For item # 6, payroll register was not on file. Cause: The Department of Administration (DOA) did not enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: GovGuam is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $7,874 based on the items identified in Conditions above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Responsible Officials: The Agency disagrees with this finding. Please refer to a letter dated March 31, 2026, regarding Reports on Compliance September 30, 2024. Auditor’s Response: Our finding remains because we were unable to determine compliance with applicable requirements.

Finding No.: 2024-022 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Eligibility Questioned Costs: $2,142 Criteria: In accordance with U.S. Department of the Treasury Homeowner Assistance Fund (HAF): Guidance on Participant Compliance and Reporting Responsibilities dated May 9, 2022, HAF participants are responsible for ensuring funds are used for eligible purposes. Generally, HAF participants must develop and implement policies and procedures, and record retention, to determine and monitor implementation of criteria for determining the eligibility of beneficiaries. HAF participants will need to maintain procedures for obtaining information evidencing a given beneficiary’s eligibility. Condition: For five (or 13%) of forty participants tested, aggregating $23,372 of $547,076 in total participant benefits, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item #s 1 and 3, vendor invoices were addressed to an individual different from the participant and there were no additional support to verify the relationship between the participant and the invoice addressee. For item # 2, no documentation was on file to support eligibility determination. For item # 4, documentation that determines the eligibility period (e.g., Approved Continuation of Financial Assistance Request Form) was not on file. For item # 5, documentation of participant’s identification (e.g., government-issued identification), documentation to support whether the participant met the income eligibility requirement (e.g., paystubs, W2s or other wage statements), and documentation that determines the eligibility period (e.g., Approved Continuation of Financial Assistance Request Form) were not on file.   Finding No.: 2024-022, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Eligibility Questioned Costs: $2,142 Cause: The Department of Administration (DOA) could not locate records while physical files are currently being scanned and saved electronically due to the closure of the program. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $2,142 based on the items identified in Condition above. Identification as a Repeat Finding: 2023-015 Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable eligibility requirements, specifically, retaining sufficient documentation to support eligibility determination. Views of Responsible Officials: The Agency is reviewing its federal grants management to ensure robust handover and succession plans are in place of future programs.

Finding No.: 2024-023 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with applicable matching, level of effort, earmarking requirements, GovGuam is subject to the following earmarking requirements: a) Counseling or educational efforts by housing counseling agencies approved by Housing and Urban Development (HUD), tribal government (including such efforts by in-house housing counselors who are HUD certified or tribally approved), or legal services, targeted to households eligible to be served with funding from the Homeowner Assistance Fund (HAF) related to foreclosure prevention or displacement, in an aggregate amount up to 5 percent of the funding from the HAF received by the HAF participant. b) Planning, community engagement, needs assessment, and administrative expenses related to the HAF participant’s disbursement of HAF funds for qualified expenses, in an aggregate amount not to exceed 15 percent of the funding from the HAF received by the HAF participant. If the HAF participant has only received the initial 10% of its allocation, no more than 50% of the initial payment is permitted to be used for the expenses mentioned here. c) Participants are providing not less than 60% of funds to homeowners with income less than 100% AMI or 100% of U.S. median income. d) Participants target homeowners that are classified as Socially Disadvantaged Individuals (SDI) and 100 percent AMI or less. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The Department of Administration (DOA) was unable to demonstrate and provide evidence of compliance with the applicable earmarking requirement due to closure of the program during the fiscal year and expiration of employment contract of personnel responsible for compliance.   Finding No.: 2024-023, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Cause: DOA lacks established internal control policies and procedures relating to proper turn-over of documents. Remaining DOA personnel managing the program did not have access to internal files of the Program Coordinator whose employment contract expired. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: DOA management should establish internal control policies and procedures relating to turnover of documents to ensure that all required and supporting documentation is properly maintained and retained for purposes of demonstrating compliance over applicable matching, level of effort, and earmarking requirements. Views of Responsible Officials: The Agency is reviewing its federal grants management to ensure robust handover and succession plans are in place of future programs.

Finding No.: 2024-024 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, GovGuam is required to submit quarterly financial report (PRA 1505-0269-Quarterly) and annual performance report (PRA 1505-0269). 2 CFR 200.302(a) states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 300.302(b) states that recipient’s financial management system must provide for the following: 1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in 2 CFR 200.328 and 200.329. 3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 2 CFR 200.329(a) states that recipient is responsible for the oversight of the Federal award. The recipient must monitor its activities under Federal awards to ensure it is compliant with all requirements and meeting performance expectations. Monitoring by the recipient must cover each program, function, or activity.   Finding No.: 2024-024, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Reporting Questioned Costs: $0 Criteria, continued: Per Homeowner Assistance Fund: Annual Report User Guide October 14, 2022 (Updated October 15, 2025), the annual report required to be submitted during fiscal year 2024 is the annual report with period covered October 1, 2022 through September 30, 2023, which is required to be submitted on or before November 15, 2023. Conditions: 1. For three (or 75%) of four financial reports tested, expenditures reported in the quarterly reports differ from amounts per underlying accounting records and no reconciliation was provided to explain the identified variances, as follows: See the Notes to the SEFA for chart/table. 2. For four (or 100%) of four financial reports tested, records that accumulate and summarize reported data/ key line items such as 1) Administrative Expenses; and 2) Services, Counseling & Education were not provided. 3. The annual report with period covered October 1, 2022 through September 30, 2023, which was required to be submitted on or before November 15, 2023 was not provided. Cause: The Department of Administration (DOA) lacks established internal control policies and procedures relating to proper turn-over of documents. DOA was unable to: 1) provide reconciliation to explain the identified variances; 2) provide sufficient supporting records to substantiate the reported data/ key line items; and 3) unable to provide a copy of the annual report. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance.   Finding No.: 2024-024, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Reporting Questioned Costs: $0 Identification as a Repeat Finding: 2023-016 Recommendation: DOA management should establish internal control policies and procedures over retention of grant-related documents after period of performance for a period specified by the grant terms and conditions. Responsible personnel should review underlying accounting records and perform reconciliation of the required reports. Views of Responsible Officials: The Agency is reviewing its federal grants management to ensure robust handover and succession plans are in place of future programs.

Finding No.: 2024-025 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $5,617,888 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Conditions: 1. For fifteen (or 33%) of forty-six items, aggregating $11,525,386 of $36,042,947 in total non-payroll expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table.   Finding No.: 2024-025, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $5,617,888 Conditions, continued: For item #s 1 through 13, there were no supporting documents (e.g. purchase order, contract, invoice, payment advice) on file to substantiate whether such expenditures were allowable cost of the underlying grant. For item # 14, except for payment advice, there were no other supporting documents (e.g. purchase order, contract, invoice) on file to substantiate whether such expenditures were allowable cost of the underlying grant. For item # 15, payment advice was not on file. 2. For three (or 30%) of ten items, aggregating $16,236 of $11,409,253 in total payroll expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item # 1, job order number was not indicated in the timesheet, hence, we are unable to ascertain whether such expenditure was allowable cost of the underlying grant. For item # 2, payroll register was unclear or illegible. For item # 3, there were no supporting documents (e.g. timesheet, payroll register, personnel action file) on file to substantiate whether such expenditure was allowable cost of the underlying grant. Cause: The Department of Administration (DOA) did not enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award.   Finding No.: 2024-025, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $5,617,888 Effect: GovGuam is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $5,617,888 based on the items identified in Conditions above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Responsible Officials: The Agency disagrees with this finding. Please refer to a letter dated March 31, 2026, regarding Reports on Compliance September 30, 2024. Auditor’s Response: Our finding remains because we were unable to determine compliance with applicable requirements.

Finding No.: 2024-026 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with 31 CFR Section 35.6(h)(3)(ii), funds used for the projects identified in 31 CFR Section 35.6(h), must supplement, and not supplant, other Federal, State, territorial, Tribal, and local government funds (as applicable) that: (A) in the case of non-Federal funds, have been obligated for activities or projects that are eligible as part of any Surface Transportation project or Title I project, as applicable, or (B) in the case of Federal funds, a Federal agency has committed to a particular project pursuant to an award agreement or otherwise. Condition: Capital outlays during the fiscal year are $3,552,804 and we were unable to determine whether such capital outlays were related to Surface Transportation or Title I projects. Department of Administration (DOA) lacks adequate internal policies and procedures over compliance with the applicable level of effort requirement. Furthermore, DOA was unable to demonstrate and provide evidence of compliance with the level of effort requirement. Cause: DOA was unaware of the level of effort compliance requirement. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: DOA management should consider training responsible personnel managing federal programs to be well informed of the applicable compliance requirements. Also, DOA management should establish internal policies and procedures over compliance with applicable matching, level of effort, earmarking requirements.   Finding No.: 2024-026, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Views of Responsible Officials: The Agency disagrees with this finding. Please refer to a letter dated March 31, 2026, regarding Reports on Compliance September 30, 2024. Auditor’s Response: Our finding remains because we were unable to determine compliance with applicable requirements.

Finding No.: 2024-027 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $ Undeterminable Criteria: 2 CFR 200.302 states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Moreover, the recipient’s and subrecipient’s financial management system must provide for maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. Condition: Report of all expenditures procured during the fiscal year could not be provided. Furthermore, there is no efficient and effective alternative way of identifying whether or not costs charged to the program were procured during the fiscal year. Cause: The Department of Administration’s (DOA) new financial management system implemented during the fiscal year has no capability to generate a report of all expenditures procured during the fiscal year and expenditure information from the old financial management system are not completely evident from the migrated expenditure information in the new financial management system. Furthermore, there was no efficient alternative way of identifying whether or not costs charged to the program were procured during the fiscal year. Effect: We are unable to make selection of transactions necessary to provide us with sufficient appropriate audit evidence to support an opinion on compliance with procurement and suspension and debarment compliance requirement. No questioned cost is presented as we are unable to quantify the extent of noncompliance.   Finding No.: 2024-027, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $ Undeterminable Identification as a Repeat Finding: 2023-017 Recommendation: DOA management should ensure that financial management system in place permits the preparation of report of all expenditures procured during the fiscal year. Views of Responsible Officials: GSA will continue to verify vendor eligibility through SAM.gov prior to contract award. Documentation of the verification will be retained in the procurement file for each transaction. GSA has revised IFB templates to include the required debarment and suspension certification language in accordance with 2 CFR 200.214. Effective immediately, all new contracts will include this clause prior to execution. For local vendors that may not appear in federal systems, GSA will require a debarment and suspension certification as part of the contracting process and maintain this documentation within the procurement record.

Finding No.: 2024-028 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $ Undeterminable Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity (PTE) must: a) Identify the Award and Applicable Requirements – Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)). b) Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). c) Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). Condition: There were no executed subaward documents relative to the amount passed through to subrecipient amounting to $5,000,000.  Finding No.: 2024-028, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $ Undeterminable Cause: Department of Administration (DOA) management relied on the Executive Order published by the Office of the Governor without establishing subaward agreement to specify applicable terms and conditions of the award. Effect: We are unable to verify compliance with the requirements for subrecipient monitoring. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-018 Recommendation: DOA management should establish internal policies and procedures regarding monitoring of subrecipients. Views of Responsible Officials: The Agency disagrees with this finding. Please refer to a letter dated March 31, 2026, regarding Reports on Compliance September 30, 2024. Auditor’s Response: Our finding remains because we were unable to determine compliance with applicable requirements.

Finding No.: 2024-029 Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with September 2021 U.S. Department of the Treasury Guidance for the Coronavirus Capital Projects Fund (CPF) for States, Territories & Freely Associated States, program administrative costs over the period of performance may not exceed the greater of 5 percent of the total amounts of the grant received under the Capital Projects Fund, or $25,000. The five percent limitation on administrative expenses includes the combined total of indirect costs and direct administrative costs charged to an award. The term “Program Administrative Costs” is defined as the costs of administering the CPF grant funding by a recipient, providing technical assistance to potential subrecipients, and complying with grant administration and audit requirements. Condition: Bureau of Budget and Management Research (BBMR) was unable to demonstrate and provide evidence of compliance with the aforementioned earmarking requirement. Cause: BBMR management did not respond to audit requests in a timely manner. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: BBMR management should establish internal policies and procedures over timely response to audit-related matters.   Finding No.: 2024-029, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Views of Responsible Officials: The Agency disagrees with this finding. Please refer to a letter dated March 31, 2026, regarding Reports on Compliance September 30, 2024. Auditor’s Response: Our finding remains because we were unable to determine compliance with applicable requirements.

Finding No.: 2024-030 Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, GovGuam is required to submit quarterly performance report, specifically, Project and Expenditure Report for States, Territories & Freely Associated States (PRA 1505-0277). Furthermore, GovGuam is required to submit SF-270, Request for Advance or Reimbursement via Treasury’s reporting portal. Conditions: 1. Bureau of Budget and Management Research (BBMR) was unable to provide a complete listing of SF-270, Request for Advance or Reimbursement reports required to be submitted during the fiscal year. 2. For two (or 100%) of two Project and Expenditure Reports tested, records that accumulate and summarize reported data/ key line items such as 1) Obligations and Expenditures; 2) Administrative Expenses; and 3) for Multi-Purpose Community Facility Projects, Square Footage funded by CPF/Reported, were not provided for the following : See the Notes to the SEFA for chart/table. Cause: BBMR management did not respond to audit requests in a timely manner. Effect: We are unable to verify accuracy of reported data/ key line items of performance reports. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-019 Recommendation: BBMR management should enforce monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain a monitoring of financial reports required to be submitted during the fiscal year. Furthermore, BBMR management should establish internal policies and procedures over timely response to audit-related matters.   Finding No.: 2024-030, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Reporting Questioned Costs: $0 Views of Responsible Officials: BBMR will work with DOA to make sure reports are submitted on time. BBMR will also retain documentation of submitted reports.

Finding No.: 2024-031 Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Subrecipient Monitoring Questioned Costs: $ Undeterminable Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity (PTE) must: a) Identify the Award and Applicable Requirements – Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)). b) Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). c) Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). Furthermore, per September 2021 U.S. Department of the Treasury Guidance for the Coronavirus Capital Projects Fund for States, Territories & Freely Associated States, it states that recipients are responsible for monitoring and overseeing subrecipients’ use of funds and other activities related to the award to ensure that the subrecipient complies with the statutory and regulatory requirements and the terms and conditions of the award. Recipients remain responsible for reporting to U.S. Department of the Treasury on their subrecipients’ use of funds. Condition: Schedule of subrecipient(s) and copies of related subaward documents including the terms and conditions of the subaward(s) were not provided during the audit. Total amount passed through to subrecipients during the fiscal year is $4,110,914.  Finding No.: 2024-031, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Subrecipient Monitoring Questioned Costs: $ Undeterminable Cause: Bureau of Budget and Management Research (BBMR) management did not respond to audit requests in a timely manner. Effect: We are unable to verify compliance with the requirements for subrecipient monitoring. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-020 Recommendation: BBMR management should establish internal policies and procedures over timely response to audit-related matters. Views of Responsible Officials: BBMR will create Standard Operating Procedures as well as a checklist, to assist in the monitoring of subrecipient compliance.

Finding No.: 2024-032 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $11,154 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Condition: For 16 (or 67%) of twenty-four items, aggregating $19,823 of $3,526,794 in total payroll expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item #s 1 through 15, there were no supporting documents (e.g. timesheet, payroll register, personnel action file) on file to substantiate whether such expenditures were allowable cost of the underlying grant.  Finding No.: 2024-032 continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $11,154 Condition, continued: For item # 16, we were unable to trace the amount tested against the provided supporting documentation. Cause: The Department of Administration (DOA) did not enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: GovGuam is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $11,154 based on the items identified in Condition above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Responsible Officials: Request to DOA will require immediate collaboration between Guam EPA and DOA to gather, reconcile, and provide all documentation supporting compliance of allowable costs incurred during the federal award period of performance as specified in the terms and conditions of the federal award or in the approved extension.

Finding No.: 2024-033 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906319 Area: Cash Management Questioned Costs: $333,147 Criteria: 2 CFR 200.305 states that payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and by default procedures codified at 31 CFR 205. Subpart A of regulations at 31 CFR Part 205 requires state recipients to enter into Treasury-State Agreements (TSA) that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing that meet the funding threshold for a major federal assistance program under the CMIA. Programs not covered by a TSA are subject to procedures prescribed by U.S. Department of the Treasury in Subpart B of 31 CFR Part 205. 31 CFR 205.12(b)(5) states that reimbursable funding means that a Federal Program Agency transfers Federal funds to a State after that State has already paid out the funds for Federal assistance program purposes. Condition: ALN 66.600 is not covered by a TSA and Department of Administration (DOA) management represents that the program is funded on a reimbursement basis For two (or 40%) of five items, aggregating $433,893 of $3,129,853 in total cash drawdowns during the year, no detailed listing of expenditures supporting the following drawdowns during the year was on file to ascertain whether the expenditures were incurred prior to the date of the reimbursement request: See the Notes to the SEFA for chart/table.   Finding No.: 2024-033, continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906319 Area: Cash Management Questioned Costs: $333,147 Cause: DOA management did not respond to audit requests in a timely manner. Effect: We are unable to make selection of transactions necessary to provide us with sufficient appropriate audit evidence to support an opinion on compliance with cash management compliance requirements. The reportable questioned cost is $333,147 based on the item identified in Condition above. Recommendation: DOA management should establish internal policies and procedures over timely response to audit-related matters. Views of Responsible Officials: Request to DOA will require immediate collaboration between Guam EPA and DOA, as all Guam EPA reimbursement requests are accompanied by the FGIA balance report and, currently, the GFMIS expenditure reports.

Finding No.: 2024-034 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906324 Area: Period of Performance Questioned Costs: $4,248 Criteria: In accordance with applicable period of performance (POP) requirements, a State may only charge allowable costs incurred during a federal award’s period of performance as specified in the terms and conditions of the federal award or in the approved extension. Condition: For seven (or 39%) of eighteen items, aggregating $13,989 of $922,464 of expenditures subjected to period of performance test, compliance with period of performance could not be determined as supporting documents (e.g., invoices, receipts, or time logs, check payment, etc.) were not made available for examination: See the Notes to the SEFA for chart/table. Cause: The Department of Administration (DOA) had limited staffing and resources during the review period that may have hindered the ability to obtain and compile documentation from Guam Environmental Protection Agency (GEPA), resulting in incomplete audit submissions. Effect: GovGuam is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $4,248 based on the item identified in Condition above.   Finding No.: 2024-034, continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906324 Area: Period of Performance Questioned Costs: $4,248 Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable period of performance requirements, specifically, ensuring all supporting documentation is on file. Views of Responsible Officials: Request to DOA will require immediate collaboration between Guam EPA and DOA to gather, reconcile, and provide all supporting documentation to support compliance with the period of performance in question.

Finding No.: 2024-035 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906319 ; M00906324 Area: Program Income Questioned Costs: $ Undeterminable Criteria: 2 CFR section 200.307(a) states that program income must be used for the original purpose of the Federal award. Program income earned during the period of performance may only be used for costs incurred during the period of performance or allowable closeout costs. 2 CFR section 200.307(b) states that there are three methods of applying program income: deduction; addition; and cost-sharing. Addition is when program income is added to the total allowable costs, increasing the overall total amount of the Federal award. Applicable Cooperative Agreement Programmatic Conditions states that: (1) the recipient is authorized to retain program income earned during the project period; (2) the program income shall be added to funds committed to the project by EPA and used for the purposes and under the conditions of the assistance agreement; and (3) the recipient must provide as part of its semi-annual and annual and final performance report, a description of how program income is being used. Further, a report on the amount of program income earned during the award period must be submitted with the semi-annual and annual and final Federal Financial Report, Standard Form 425. Condition: Recording and use of program income is not monitored. Specifically, collections of program income are recorded in a special revenue fund, along with other non-program income related transactions, and identification of program income that relates to a specific federal award could not be performed. We could not determine whether program income earned during the federal award’s period of performance was used only for costs incurred during the period of performance or for the purposes and under the conditions of the assistance agreement. Further, records which account for program income and specify how program income has been used was not provided.   Finding No.: 2024-035, continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants for the Insular Areas - Program Support Federal Award No.: M00906319 ; M00906324 Area: Program Income Questioned Costs: $ Undeterminable Cause: Guam Environmental Protection Agency (GEPA) did not monitor compliance with applicable program income requirements. Effect: GovGuam is in noncompliance with applicable program income requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-022 Recommendation: Responsible personnel should monitor the recording and use of program income. Views of Responsible Officials: Guam EPA has implemented processes relevant to the monitoring and reconciliation of program income. As part of our Correction Action for the FY2023 audit, which is a repeat finding in FY2024, Guam EPA is attaching a sample report of all program income collected through the Transaction Processing System (TPS) to include external payments received by DOA. Also, variances not captured by this report, consisting of payments/transactions submitted directly to DOA via electronic method of payments, are being reconciled by our staff and DOA.

Finding No.: 2024-036 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Cash Management Questioned Costs: $113,143 Criteria: 2 CFR 200.305 states that payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and by default procedures codified at 31 CFR 205. Subpart A of regulations at 31 CFR Part 205 requires state recipients to enter into Treasury-State Agreements (TSA) that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing that meet the funding threshold for a major federal assistance program under the CMIA. Programs not covered by a TSA are subject to procedures prescribed by U.S. Department of the Treasury in Subpart B of 31 CFR Part 205. 31 CFR 205.12(b)(5) states that reimbursable funding means that a Federal Program Agency transfers Federal funds to a State after that State has already paid out the funds for Federal assistance program purposes. Condition: ALN 93.323 is not covered by a TSA and Department of Administration (DOA) management represents that the program is funded on a reimbursement basis For fourteen (or 35%) of forty items tested, aggregating $182,079 of $4,540,455 in total cash drawdowns during the year, supporting documentations (e.g., timesheet, payroll register, vendor invoice, check payment) to ascertain whether the expenditures were incurred prior to the date of the reimbursement request were not provided.   Finding No.: 2024-036, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Cash Management Questioned Costs: $113,143 Condition, continued: See the Notes to the SEFA for chart/table. Cause: DOA had limited staffing and resources during the review period that may have hindered the ability to obtain and compile documentation from DPHSS, resulting in incomplete submissions. Effect: GovGuam is in noncompliance with applicable cash management requirements. The reportable questioned cost is $113,143 based on the item identified in Condition above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable cash management requirements, specifically, ensuring all supporting documentation is on file.   Finding No.: 2024-036, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Cash Management Questioned Costs: $113,143 Views of Responsible Officials: The Federal and Compliance section will establish a Standard Operating Procedure for drawdowns. As well as, conducting drawdowns daily to minimize the time between the drawdowns of federal funds and the disbursement for federal program purposes.

Finding No.: 2024-037 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. 2 CFR 200.313(d) states that regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO.  Finding No.: 2024-037, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Conditions: 1. Department of Public Health and Social Services (DPHSS) lacks adequate internal policies and procedures over compliance with the applicable federal property rules and regulations. 2. DPHSS’s capital asset records do not meet the criteria above and certain sources of funding for the property (including the FAIN) information are missing. Furthermore, some assets purchased in prior years (e.g., 2020 through 2023) are tagged as “New”. 3. DPHSS’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2024, the required biannual physical inventory and reconciliation were not performed. 4. As capital asset records are not effectively maintained, it does not appear that DPHSS has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. We are unable to assess the overall cumulative monetary value of these deficiencies. However, the table below summarizes total capital outlays over the past five years. See the Notes to the SEFA for chart/table. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. DPHSS requires more funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance.   Finding No.: 2024-037, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Identification as a Repeat Finding: 2023-026 Recommendation: DPHSS should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system that will help automate the tracking and reporting of Capital assets, is near completion with final testing in progress. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. Review of Assets acquired in FY2024 was completed, with FY2025 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.

Finding No.: 2024-038 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Period of Performance Questioned Costs: $16,668 Criteria: In accordance with applicable period of performance (POP) requirements, a State may only charge allowable costs incurred during a federal award’s period of performance as specified in the terms and conditions of the federal award or in the approved extension. Conditions: 1. For four (or 67%) of six items, aggregating $24,122 of $44,823 of expenditures subjected to period of performance test, compliance with period of performance could not be determined as supporting documents (e.g., time logs, check payment, etc.) were not made available for examination: See the Notes to the SEFA for chart/table. 2. Underlying grant agreements related to the following federal award# were subsequently provided and compliance with period of performance of expenditures could not be determined: See the Notes to the SEFA for chart/table.   Finding No.: 2024-038, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Period of Performance Questioned Costs: $16,668 Cause: The Department of Administration (DOA) had limited staffing and resources during the review period that may have hindered the ability to obtain and compile documentation from DPHSS, resulting in incomplete audit submissions. Effect: GovGuam is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $16,668 based on the items identified in Condition #1 above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable period of performance requirements, specifically, ensuring all supporting documentation is on file. Views of Responsible Officials: DPHSS ELC Program disagrees with the findings. Condition 1: The questioned labor costs of $16,668 align with payment of Core funded staff during that approved budget period for BP01. The PPE coincides with two draws for the ending and beginning of those fiscal years. Supporting documents were submitted twice, once on February 9, 2026, and February 20, 2026, including the Notice of Award (NOA) for this grant with issue date of July 9, 2024. Condition 2: The question of compliance with period of performance was justified through supporting documentations as reflected in the NOAs and extensions of NOAs which were provided twice February 9, 2026 and February 23, 2026. Program also noted that core funds have expanded authority to be utilized in subsequent budget periods throughout the 5-year cycle of the Cooperative Agreement. Upon auditor’s review, a correspondence email noted that the documents were received and findings were removed for all but on expense. Although all supporting NOAs were submitted for every expenditure amount, a follow up email with the last NOA for 6NU50CK000561-05-00 was provided again as an attachment.   Finding No.: 2024-038, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Period of Performance Questioned Costs: $16,668 Auditor’s Response: Condition1: Our finding remains because documents subsequently received by auditors on February 10, 2026 from DOA were insufficient or incomplete to substantiate compliance with period of performance. Condition 2: Although grant agreements were subsequently provided, our finding remains based on the agreed timeline with DOA. We were unable to proceed or perform further testing on the expenditures related to federal awards cited in the condition above. Therefore, we were unable to determine compliance with applicable requirements.

Finding No.: 2024-039 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $980,252 Criteria: 2 CFR 180.300 requires entities entering into a covered transaction with another person at the next lower tier to verify that the person with whom they intend to do business is not excluded or disqualified. Such verification can be made by (a) checking SAM.gov Exclusions, or (b) collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. 2 CFR 180.220 (b) (1) states that a contract for goods and services is a covered transaction if the contract is awarded by a participant in a nonprocurement transaction covered under 2 CFR 180.210, and the contract amount is expected to equal or exceed $25,000. 2 CFR 200.302 states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Moreover, the recipient’s and subrecipient’s financial management system must provide for maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. Conditions: 1. For thirteen (or 62%) of twenty-one items, aggregating $1,042,567 of $1,799,849 of expenditures subjected to procurement and suspension and debarment test, we noted the following: See the Notes to the SEFA for chart/table.   Finding No.: 2024-039, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $980,252 Conditions, continued: See the Notes to the SEFA for chart/table. For item #s 1 through 4, the General Services Agency (GSA) represented that it performed verification of suspension or debarment from SAM.gov. However, no formal documentation is kept on file to demonstrate compliance at the time of procurement. For items #s 5 through 13, we noted noncompliance with applicable procurement policies and procedures due to various reasons, such as expired procurement contracts, unclear procurement method followed, and lack of rationale for vendor selection. 2. Three initially tested samples were later determined to be procured in prior years and are not procurements during fiscal year 2024. Consequently, remaining samples tested were insufficient to satisfy the minimum number of items to test. Cause: DOA’s new financial management system implemented during the fiscal year has no capability to generate a report of all expenditures procured during the fiscal year and expenditure information from the old financial management system are not completely evident from the migrated expenditure information in the new financial management system, hence, there was difficulty in establishing population that will be subjected to procurement and suspension and debarment test. As there was no efficient alternative way of identifying whether or not costs charged to the program were procured during the fiscal year, and due to the timing of the audit and lack of staffing resources, DOA was unable to provide the procurement files of selected transactions by the agreed audit timeline.   Finding No.: 2024-039, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $980,252 Cause, continued: This limitation necessitated repeated replacement of sample selections to meet the minimum sample size required for testing. DOA also does not have a formal policy requiring documentation of procedures performed to verify that the person in a covered transaction with whom they intend to do business is not excluded or disqualified. Effect: GovGuam is in noncompliance with applicable procurement and suspension and debarment requirements. The reportable questioned cost is $980,252 based on the items identified in Condition #1 above. Identification as a Repeat Finding: 2023-027 Recommendation: DOA management should ensure that financial management system in place permits the preparation of report of all expenditures procured during the fiscal year. Responsible personnel should ensure that documentation is adequate to comply with the applicable procurement requirements. Specifically, documentation should indicate the history of procurement, including the solicitation process and rationale for contractors or vendor selection. DOA management should establish formal policy requiring retaining documentation of procedures performed to verify that the person in a covered transaction with whom they intend to do business is not excluded or disqualified Views of Responsible Officials: GSA will continue to verify vendor eligibility through SAM.gov prior to contract award. Documentation of the verification will be retained in the procurement file for each transaction. GSA has revised IFB templates to include the required debarment and suspension certification language in accordance with 2 CFR 200.214. Effective immediately, all new contracts will include this clause prior to execution. Finding No.: 2024-039, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $980,252 Views of Responsible Officials, continued: For local vendors that may not appear in federal systems, GSA will require a debarment and suspension certification as part of the contracting process and maintain this documentation within the procurement record.

Finding No.: 2024-040 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $3,005 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Condition: For four (or 11%) of thirty-eight items, aggregating $45,527 of $32,818,949 in total non-payroll expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. For item #s 1 through 3, these pertain to transactions migrated from AS400 to D365 system. We were unable to determine whether such expenditures were allowable cost of the underlying grants. We were unable to trace the selected sample to the supporting documents since selected samples could not be traced to AS400 due to insufficient identifier in the migrated information. For item # 4, there was no vendor invoice or other supporting documents on file to substantiate whether such expenditure was allowable costs of the underlying grant.   Finding No.: 2024-040, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Area: Activities Allowed or Unallowed Area: Allowable Cost/Cost Principles Questioned Costs: $3,005 Cause: The Department of Administration (DOA) did not enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Additionally, migrated information from AS400 to D355 was incomplete. Effect: GovGuam is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $3,005 based on the items identified in Condition above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions. Views of Responsible Officials: The Bureau of Child Care Services (BCCS) disagrees with this finding. The questioned transactions relate to a major system migration from the AS400 to the D365 system, which temporarily impacted the traceability of certain records. During this transition, some data identifiers were reformatted to fit the new system's structure. However, this was a synchronization issue rather than a lack of oversight, and BCCS maintains that all costs are allowable, necessary, and reasonable under CCDF requirements. Supporting documents exist and were provided after a subsequent request on February 9, 2026, via One Drive link. Auditor’s Response: Our finding remains because we were unable to determine compliance with applicable requirements. We did not receive subsequent submissions or other documentations to resolve findings cited in the condition above.

Finding No.: 2024-041 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Eligibility Questioned Costs: $638,831 Criteria: 45 CFR 98.20(a) states that to be eligible for services under 45 CFR 98.50, a child shall, at the time of eligibility determination or redetermination: (1) (i) Be under 13 years of age; or, (ii) At the option of the Lead Agency, be under age 19 and physically or mentally incapable of caring for himself or herself, or under court supervision; (2) (i) Reside with a family whose income does not exceed 85 percent of the State’s median income (SMI), which must be based on the most recent SMI data that is published by the Bureau of the Census, for a family of the same size; and (ii) Whose family assets do not exceed $1,000,000 (as certified by such family member); and (3) (i) Reside with a parent or parents who are working or attending a job training or educational program; or (ii) Receive, or need to receive, protective services, which may include specific populations of vulnerable children as identified by the Lead Agency, and reside with a parent or parents other than the parent(s) described in paragraph (a)(3)(i) of this section. 45 CFR 98.68(c) states that Lead Agencies must describe in their Plan the procedures that are in place for documenting and verifying that children receiving assistance under this part meet eligibility criteria at the time of eligibility determination and redetermination. Child Care and Development Plan for Guam 2022-2024 states that: 1) Guam requires identity verification of each applicant. Acceptable documentary evidence may include, but is not limited to, drivers’ license, work or school ID, birth certificate, passport, social security card or permanent residency card. 2) Guam requires verification of the applicant’s relationship to the child. Acceptable documentary evidence of relationship may include, but is not limited to, birth certificate or legal document establishing power of attorney, and guardianship or in loco parentis. 3) Guam requires a child to be a U.S. citizen or child of a qualified alien. Acceptable documentary evidence may include, but is not limited to, birth certificate, US Passport, US Naturalization Papers, Permanent Residency Card, INS Form 151 or I-551, INS Form I-94, and social security card. Finding No.: 2024-041, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Eligibility Questioned Costs: $638,831 Criteria, continued: 4) Guam verifies family income by checking documentary evidence of income of all members of the household unit which may include, but is not limited to, employment check stubs from the previous two months, tax statements, and by checking online income resources. 5) Guam verifies household composition by checking documentary evidence which may include, but is not limited to, Mayor’s verification and Guam Housing and Urban Renewal Authority documentation. 6) Guam will verify work as the qualifying activity by checking documentary evidence which may include, but is not limited to, employment check stubs from the previous two months, tax statements, JOBS Works or employer verification. 7) Guam verifies job training or educational program by checking documentary evidence which may include, but is not limited to training or education verification, class schedule, job or education training enrollment forms. 45 CFR 98.45(a) states that the Lead Agency shall certify that the payment rates for the provision of child care services under this part are sufficient to ensure equal access, for eligible families in the area served by the Lead Agency, to child care services comparable to those provided to families not eligible to receive CCDF assistance or child care assistance under any other Federal, State, or tribal programs. In accordance with the conditions and requirements for the Early Childhood Workforce Retention Grant, applicants from Child Care Development Fund Childcare Facility must be on the latest staffing pattern submitted to the Bureau of Child Care Services. Additionally, in accordance with Early Childhood Workforce Retention Grant Fact Sheet, applicants from private school institutions must be accredited by private school. Pub. L. No. 117–2 Section 2202(a)(2)(B) states that eligible child care provider means a child care provider that is licensed, regulated, or registered in the State, territory, or Indian Tribe on the date of enactment of this Act and meets applicable State and local health and safety requirements. In accordance with Child Care and Development Plan for Guam 2022-2024, as part of the health and safety standards and other requirements prior to the receipt of any CCDF funds, child care providers must meet the minimum 15 hours of ongoing training required annually.   Finding No.: 2024-041, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Eligibility Questioned Costs: $638,831 Criteria, continued: Pub. L. No. 117–2 Section 2202(d)(2)(D)(i)(II) states that the lead agency shall make available on the lead agency’s website an application for qualified child care providers that includes certifications that, for the duration of the subgrant, for each employee, the provider will pay not less than the full compensation, including any benefits, that was provided to the employee as of the date of submission of the application for the subgrant (referred to in this subclause as “full compensation”), and will not take any action that reduces the weekly amount of the employee’s compensation below the weekly amount of full compensation, or that reduces the employee’s rate of compensation below the rate of full compensation, including the involuntary furloughing of any employee employed on the date of submission of the application for the subgrant. Conditions: For fifty-two (or 37%) of one hundred forty-one items, aggregating $2,846,246 of $32,484,704 in total participant benefits, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table.   Finding No.: 2024-041, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Eligibility Questioned Costs: $638,831 Conditions, continued: a. Eligibility for Children Receiving CCDF Subsidies See the Notes to the SEFA for chart/table. For item #s 1 through 10, no case folder was maintained on file to support eligibility determination. For item #s 11 and 21 through 23, the benefit paid exceeded the maximum cost per child care directory for licensed childcare providers. For item #s 13 through 15 and 17 through 20, documentation that substantiates the relationship of the applicant to the child was not on file. For item # 15, documentation of applicant’s identification was not on file. For item #s 13 through 15 and 17 through 18, documentation that determines whether the child is a U.S. citizen or a child of a qualified alien was not on file. For item #s 11 through 12, documentation to support whether the applicant met the income eligibility requirement and documentation to support applicant’s household size were not on file. For item # 11, documentation to support applicant’s need for childcare was not on file. For item #s 11 and 13 through 16, the Notice of Action and Child Care Certificate were not provided to substantiate the certification period of the claimant.   Finding No.: 2024-041, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Eligibility Questioned Costs: $638,831 Conditions, continued: b. Eligibility for Other Beneficiaries Receiving CCDF Subsidies Determined by Guam Economic Development Authority See the Notes to the SEFA for chart/table. For item #s 24 through 40, beneficiaries were not included in the staffing pattern submitted to the Bureau of Child Care Services. Additionally, for those employed in private schools, there were no documentation provided to support that beneficiaries were accredited by private school.   Finding No.: 2024-041, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Eligibility Questioned Costs: $638,831 Conditions, continued: c. Eligibility for Child Care Providers Receiving CCDF ARP Act Stabilization Funds See the Notes to the SEFA for chart/table. For item #s 41 through 52, child care provider’s application did not include certification that the child care provider will pay at least the same amount in weekly wages and maintain the same benefits for the duration of the stabilization funding. For item #s 43, 45, and 49, documentation that determines whether participant has met the 15-hour health and safety training requirement was not on file. For item #s 41 through 44, 46 through 47, and 49 through 52, either incomplete or no supporting documentation was on file to support eligibility determination. Cause: The Department of Public Health and Social Services (DPHSS) did not enforce monitoring controls over compliance with applicable eligibility requirements, specifically, retaining sufficient documentation to support eligibility determination.   Finding No.: 2024-041, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Eligibility Questioned Costs: $638,831 Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $638,831 based on the items identified in Conditions above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable eligibility requirements, specifically, retaining sufficient documentation to support eligibility determination. Views of Responsible Officials: The Bureau of Child Care Services (BCCS) disagrees with this finding. Eligibility determinations were conducted in accordance with federal and local requirements. The exceptions noted are due to a subsequent request received by BCCS on January 20, 2026, and consequently responded to on January 29, 2026. Additional supporting documents were provided on February 9, 2026. Certain payment variances reflect allowable program exceptions. Auditor’s Response: Our finding remains because documents subsequently received by auditors on February 10, 2026 from DOA through the EY portal are insufficient or incomplete to substantiate compliance with eligibility.

Finding No.: 2024-042 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Area: Matching, Level of Effort, Earmarking Questioned Costs: $1,828,343 Criteria: 45 CFR 98.50(b) states that of the aggregate amount of funds expended by a State or Territory (i.e., Discretionary, Mandatory, and Federal and State share of Matching funds): (1) No less than nine percent shall be used for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR 98.53; and (2) No less than three percent shall be used to carry out activities at 45 CFR 98.53(a)(4) as such activities relate to the quality of care for infants and toddlers. 45 CFR 98.50(d) states that of the aggregate amount of funds expended (i.e., Discretionary, Mandatory, and Federal and State share of Matching Funds), no more than five percent may be used for administrative activities as described at 45 CFR 98.54. 45 CFR 98.50(e) states that not less than seventy percent of the State and Territory Mandatory and Federal and State share of State Matching Funds shall be used to meet the child care needs of families who: (1) Are receiving assistance under a State program under Part A of title IV of the Social Security Act; (2) Are attempting through work activities to transition off such assistance program; and (3) Are at risk of becoming dependent on such assistance program. Conditions: 1. For the quarter ended 09/30/2024, Department of Public Health and Social Services (DPHSS) did not meet the minimum spending for activities designed to improve the quality of child care services and increase parental options for, and access to, high-quality child care as described at 45 CFR 98.53: See the Notes to the SEFA for chart/table.   Finding No.: 2024-042, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Area: Matching, Level of Effort, Earmarking Questioned Costs: $1,828,343 Conditions, continued: 2. For the quarter ended 09/30/2024, DPHSS did not meet the minimum spending for activities related to the quality of care for infants and toddlers as follows: See the Notes to the SEFA for chart/table. 3. For the quarter ended 09/30/2024, DPHSS expended more than five percent for administrative activities as follows: See the Notes to the SEFA for chart/table.   Finding No.: 2024-042, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Area: Matching, Level of Effort, Earmarking Questioned Costs: $1,828,343 Conditions, continued: 4. For the quarter ended 09/30/2024, DPHSS did not meet the minimum spending to meet the child care needs of families mentioned in the above criteria: See the Notes to the SEFA for chart/table. Cause: DPHSS did not effectively monitor compliance with applicable earmarking requirements. Effect: GovGuam is in noncompliance with applicable earmarking requirements. The reportable questioned cost is $1,828,343 based on the items identified in Conditions above. Identification as a Repeat Finding: 2023-028 Recommendation: DPHSS management should strengthen monitoring controls over compliance with applicable earmarking requirements. Views of Responsible Officials: The Bureau of Child Care Services (BCCS) disagrees with this finding and maintains that it has enhanced monitoring controls to ensure compliance with all applicable earmarking requirements. BCCS reports expenditures on a cumulative basis until the grant’s liquidation end date. This reporting structure provides the necessary flexibility to reconsolidate cost categories, ensuring that final totals align with mandated spending thresholds by the end of the grant period.   Finding No.: 2024-042, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Area: Matching, Level of Effort, Earmarking Questioned Costs: $1,828,343 Views of Responsible Officials, continued: Furthermore, BCCS maintains that Quality Rating and Improvement System (QRIS) initiatives and other quality-enhancing activities were actively conducted throughout the performance period. To ensure a thorough reconciliation of these expenditures, BCCS formally requests the supporting documentation and specific sample set used by the auditors to conclude that these activities were not sufficiently documented or performed. We are prepared to provide evidence of these programmatic activities to demonstrate compliance with earmarking requirements. Auditor’s Response: Our finding remains. The amount of total expenditures and actual spending reflected in the cited conditions above are obtained from auditee’s internally prepared ACF-696, Child Care and Development Fund Financial Reports.

Finding No.: 2024-043 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, GovGuam is required to submit quarterly ACF-696, Child Care and Development Fund Financial Report (OMB No. 0970-0510). These reports are required instead of the SF-425, Federal Financial Report. Each fiscal year’s expenditure report must be separate; therefore, multiple reports are required if awards from more than one fiscal year are expended in a given quarter. Condition: We noted variances between the expenditures reported in ACF-696 against the underlying accounting records as summarized below: See the Notes to the SEFA for chart/table. Cause: The Department of Public Health and Social Services (DPHSS) did not ensure accurate data entry to comply with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is reported because we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2023-030 Recommendation: DPHSS management should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records and perform reconciliation of the required reports. Finding No.: 2024-043, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The Bureau of Child Care Services (BCCS) disagrees with this finding. BCCS maintains that it enforces strict monitoring controls over compliance with reporting requirements and that the variances noted are not a result of inaccurate data entry but that is due to the cumulative reporting until the end of the grant period. BCCS’ ACF-696 quarterly reports are reported cumulatively through the grant's liquidation end date, and any quarterly reported variances are reconciled by the end of the grant period. During a Reporting Walkthrough meeting with Ernst & Young Senior Auditor, on November 17, 2025, BCCS discussed detailed reporting requirements, processes, and procedures. During this meeting, the agency communicated how responsible personnel review accounting records and perform the reconciliation of required reports. Auditor’s Response: Our finding remains because there was no evidence provided during the time of the audit to support that the unreconciled variance, cited in the condition above, was due to timing difference or cumulative reporting.

Finding No.: 2024-044 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Special Tests and Provisions - Health and Safety Requirements Questioned Costs: $3,726,391 Criteria: 45 CFR 98.41(a) states that each Lead Agency shall certify that there are in effect, within the State (or other area served by the Lead Agency), under State, local or tribal law, requirements that are designed, implemented, and enforced to protect the health and safety of children. Such requirements must be applicable to childcare providers of services for which assistance is provided under this part. Such requirements, which are subject to monitoring pursuant to 45 CFR 98.42, shall: (1) Include health and safety topics; and (2) Include minimum health and safety training on the topics above, as described in 45 CFR 98.44. In accordance with the Child Care Development Fund (CCDF) State Plan, Section 5.3 Health and Safety Standards and Training for CCDF Providers, all licensed and license-exempt child care providers must be able to demonstrate compliance with Guam Public Law 31-73, which outlines certain home/facility conditions, as part of the health and safety standards and other requirements prior to the receipt of any CCDF funds. Validations of these requirements are made by Guam DPHSS Licensing Office and DPHSS-Division of Environmental Health (DEH) during quarterly facility inspections and monitoring. A certification of compliance report of the Job-Site Inspection is issued by Division of Environmental Health and provided to Guam’s CCDF Program Office and Bureau of Social Services Administration (BOSSA) – Licensing Office. Condition: For forty-two (or 91%) of forty-six items, aggregating $4,513,648 of $19,184,317 in total program benefits paid to child care providers during the year, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. Finding No.: 2024-044, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Special Tests and Provisions - Health and Safety Requirements Questioned Costs: $3,726,391 Condition, continued: See the Notes to the SEFA for chart/table.   Finding No.: 2024-044, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Special Tests and Provisions - Health and Safety Requirements Questioned Costs: $3,726,391 Condition, continued: For item # 5, FY2024 Licensed Child Care Inspection Summary Report/License-Exempt Relative Care Validation Checklist from the Bureau of Child Care Services (BCCS) was not provided. Hence, we were unable to ascertain compliance. For item #s 33 through 36 and 38 through 39, FY2024 Licensed Child Care Inspection Summary Report/License-Exempt Relative Care Validation Checklist from BCCS, FY2024 Inspection Report from the Division of Environmental Health (DEH), and FY2024 Certification for Assurance for Child Care Facility License were not provided. Hence, we were unable to ascertain compliance. For item #s 6 through 26, and 42, FY2024 Inspection Report from DEH and FY2024 Certification for Assurance for Child Care Facility License were not provided. Hence, we were unable to ascertain compliance. For item #s 27 through 29, FY2024 Inspection Report from DEH and FY2024 Certification for Assurance for Child Care Facility License were not provided. Hence, we were unable to ascertain compliance. Furthermore, there were several non-compliances indicated in BCCS checklist, however, there were no BCCS Corrective Action Plan or supporting document to show re-inspection was conducted to demonstrate compliance. For item #s 1 through 4, 30 through 32, 37, and 40 through 41, these items were noted to have demerits in their FY2024 DEH Inspection Report and there were no supporting documents provided to demonstrate that the demerits were corrected to demonstrate compliance. Cause: The Department of Public Health and Social Services (DPHSS) management did not enforce monitoring controls over compliance with applicable special tests and provisions for health and safety requirements. Also, there were no formal internal control policies and procedures in place to ensure compliance with applicable special tests and provisions for health and safety requirements.   Finding No.: 2024-044, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Special Tests and Provisions - Health and Safety Requirements Questioned Costs: $3,726,391 Effect: GovGuam is in noncompliance with applicable special tests and provisions for health and safety requirements. The reportable questioned cost is $3,726,391 based on the items identified in Condition above. Identification as a Repeat Finding: 2023-032 Recommendation: DPHSS management should strengthen monitoring controls over compliance with applicable special tests and provisions for health and safety requirements. Responsible personnel should retain required inspections summary report/ license, or certification to support compliance. Views of Responsible Officials: The Bureau of Child Care Services (BCCS) disagrees with this finding. All applicable providers were monitored and met necessary health and safety requirements. All supporting inspection reports and certifications exist and were provided to the auditors via a OneDrive link on February 9, 2026, following a subsequent request for information. Additionally, in accordance with the Rules and Regulations Governing Child Care Facilities Section 1.5.00 (a), Relative Care facilities are exempt from Sanitary Permits. BCCS requests a detailed breakdown of the $3,726,391 valuation to clarify if the audit team applied a total disallowance of payments or a weighted penalty for perceived documentation gaps. We maintain that this dollar amount is fundamentally inaccurate if the assessment did not properly factor in the specific regulatory exemptions applicable to these providers. Furthermore, BCCS questions the rationale used to assign such a substantial fiscal impact to an administrative-heavy finding, especially where the core program requirements and services were successfully fulfilled.    Finding No.: 2024-044, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, 2101GUCCDF, 2101GUCCC5, 2201GUCCDD, 2301GUCCDD, 2401GUCCDD, 2301GUCCDF, 2401GUCCDT Area: Special Tests and Provisions - Health and Safety Requirements Questioned Costs: $3,726,391 Auditor’s Response: Our finding remains because documents subsequently received by auditors on February 9, 2026 were insufficient or incomplete to substantiate compliance with special tests and provisions – health and safety requirements. Our finding does not mention matters regarding Sanitary Permit requirement. The amount presented as questioned costs in the condition above pertains to total program benefits paid to child care providers with identified deficiencies. There are no weighted penalty assigned to each cost being tested. As defined in 2 CFR Part 200 Subpart A, “Questioned cost means an amount, expended or received from a Federal award, that in the auditor's judgment: (i) Is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award; (ii) At the time of the audit, lacked adequate documentation to support compliance; or (iii) Appeared unreasonable and did not reflect the actions a prudent person would take in the circumstances. (2) The questioned cost amount under (1)(ii) is calculated as if the portion of a transaction that lacked adequate documentation were confirmed noncompliant. (6) Questioned costs are not improper payments until reviewed and confirmed to be improper payments as defined in OMB Circular A-123 Appendix C.”

Finding No.: 2024-045 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Eligibility Questioned Costs: $1,970,002 Criteria: 42 CFR 457.965(b)(1)(iii) states that a State plan must provide that the State will maintain or supervise the maintenance of the records necessary for the proper and efficient operation of the plan. The records must include all individual records on each applicant and enrollee that contain the date of, basis for, and all documents or other evidence to support any determination, denial, or other adverse action, including decisions made at application, renewal, and a result of a change in circumstance, taken with respect to the applicant or enrollee, including all information provided by the applicant or enrollee, and all information obtained electronically or otherwise by the State from third-party sources. 42 CFR 457.965(d)(1) states that the agency must maintain the records described in 42 CFR 457.965(b) in an electronic format. 42 CFR 457.340(e) states that the State must provide each applicant or enrollee with timely and adequate written notice of any decision affecting his or her eligibility, including an approval, denial or termination, or suspension of eligibility. 42 CFR 457.340(d)(2) states that in applying timeliness standards, the State must define “date of application” and must count each calendar day from the date of application to the day the agency provides notice of its eligibility decision. 42 CFR 435.912(c)(3) states that except as provided in 42 CFR 435.912(e), the determination of eligibility for any applicant or individual whose account was transferred from another insurance affordability program may not exceed: (i) 90 calendar days for applicants who apply for Medicaid on the basis of disability; and (ii) 45 calendar days for all other applicants. Condition: For thirty-seven (or 56%) of sixty-six items, aggregating $1,974,989 of $32,045,067 in total participant benefits, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. Finding No.: 2024-045, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Eligibility Questioned Costs: $1,970,002 Condition, continued: See the Notes to the SEFA for chart/table.   Finding No.: 2024-045, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Eligibility Questioned Costs: $1,970,002 Condition, continued: For item #s 1 through 3, 9, and 22 through 31, eligibility determination exceeded the 45-day requirement. For item # 32, benefit payment was for medical service not within the certified period of eligibility. For item # 37, documentation of applicant’s identification was not on file. For item #s 22, supporting documentation (e.g. identification card) to support whether the child met the age requirement and whether the child is a U.S. citizen or qualified noncitizen (alien) was not on file. Also, documentation of applicant’s identification was not on file. For item #s 4 and 6, documentation (e.g. mayor’s verification document) to support applicant’s household size were not on file. For item #s 4, 6 through 7, and 9 through 15, documentation to support whether the applicant met the income eligibility requirement was not on file. For item #s 4 through 5, 8, 10 through 11, and 32 through 36, we were unable to verify whether eligibility was determined within 45 days upon application as the Notice of Action and/or the application were not in the case file. For item #s 16 through 21, and 37, the applicant did not meet the income eligibility requirement. Cause: Department of Public Health and Social Services (DPHSS) did not enforce monitoring controls over compliance with applicable eligibility requirements, specifically, retaining sufficient documentation to support eligibility determination.   Finding No.: 2024-045, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Eligibility Questioned Costs: $1,970,002 Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $1,970,002 based on the items identified in Condition above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable eligibility requirements, specifically, retaining sufficient documentation to support eligibility determination. Views of Responsible Officials: DPHSS agrees with this finding. The Bureau of Economic Security (BES) recognized the finding as an issue and in response, held a bureau-wide training for both front desk personnel and eligibility specialists on December 22 - 23, 2025. This training focused on application handling including the timeliness of eligibility determinations and proper documentation maintenance procedures. The training reinforced use of a standardized application checklist that was developed to support application completeness. Staff were also trained in the correct method for uploading documents into the OnBase system, the bureau’s digital record archive, for secure storage and efficient retrieval. In January 2026, BES conducted a Customer Email Standard Operating Procedure (SOP) training to reinforce staff compliance with documentation requirements, including the use of document imaging process (DIP) to ensure customer documentation received via email is uploaded into the OnBase system within two business days. In addition, DPHSS is preparing additional training sessions, which are currently being developed, on topics such as Medicaid Basics 101, Customer Service, and Medicaid Eligibility. To assess compliance with the training, Eligibility Specialist Supervisors were tasked with periodically reviewing random samples of applications across all three centers to verify application completeness, including required documents. BES will further reinforce timeliness compliance by incorporating 45-day timeliness checks and targeted reviews of higher-risk cases into supervisory case reviews. Findings from these reviews will be used to inform corrective action and retraining as needed. DPHSS is also revising the document verification list in the Public Application form to help clients clearly identify required documentation needed to support eligibility determination and reduce the risk of missing or incomplete case files.

Finding No.: 2024-046 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5R21 Area: Period of Performance Questioned Costs: $76,203 Criteria: In accordance with applicable period of performance (POP) requirements, a State may only charge allowable costs incurred during a federal award’s period of performance as specified in the terms and conditions of the federal award or in the approved extension. Condition: For twenty-one (or 53%) of forty items, aggregating $163,214 of $1,253,556 of expenditures subjected to period of performance test, the Department of Public Health and Social Services (DPHSS) charged costs to a federal award prior to the period of performance: See the Notes to the SEFA for chart/table.   Finding No.: 2024-046, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5R21 Area: Period of Performance Questioned Costs: $76,203 Cause: DPHSS did not enforce monitoring controls over compliance with applicable period of performance requirements relating to charging costs to a federal award within the period of performance. Effect: GovGuam is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $76,203 based on the item identified in Condition above. Recommendation: Prior to charging costs to a federal award, responsible personnel should verify that such costs are within the period of performance. Views of Responsible Officials: DPHSS disagrees with this finding and provided documentation of grantor approval to use the FY 2024 award to pay prior year obligations. The enclosed communication from Linda Gee, CMS, dated July 1, 2021, provides more information. 45 CFR 95.7 (https://www.ecfr.gov/cgi-bin/text-idx?node=pt45.1.95&rgn=div5#se45.1.95_17) provides that a state Medicaid agency (i.e. Guam Medicaid Agency) has up to two years to file for a claim that it made. DPHSS welcomes the opportunity to discuss and collaboratively identify the relevant information and guidance during an entrance conference for each year’s audit. Auditor’s Response: Our finding remains because the condition cited above pertains costs charged to a federal award prior to the period of performance and does not pertain to the period up to when a charge can be made (i.e. liquidation period).

Finding No.: 2024-047 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria: 42 CFR 455.412 states that the State Medicaid Agency must have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State. Also, State Medicaid Agency must confirm that the provider’s license has not expired and that there are no current limitations on the provider’s license. 42 CFR 455.432 states that the State Medicaid agency must conduct pre-enrollment and post-enrollment site visits of providers who are designated as “moderate” or “high” categorical risks to the Medicaid program. Also, the State Medicaid agency must require any enrolled provider to permit CMS, its agents, its designated contractors, or the Medicaid agency to conduct unannounced on-site inspection of any and all provider locations. 42 CFR 455.434(a) states that the State Medicaid agency, as a condition of enrollment, must require providers to consent to a criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider. 42 CFR 455.434(b) states that the State Medicaid agency must establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. 42 CFR 455.450 states that a State Medicaid agency must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of “limited,” “moderate,” or “high.” If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable.   Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria, continued: 42 CFR 455.460 states that beginning on or after March 25, 2011, States must collect the applicable application fee prior to executing a provider agreement from a prospective or re-enrolling provider other than either of the following: (1) Individual physicians or nonphysician practitioners. (2) (i) Providers who are enrolled in either of the following: (A) Title XVIII of the Act. (B) Another State’s title XIX or XXI plan. (ii) Providers that have paid the applicable application fee to - (A) A Medicare contractor; or (B) Another State. 42 CFR 455.104 states that the Medicaid agency must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: (1) (i) The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. (ii) Date of birth and Social Security Number (in the case of an individual). (iii) Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. (2) Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling.   Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria, continued: (3) The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. (4) The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. The Department of Public Health and Social Services (DPHSS) lacks adequate internal policies and procedures over compliance with the applicable special tests and provisions for provider eligibility (screening and enrollment). 2. For twenty-four (or 100%) of twenty-four items, aggregating $1,562,177 of $32,045,067 of expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table.   Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Conditions, continued: See the Notes to the SEFA for chart/table. DPHSS did not establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program, hence, for all items, we are unable to determine whether screening and enrollment requirements (e.g., pre-enrollment and post-enrollment site visits and consent to a criminal background checks) were performed accordingly based on the categorical risk level of providers. For all items, DPHSS was unable to provide supporting documentation that could demonstrate the basis of not collecting the applicable application fee prior to executing a provider agreement. For items # 8 through 22, the Guam Medicaid and Medically Indigent Program (MIP) Provider Enrollment Disclosure of Ownership and Control Interest Statement form was not on file. For items # 18 through 22, provider’s license or business license was not on file.   Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Cause: DPHSS lacks adequate internal policies and procedures over compliance with the applicable special tests and provisions for provider eligibility (screening and enrollment). Responsible personnel managing the program attended off-island trainings during the fiscal year, however, standard operating procedures that specifically address the applicable compliance requirements have not yet been established. Effect: GovGuam is in noncompliance with applicable special tests and provisions for provider eligibility (screening and enrollment). The reportable questioned cost is $1,562,177 based on the items identified in Conditions above. Recommendation: DPHSS management should prioritize to establish internal policies and procedures over compliance with applicable special tests and provisions for provider eligibility (screening and enrollment). Views of Responsible Officials: DPHSS agrees with this finding. DPHSS is aware that deficiencies exist with the Medicaid provider enrolment process. DPHSS’s response to this deficiency is addressed in its modernization plan, which will automate certain provider enrolment functions. In March 2024, DPHSS performed site visits for 21 providers, and since then has continued to perform site visits year-round. Memorandums regarding provider compliance topics have also been communicated to providers and published on the provider portal, including information regarding criminal background checks. DPHSS is currently contracted with a consultant that is assisting in the implementation of compliant provider enrolment operations, which includes policy revisions, updates to provider applications and disclosure forms, development of standard operating procedures, and training for both staff and providers.   Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Views of Responsible Officials, continued: In addition, DPHSS is currently in the process of establishing a Medicaid Program Integrity Unit (PI Unit) with a mission to conduct independent and objective Medicaid program integrity functions adherent to federal and local laws. The PI Unit will also assist DPHSS in addressing and managing Medicaid related Corrective Action Plans.

Finding No.: 2024-048 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Eligibility for Individuals Area: Special Tests and Provisions - Utilization Control Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Area: Special Tests and Provisions - Provider Health and Safety Standards Questioned Costs: $ Undeterminable Criteria: 2 CFR 200.302 states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Moreover, the recipient’s and subrecipient’s financial management system must provide for maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. Condition: A reconciled medical claims schedule for the fiscal year could not be provided. Specifically, total amount of medical claims per medical claims schedule ($186 million) did not agree with the claims expenditure per financial records ($189 million). Cause: There is a lack of reconciliation process between Department of Public Health and Social Services (DPHSS) and Department of Administration (DOA). Effect: We are unable to establish a complete and accurate population from which to draw our selection of transactions in order to provide sufficient appropriate audit evidence to support an opinion on compliance. No questioned cost is presented as we are unable to quantify the extent of noncompliance.   Finding No.: 2024-048, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Eligibility for Individuals Area: Special Tests and Provisions - Utilization Control Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Area: Special Tests and Provisions - Provider Health and Safety Standards Questioned Costs: $ Undeterminable Recommendation: Reconciliation process between DPHSS and DOA should take place to ensure that claims expenditure per financial record is supported by underlying medical claims schedule. Views of Responsible Officials: DPHSS agrees with this finding. To address the recommendation for a reconciliation process, DPHSS is in the process of forming a multi-agency technology initiative which will include: • Establishment of an Inter-Agency Data Hub: DPHSS, in collaboration with the Office of Technology (OTECH) and the Department of Administration (DOA), aims to establish a centralized Data Hub. This hub will facilitate real-time or scheduled data synchronization between the DPHSS medical management systems and DOA’s financial accounting records, which are managed in the Guam Financial Management Information System (GFMIS). The data hub is intended to ensure all claims paid are automatically after proper approvals and are then reconciled with the general ledger. • Inter-Agency Agreement and Coordination: DPHSS acknowledges that successful implementation of this Data Hub requires a unified commitment. DPHSS leadership is coordinating with the Director of DOA to discuss the technical requirements and administrative protocols. A formal Memorandum of Agreement (MOA) or a joint standard procedure will be sought, subject to the concurrence and approval by both Agency Directors. • Manual Interim Reconciliation: Until the Data Hub is fully operational, DPHSS will work with DOA to implement a monthly manual reconciliation process. This will involve a “crosswalk” review of claim batch totals against financial system postings to identify and resolve variances (such as voided checks or manual adjustments) in a timely manner. • Engagement with OTECH: Once the two directors agree on the framework, DPHSS will engage OTECH to design the data architecture necessary to ensure data integrity, security, and compliance with federal reporting standards. Estimated implementation timeframe: March 31, 2027

Finding No.: 2024-049 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $65,621 Criteria: In accordance with the applicable activities allowed or unallowed requirements, institutions must demonstrate that costs incurred are allowable under the relevant program legislation, federal awarding agency regulations, and the terms and conditions of the award and consistent with the purpose of the grant. 2 CFR 200.403(a) states that federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and 2 CFR 200.403(g) states that costs should be adequately documented. Furthermore, 2 CFR 200.431(c) states that the cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker’s compensation insurance (except as indicated in 2 CFR 200.447); pension plan costs; and other similar benefits are allowable, provided such benefits are permitted under established written policies. The recipient or subrecipient must allocate fringe benefits to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities and charged as direct or indirect costs following the recipient’s or subrecipient’s accounting practices. Conditions: 1. For one (or 8%) of twelve items, aggregating $900,119 of $1,109,001 in total non-payroll expenditures, there were no supporting documents (e.g. contracts, vendor invoice, payment advice) on file to substantiate whether expenditure amounting to $61,799 related to federal award no. PA09GU4495PW00061-54 and with voucher no. IJE0027179, was allowable cost of the underlying grant.   Finding No.: 2024-049, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $65,621 Conditions, continued: 2. For three (or 33%) of nine items, aggregating $13,103 of $833,788 in total payroll expenditures, deficiencies were noted, as follows: Item No. See the Notes to the SEFA for chart/table. For item # 1, personnel action file was not on file. For item #s 2 through 3, there were no supporting documents (e.g. timesheet, payroll register, personnel action file) on file to substantiate whether expenditure was allowable cost of the underlying grant. Cause: The Department of Administration (DOA) did not enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions and ensuring expenditures are necessary and reasonable for the performance of the Federal award. Effect: GovGuam is in noncompliance with activities allowed or unallowed and allowable costs/cost principles requirements. The reportable questioned cost is $65,621 based on the items identified in Conditions above. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable activities allowed or unallowed and allowable costs/cost principles requirements, specifically, retaining sufficient documentation to support transactions.   Finding No.: 2024-049, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Activities Allowed or Unallowed Area: Allowable Costs/Cost Principles Questioned Costs: $65,621 Views of Responsible Officials: Guam Homeland Security (GHS) will make sure that proper supporting documentation is available. GHS will also identify department personnel responsible.

Finding No.: 2024-050 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with 44 CFR 206.65, the Federal share for assistance provided shall not be less than 75 percent of the eligible costs. Per applicable matching requirement, the accountability for meeting the matching requirement resides with the recipient and is determined at the time of project accounting as part of project closeout (i.e., the nonfederal share does not have to be met until the end of the project). In accordance with FEMA Recovery Policy 104-11-2 (B)(2)(a), FEMA provides contribution for management costs based on actual costs incurred up to 7 percent of the total award amount for the disaster or emergency, excluding subrecipient management costs. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. Required non-federal share of matching could not be determined as underlying grant agreements were not made available. 2. Guam Homeland Security (GHS) was unable to demonstrate and provide evidence of compliance with the aforementioned earmarking requirement. 3. GHS lacks adequate internal policies and procedures over compliance with the applicable matching and earmarking requirements. Cause: GHS management did not monitor compliance with applicable matching and earmarking requirements.   Finding No.: 2024-050, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Effect: We are unable to verify compliance with the requirements for matching. Furthermore, GovGuam is in noncompliance with applicable earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GHS management should establish internal policies and procedures over compliance with applicable matching and earmarking requirements. Also, GHS management should clearly identify department/ personnel responsible for program’s compliance. Views of responsible officials: GHS will create a Standard Operating Procedure (SOP) to establish internal policies and procedures with applicable matching and earmarking requirements. GHS will also identify department personnel responsible.

Finding No.: 2024-051 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Period of Performance Questioned Costs: $ Undeterminable Criteria: In accordance with applicable period of performance (POP) requirements, a State may only charge allowable costs incurred during a federal award’s period of performance as specified in the terms and conditions of the federal award or in the approved extension. Condition: Compliance with period of performance of expenditures related to the following federal award could not be determined as underlying grant agreements were not made available: See the Notes to the SEFA for chart/table. Cause: Guam Homeland Security (GHS) was unable to provide copy of underlying grant agreements. Effect: GovGuam is in noncompliance with applicable period of performance requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GHS management should establish internal policies and procedures over compliance with applicable period of performance requirements. Furthermore, GHS management should implement adequate internal control policies and procedures requiring retention of all grant agreements.  Finding No.: 2024-051, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Area: Period of Performance Questioned Costs: $ Undeterminable Views of Responsible Officials: GHS will create a Standard Operating Procedure (SOP) to establish internal policies and procedures over compliance with applicable period of Performance requirements, as well as retention of all grant agreements. GHS will also identify department personnel responsible.

Finding No.: 2024-052 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Reporting Questioned Costs: $0 Criteria: 2 CFR 200.302(a) states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 300.302(b) states that recipient’s financial management system must provide for the following: 1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in 2 CFR 200.328 and 200.329. 3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 2 CFR 200.328(c) states that recipient must submit financial reports as required by the Federal award. Conditions: 1. We are unable to establish a complete list of financial reports required to be submitted during the fiscal year as Guam Homeland Security (GHS) was unable to provide copies of each grant award. GHS was unable to demonstrate that the financial reports submitted to our audit team consisted of all the required reports. Finding No.: 2024-052, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Reporting Questioned Costs: $0 Conditions, continued: 2. From the list of reports submitted to our audit team, for eight (or 100%) of eight reports tested, records that accumulate and summarize reported data such as 1) cash receipts; 2) cash disbursements; and 3) federal share of expenditures, were not provided for the following: See the Notes to the SEFA for chart/table. Cause: Department of Administration (DOA) assigned GHS as the agency responsible for providing required audit documentation, however, GHS did not provide timely responses to the audit team’s requests. GHS could not identify the personnel responsible for compliance with applicable reporting requirements. Effect: We are unable to determine compliance with applicable reporting requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GHS management should enforce monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain a monitoring of financial reports required to be submitted for each grant award effective during the fiscal year.   Finding No.: 2024-052, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Reporting Questioned Costs: $0 Views of Responsible Officials: GHS will work with DOA to make sure reports are submitted on time. GHS will also retain documentation of submitted reports.

Finding No.: 2024-053 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Special Tests and Provisions – Project Accounting Questioned Costs: $ Undeterminable Criteria: In accordance with 44 CFR 206.205(b)(1), for large projects, the recipient shall make an accounting to the Regional Administrator of eligible costs for each approved large project. In submitting the accounting the recipient shall certify that reported costs were incurred in the performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, and that payments for that project have been made in accordance with 2 CFR 200.305. Each large project shall be submitted as soon as practicable after the subrecipient has completed the approved work and requested payment. Condition: Guam Homeland Security (GHS) did not provide a listing of ongoing and completed large projects during the audit period. Cause: Department of Administration (DOA) assigned GHS as the agency responsible for providing required audit documentation, however, GHS did not provide timely responses to the audit team’s requests. GHS could not identify the personnel responsible for compliance with applicable special tests and provision requirements. Effect: We are unable to verify compliance with the requirements for special tests and provisions – project accounting. Specifically, we are unable to ascertain if (1) for ongoing large projects, costs submitted for reimbursement were in compliance with the requirements for eligible work under the applicable Project; and (2) for completed large projects, entity’s files document the total costs as allowable costs and if the costs are for allowable activities under the applicable Project. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GHS management should establish internal policies and procedures over compliance with applicable special tests and provisions requirements. Also, GHS management should clearly identify department/ personnel responsible for program’s compliance. Finding No.: 2024-053, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Special Tests and Provisions – Project Accounting Questioned Costs: $ Undeterminable Views of responsible officials: GHS will create a Standard Operating Procedure (SOP) to establish internal policies and procedures in compliance with applicable special tests and provision requirements. GHS will also identify department personnel responsible.

Finding No.: 2023-008 Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2023 Disaster Supplemental Nutrition Assistance Program (D-SNAP) Area: Special Tests and Provisions - Quality Control and Program Integrity Questioned Costs: $0 Criteria: In accordance with applicable quality control and program integrity requirements relative to D- SNAP, Guam Department of Public Health and Social Services, Bureau of Economic Security (BES), will perform the following: 1. Review 100 percent of all applications from permanent and temporary government employees. These results must be included in the Post-Disaster Report. 2. Conduct individual case reviews (public and employee cases) to ensure D-SNAP eligibility and allotments were correctly determined. Condition: 1. BES neither identified applications from government employees nor reviewed 100% of all applications from government employees, and therefore, the results are not included in the Post-Disaster Report. 2. No documentation was provided to substantiate that BES conducted the required individual case reviews. Cause: GovGuam did not effectively monitor compliance with applicable D-SNAP quality control and program integrity requirements given the high volume of applications and limited staffing. Effect: GovGuam is in noncompliance with applicable D-SNAP quality control and program integrity requirements. No questioned cost is reported as we are unable to quantify the extent of noncompliance. Recommendation: Responsible personnel should perform the required verifications and reviews in accordance with applicable quality control and program integrity requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 37 Finding No.: 2023-008, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2023 Disaster Supplemental Nutrition Assistance Program (D-SNAP) Area: Special Tests and Provisions - Quality Control and Program Integrity Questioned Costs: $0 Views of Responsible Officials: We agree with this finding. Due to the overwhelming volume of applications, it was difficult to determine and review 100% of applications. The current application does not specify, whether the applicant or a household member is a government employee. The goal was to service as many people as possible in a very short time frame. Details of corrective actions and target dates are set forth in GovGuam’s Corrective Action Plan.

Finding No.: 2023-009 Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2023 7GU400GU4 Area: Special Tests and Provisions – ADP System for SNAP Questioned Costs: $27,273 Criteria: In accordance with applicable special tests and provisions requirements for the ADP system for SNAP, States must accurately and completely process and securely store all case file information for eligibility determination and benefit calculation. Condition: For four (or 10%) of forty case files tested, aggregating $27,292 of $151.9 million in total Program benefits, the data obtained from PHPro does not have files to substantiate all case file information that has been input in the system, including the certification period. Further, Case Number 201301439 incorrectly processed the household size of the applicant, resulting in an overpayment. See the Notes to the SEFA for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable special tests and provisions requirements for the ADP System for SNAP. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the ADP System for SNAP. The reportable questioned cost is $27,273. Identification as a Repeat Finding: 2022-011 Government of Guam Schedule of Findings and Questioned Costs, continued 39 Finding No.: 2023-009, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2023 7GU400GU4 Area: Special Tests and Provisions – ADP System for SNAP Questioned Costs: $27,273 Recommendation: GovGuam should closely monitor processes over the ADP System for SNAP so that the required filing and documentation of data inputted into the PHPro system are accurate and in accordance with applicable special tests and provisions requirements. Views of Responsible Officials: Agency disagrees with the finding. [Case Numbers 600020362, 300075627 and 300073890] Documentation was provided to auditor electronically on 09/03/2024. Additional documentation was provided in person on 11/15/2024 because the files were too large to send via email. [Case Number 201301439] The additional documentation related to the "processing of the household size of the applicant, resulting in an overpayment" was included in the files provided on 11/15/2024 to dispute this finding. Additional information was provided to explain. 201301439 - benefit amount is for a household size of 8 based on the renewal and change reports submitted during the certification period 3/1/2024-02/29/2024. Benefit amount indicated on the audit report says $312, which was not what was issued. Screenshots of this process was provided. 600020362 – The notice of action was provided and all other documents for this case. Details of corrective actions and target dates are set forth in GovGuam’s Corrective Action Plan. Auditor Response: The documentation that was provided on 09/03/2024 and 11/15/2024 for Case Numbers 600020362, 300075627 and 300073890 did not contain the required Notice of Action. The additional documentation relative to Case Number 201301439 did not substantiate the use of eight as the household size for purposes of the SNAP allotment for FY 2023; the case file documentation demonstrates a household size of only seven. Also, the finding report amount of $312 represents the excess allotment between a household size of eight ($2,493) and a household size of seven ($2,181).

Finding No.: 2023-010 Federal Agency: U.S. Department of Commerce AL Program: 11.031 Broadband Infrastructure Program Federal Award No.: 66-08-I2208 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: Subawards are not reported in FSRS, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. GovGuam subsequently reported the required information in FSRS in October 2024. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable reporting requirements. Responsible personnel should review reported amounts for accuracy prior to submission. Responsible personnel should establish and implement controls over compliance with applicable reporting requirements relative to reporting subawards in FSRS. Government of Guam Schedule of Findings and Questioned Costs, continued 41 Finding No.: 2023-010, continued Federal Agency: U.S. Department of Commerce AL Program: 11.031 Broadband Infrastructure Program Federal Award No.: 66-08-I2208 Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The subrecipients were not listed in the FFATA Subaward Reporting System (FSRS). This was an oversight on our part and have corrected this action. The FSRS was updated to include the subrecipients to the Guam Department of Administration Guam Broadband Infrastructure Program (Federal Award ID Number 66-08-I2208). Moving forward, we will ensure to report first-tier subawards of $30,000 or more to the Federal funding Accountability and Transparency Act Subaward Reporting System. This has been remedied as the Agency did the reporting in FSRS in FY24.

Finding No.: 2023-011 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $0 Criteria: In accordance with the applicable equipment management requirements, grantees that acquire equipment with Federal funds are required to perform a physical inventory of the property and reconcile results with property records at least once every two years. Such property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. In addition, adequate maintenance procedures must be established to keep the property in good condition. Condition: GovGuam’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2023, the required biannual physical inventory and reconciliation were not performed. We are unable to assess the overall cumulative monetary value of this deficiency. However, the table below summarizes the level of total capital outlays for the program over the past five years. See the Notes to the SEFA for chart/table. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. Government of Guam requires more funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. Government of Guam Schedule of Findings and Questioned Costs, continued 43 Finding No.: 2023-011, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $0 Identification as a Repeat Finding: 2022-008 Recommendation: GovGuam should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system is near completion which will help automate the tracking and reporting of capital assets. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. In addition, the Agency will require all line agencies to designate a property manager to periodically track tagged assets on a revolving basis. Review of Assets acquired in FY2023 was completed, with FY2024 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.

Finding No.: 2023-012 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $515,384 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. Awards shall be made to the lowest responsible and responsive bidder. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. All procurement records shall be retained and disposed of in accordance with record retention guidelines and schedules approved by the Attorney General. Condition: Of 14 procurement transactions tested, aggregating $5.9 million of $9.2 million in total applicable non-payroll program expenditures, we noted the following: 1. For two (or 14%), no procurement file was provided. See the Notes to the SEFA for chart/table. 2. For two (or 14%), GovGuam paid vendor number M0098076 under Prior Reference number D230660529 on behalf of a subrecipient and did not retain documentation to ascertain that the subrecipient’s vendor selection complied with applicable procurement requirements. Subsequently, GovGuam provided procurement files obtained from the subrecipient; we noted noncompliance. Government of Guam Schedule of Findings and Questioned Costs, continued 45 Finding No.: 2023-012, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $515,384 Condition, continued: For PO Number 20224338, no written rationale is included in the procurement file as to why the lowest bidder was not selected. The lowest bidder quoted $154.28 per medical drug vial, and the selected bidder quoted $189.50, resulting in an excess quote of $35.22. GovGuam paid the vendor for 72 vials at the excess quote, resulting in a questioned cost of $2,536. For PO Number 20230055, the small purchases method was used; however, less than three informal price quotations are on file. The procurement of a medical drug includes four solicitations, to which three did not respond. The solicitations were emailed the morning of 10/04/2022 and required delivery within 24 hours. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transaction. See the Notes to the SEFA for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $515,384. Identification as a Repeat Finding: Finding 2022-013 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Prior to making payments directly to a vendor on behalf of a subrecipient, responsible personnel should retain documentation that substantiates compliance with procurement requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 46 Finding No.: 2023-012, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $515,384 Views of Responsible Officials: Legal requirement was followed. In circumstances where less than 3 quotes are obtained, that is a market indication that further efforts to secure quotation will be unsuccessful.

Finding No.: 2023-013 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in SF-425 Federal Financial Report should be accurate. Condition: 1. For two (or 22%) of nine reports tested, the amounts reported in the SF-425 reports for the semi-annual reporting periods 12/31/2022 and 06/30/2023 did not agree with the underlying accounting records, as follows: See the Notes to the SEFA for chart/table. 2. For two (or 22%) of nine reports tested, the amounts reported in the SF-425 report for the semi- annual reporting period 12/31/2022 did not agree with the underlying accounting records, as follows: See the Notes to the SEFA for chart/table. Finding No.: 2023-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Reporting Questioned Costs: $0 Cause: GovGuam did not enforce monitoring controls over compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as reported amounts do not represent Program overpayments. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain underlying accounting records to substantiate reported amounts. Views of responsible officials: The Agency disagrees with the finding of non-compliance as we have complied to submit the reporting in a timely manner to the federal agency. Due to the timing of required reporting, it may not align with reported AS400 expenditure after reporting has been posted. There is no provision in the reporting for adjustments of previously reported values. Moving forward all reporting will be reviewed and approved by the Federal and Compliance Section. Implementation of the Federal Module anticipated to be fully functional by end of FY2025 will automate and improve this process. Auditor Response: Timeliness of report submission is not an issue. We acknowledge that reported amounts may not align with post-reporting transactions in AS400. However, no documentation of contemporaneous transactions was provided to substantiate reported amounts, and no reconciliation was provided to explain the identified variances.

Finding No.: 2023-014 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, expenditures reported in quarterly reports should be supported by underlying accounting records. Condition: The expenditures reported in the quarterly reports differ from amounts recorded in AS400, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is reported because the variances do not represent overpayments. Identification as a Repeat Finding: Finding 2022-017 Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain underlying accounting records to substantiate reported amounts. Government of Guam Schedule of Findings and Questioned Costs, continued 50 Finding No.: 2023-014, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The Agency disagrees with the finding of non-compliance as we have complied to submit the reporting in a timely manner to the federal agency. Due to the timing of required reporting, it may not align with reported AS400 expenditures after reporting has been posted. There is no provision in the reporting for adjustments of previously reported values. Moving forward all reporting will be reviewed and approved by the Federal and Compliance Section. Implementation of the Federal Module anticipated to be fully functional by end of FY2025 will automate and improve this process. Auditor Response: Timeliness of report submission is not an issue. We acknowledge that reported amounts may not align with post-reporting transactions in AS400. However, no documentation of contemporaneous transactions was provided to substantiate reported amounts, and no reconciliation was provided to explain the identified variances.

Finding No.: 2023-015 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Eligibility Questioned Costs: $2,931 Criteria: In accordance with applicable eligibility requirements, HAF participants are required to maintain documentation to support eligibility determinations. Condition: For two (or 3%) of 60 transactions, aggregating $66,243 of $6.4 million in total Program benefits, no case file was provided. See the Notes to the SEFA for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable eligibility requirements. GovGuam did not effectively maintain documentation to corroborate eligibility determinations. Case file documentation was misplaced due to the transfer of files to a new office. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $2,931 because the projected questioned cost exceeds the threshold. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable eligibility requirements. Responsible personnel should ensure that all supporting case files are stored and properly maintained to substantiate eligibility determinations. Views of Responsible Officials: All documents were provided to HAF for client's eligibility for the program. However, due to a move, file was misplaced. Records Management SOPs will be updated to have all documentation stored electronically.

Finding No.: 2023-016 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements expenditures reported in quarterly reports should be supported by underlying accounting records. Condition: The expenditures reported in the quarterly reports differ from amounts recorded in AS400, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is reported because the variances do not represent overpayments. Identification as a Repeat Finding: Finding 2022-020 Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain underlying accounting records to substantiate reported amounts. Government of Guam Schedule of Findings and Questioned Costs, continued 53 Finding No.: 2023-016, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The Agency disagrees with the finding of non-compliance as we have complied to submit the reporting in a timely manner to the federal agency. Due to the timing of required reporting, it may not align with reported AS400 expenditures after reporting has been posted. There is no provision in the reporting for adjustments of previously reported values. Moving forward all reporting will be reviewed and approved by the Federal and Compliance Section. Implementation of the Federal Module anticipated to be fully functional by end of FY2025 will automate and improve this process. Auditor Response: Timeliness of report submission is not an issue. We acknowledge that reported amounts may not align with post-reporting transactions in AS400. However, no documentation of contemporaneous transactions was provided to substantiate reported amounts, and no reconciliation was provided to explain the identified variances.

Finding No.: 2023-017 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $3,984,442 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. A requirement for a particular proprietary item does not justify a sole source procurement if there is more than one potential bidder or offeror for that item. In cases of reasonable doubt, competition should be solicited. All procurement records shall be retained and disposed of in accordance with record retention guidelines and schedules approved by the Attorney General. Condition: Of 60 procurement transactions, aggregating $21.5 million of $28.3 million in total applicable non- payroll program expenditures, we noted the following: 1. For one (or 2%), the small purchases method was used; however, less than three informal price quotations are on file. The procurement of miscellaneous mitigation and repairs of a public building includes three quotations, of which two indicate “no quote.” Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. See the Notes to the SEFA for chart/table. Government of Guam Schedule of Findings and Questioned Costs, continued 55 Finding No.: 2023-017, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $3,984,442 Condition, continued: 2. For one (or 2%), documentation in the procurement file provides a justification for sole source procurement of a proprietary item, as well as informal solicitations of three other vendors who provided responses of “no quote.” Such rationale and documentation are insufficient to demonstrate that the required services were available from only a single supplier. Competitive sealed bidding procedures should have been used given the dollar value of the required services. See the Notes to the SEFA for chart/table. 3. For 10 (or 17%) no procurement file was provided. See the Notes to the SEFA for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $3,984,442 from Conditions 2 and 3. Government of Guam Schedule of Findings and Questioned Costs, continued 56 Finding No.: 2023-017, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $3,984,442 Identification as a Repeat Finding: Finding 2022-022 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: Procurement personnel will continue to enforce compliance with applicable procurement. A requirement of no less than three (3) price quotations to be on file, with evidence of solicitation from other potential suppliers to participate. In addition, a requirement for a "no quote" submission and to solicit from other potential suppliers should a "no quote" be received. It is our belief that we have followed the procurement process based on GAC Title 5 Chapter 5 §5213 for conditions 1 and 2. Condition 3, $3.35 million are not a cost in our books, as these costs are captured in GMHA's audit expenditures. Auditor Response: We obtained Condition 3 transactions from GovGuam’s financial management system expenditure details.

Finding No.: 2023-018 Federal Agency: U.S. Department of The Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $0 Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity must: 1. Clearly identify to the subrecipient the award as a subaward by providing the ALN (Assistance Listings Number) and name. 2. Include the total amount provided to subrecipients from each Federal program. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR 200, subpart F, met the audit requirements. Condition: For the year ended September 30, 2023, GovGuam reported $80.6 million in total program expenditures in the Schedule of Federal Awards (SEFA). A total of $28.3M represents amounts passed through to GovGuam line agencies and component units. Of this amount, approximately $847,464 represents payments for various programs administered by Guam Economic Development Authority (GEDA). Only $27.5 million was identified as amounts passed through to GovGuam line agencies and component units in the final SEFA, which did not include the amounts administered by GEDA. According to Executive Order No. 2021-22, dated September 7, 2021, “GEDA is appointed to serve as the Program processor for Guam, subject to continued monitoring and oversight by the Office of the Governor. The Administrator of GEDA shall serve as the official responsible for overseeing GEDA’s fulfillment of the Program, which includes the following items:…[(]i[)].. Implementing the Program, inclusive of drafting the application, standard operating procedures (SOP), and other relevant documentation. [(]ii.[)] Receiving and reviewing applications and submitting payment requests to the Department of Administration for disbursement to eligible small businesses.” Government of Guam Schedule of Findings and Questioned Costs, continued 58 Finding No.: 2023-018, continued Federal Agency: U.S. Department of The Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $0 Condition, continued: Similar language is documented in other executive orders, describing GEDA as the administrator of various programs funded by ALN 21.027 and describing GEDA’s responsibility to make eligibility determinations. Therefore, GEDA meets the definition of a subrecipient, and amounts administered by GEDA should be reported in the SEFA as amounts passed through to subrecipients. Cause: GovGuam did not properly identify amounts passed through to subrecipients and did not enforce compliance with applicable subrecipient monitoring requirements. The Department of Administration believes that GEDA is not a subrecipient. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. No questioned cost is reported because GEDA underwent a Single Audit for FY 2023. Identification as a Repeat Finding: Finding 2022-023 Recommendation: GovGuam should enforce compliance with applicable subrecipient monitoring requirements. Also, GovGuam should consider seeking guidance and confirmation from the Grantor Agency regarding the classification of GEDA as either a subrecipient or a contractor. Views of Responsible Officials: The Government continues to disagree with the auditor. The language of CFR 200.331(c) is clear that it is the judgment of the pass-through entity that is important. The auditor does not explain the reasoning for reaching a different opinion. Many jurisdictions have engaged third-party administrators for programs without concluding that they become sub-recipients. Government of Guam Schedule of Findings and Questioned Costs, continued 59 Finding No.: 2023-018, continued Federal Agency: U.S. Department of The Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $0 Auditor Response: The language of 2 CFR 200.331(c) is clear that “the pass-through entity must use judgement” and that “the substance of the relationship is more important than the form of the agreement.” The language of 2 CFR 200.331(a)(1) is also clear that a characteristic of a subrecipient is that the entity “Determines who is eligible to receive what Federal assistance.” The Condition sets forth our rationale.

Finding No.: 2023-019 Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable special reporting requirements, recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: Subawards are not reported in FSRS, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not effectively monitor Program costs for compliance with applicable reporting requirements. Effect: GovGuam appears to be in noncompliance with applicable reporting requirements relative to special reporting for FFATA requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable reporting requirements. Responsible personnel should establish and implement controls over compliance with applicable reporting requirements relative to reporting subawards in FSRS. Views of Responsible Officials: An awardee could not report the required information in FSRS unless the federal awarding agency has registered the award. The US Treasury has not advised the Government that they have registered the Capital Projects Fund award.

Finding No.: 2023-020 Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Subrecipient Monitoring Questioned Costs: $0 Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity must: 1. Clearly identify to the subrecipient the award as a subaward by providing the ALN (Assistance Listings Number) and name. 2. Include the total amount provided to subrecipients from each Federal program. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR 200, subpart F, met the audit requirements. Condition: For the sole subrecipient, Vendor Number U0226001, amounting to $759,030, we did not receive subaward documentation to substantiate communication of the subaward’s terms and conditions. Cause: GovGuam did not enforce monitoring controls over compliance with applicable subrecipient monitoring requirements. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. No questioned cost is presented as we are aware that Vendor Number U0226001 obtained a Single Audit for FY 2023. Recommendation: GovGuam should more closely monitor subrecipients in accordance with subrecipient monitoring requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 62 Finding No.: 2023-020, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.029 Coronavirus Capital Projects Fund Federal Award No.: COVID-19 42 U.S.C. Section 804(b)(1)(B) Area: Subrecipient Monitoring Questioned Costs: $0 Views of Responsible Officials: The agency followed the criteria stated in the finding. Improvements to monitoring controls have been implemented. Prior to the creating of any subrecipient account a copy of the FFATA report be attached, as well as, creating a check list of subrecipient monitoring requirements prior to any payments being made.

Finding No.: 2023-021 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants Federal Award No.: M009061390 Area: Procurement and Suspension and Debarment Questioned Costs: $0 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. All procurement records shall be retained and disposed of in accordance with record retention guidelines and schedules approved by the Attorney General. Condition: For three (or 5%) of 60 procurement transactions, aggregating $166,681 of $506,862 in total applicable non-payroll program expenditures, the small purchases method was used; however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. Government of Guam Schedule of Findings and Questioned Costs, continued 64 Finding No.: 2023-021, continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants Federal Award No.: M009061390 Area: Procurement and Suspension and Debarment Questioned Costs: $0 Condition, continued: 1. The procurement of preventative maintenance of laboratory equipment includes four quotations, of which three indicate “no quote.” 2. The procurement of laboratory/medical items includes five quotations, of which three indicate “no quote.” 3. The procurement of repair and maintenance of marine vessels includes four quotations, of which two indicate “no quote.” See the Notes to the SEFA for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: Procurement process was followed based on GAC Title 5 Chapter 5 §5213.

Finding No.: 2023-022 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants Federal Award No.: M009061390 Area: Program Income Questioned Costs: $645,005 Criteria: In accordance with applicable Cooperative Agreement Programmatic Conditions for program income, all program income generated by the recipient must be added to the assistance award and must be used for the purposes and under the conditions of the award. Pursuant to 2 CFR 1500.7(b), the Addition method applies to the use of program income under the award. The recipient must maintain records which account for program income and specify how program income has been used. Condition: 1. We noted that FY 2023 program income (PI) records of Guam Environmental Protection Agency (GEPA) did not agree with underlying accounting records, as follows: See the Notes to the SEFA for chart/table. 2. No records were provided to specify the uses of excess program income. See the Notes to the SEFA for chart/table. Cause: GovGuam did not monitor compliance with applicable program income requirements. Effect: GovGuam is in noncompliance with applicable program income requirements. The reportable questioned cost is $645,005. Recommendation: Responsible personnel should review reported amounts for accuracy and completeness based on the underlying accounting records. Government of Guam Schedule of Findings and Questioned Costs, continued 66 Finding No.: 2023-022, continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants Federal Award No.: M009061390 Area: Program Income Questioned Costs: $645,005 Views of Responsible Officials: Agency disagrees with the findings. The program income is not tied to assist or supplement the federal awards. The program income is used to supplement the special revenue funds handled by the department. Auditor Response: No documentation was provided to substantiate the use of $645,005 in program income.

Finding No.: 2023-023 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants Federal Award No.: M009061390 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in SF-425 Federal Financial Report should be accurate and complete. Condition: For the one SF-425 report tested, the amounts reported for the semi-annual reporting period ended 09/30/2023 did not agree with the underlying accounting records, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not enforce compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as the reported amounts do not represent overpayments. Recommendation: GovGuam should enforce compliance with applicable reporting requirements. Responsible personnel should review reported amounts for accuracy prior to submission. Views of Responsible Officials: The Agency disagrees with the finding of non-compliance as we have complied to submit the reporting in a timely manner to the federal agency. Due to the timing of required reporting, it may not align with reported AS400 expenditure after reporting has been posted. There is no provision in the reporting for adjustments of previously reported values. Moving forward all reporting will be reviewed and approved by the Federal and Compliance Section. Implementation of the Federal Module anticipated to be fully functional by end of FY2025 will automate and improve this process. Government of Guam Schedule of Findings and Questioned Costs, continued 68 Finding No.: 2023-023, continued Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants Federal Award No.: M009061390 Area: Reporting Questioned Costs: $0 Auditor Response: Timeliness of report submission is not an issue. We acknowledge that reported amounts may not align with post-reporting transactions in AS400. However, no documentation of contemporaneous transactions was provided to substantiate reported amounts, and no reconciliation was provided to explain the identified variances.

Finding No.: 2023-024 Federal Agency: U.S. Department of Education (ED) AL Program: 84.425 Education Stabilization Fund ED Subprogram: 84.425H Education Stabilization Fund–Governors (Outlying Areas) (ESF- Governor) Federal Award No.: COVID-19 S425H210004 Area: Matching, Level of Effort, Earmarking Questioned Costs: $0 Criteria: In accordance with applicable matching, level of effort, earmarking requirements and section 18008 of the CARES Act, the State will maintain support for elementary and secondary education, and State support for higher education, at least at the proportional levels of such support relative to the State’s overall spending, averaged over fiscal years 2017, 2018, and 2019. Such average is defined as the baseline. Furthermore, a State must use the same data sources in determining overall State spending for the baseline years and FY 2023. Condition: The Government of Guam has not submitted final 2023 expenditure data for elementary/secondary education, higher education, and overall Outlying Area spending. Based on our reading of email communications from U.S. ED, Education Program Specialist, Insular Areas, in September 2024, we noted that U.S. ED is aware of such pending submission. Calculations using preliminary data appear to indicate that GovGuam’s maintenance of effort for FY 2023 may be deficient, as follows: See the Notes to the SEFA for chart/table. Government of Guam Schedule of Findings and Questioned Costs, continued 70 Finding No.: 2023-024, continued Federal Agency: U.S. Department of Education (ED) AL Program: 84.425 Education Stabilization Fund ED Subprogram: 84.425H Education Stabilization Fund–Governors (Outlying Areas) (ESF- Governor) Federal Award No.: COVID-19 S425H210004 Area: Matching, Level of Effort, Earmarking Questioned Costs: $0 Cause: GovGuam did not enforce monitoring controls over compliance with applicable matching, level of effort, earmarking requirements relative to maintenance of effort requirements. Effect: GovGuam appears to be in noncompliance with applicable matching, level of effort, earmarking requirements relative to maintenance of effort requirements. No questioned cost is presented because the source data for determining overall State spending for the baseline years was the State’s Single Audit Reports, and the State’s Single Audit Report for FY 2023 is yet to be issued. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable matching, level of effort, earmarking requirements relative to maintenance of effort requirements. Responsible personnel should verify GovGuam’s overall spending levels. Views of Responsible Officials: The agency agrees with the findings and will apply the recommendations moving forward.

Finding No.: 2023-025 Federal Agency: U.S. Department of Education (ED) AL Program: 84.425 Education Stabilization Fund ED Subprogram: 84.425H Education Stabilization Fund–Governors (Outlying Areas) (ESF- Governor) Federal Award No.: COVID-19 S425H210004 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable special reporting requirements, recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, amounts reported in FSRS should agree with the underlying accounting records. Condition: 1. Subawards are not reported in FSRS, as follows: See the Notes to the SEFA for chart/table. 2. For one (or 33%) of three reports tested, Guam Community College reported expenditures of $197,448 in USASpending.gov as opposed to $141,404 shown on the GEER I report submitted in FY2023. This resulted in a variance of $56,044. Cause: GovGuam did not effectively monitor compliance with applicable reporting requirements. Effect: GovGuam appears to be in noncompliance with applicable reporting requirements relative to special reporting for FFATA requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Government of Guam Schedule of Findings and Questioned Costs, continued 72 Finding No.: 2023-025, continued Federal Agency: U.S. Department of Education (ED) AL Program: 84.425 Education Stabilization Fund ED Subprogram: 84.425H Education Stabilization Fund–Governors (Outlying Areas) (ESF- Governor) Federal Award No.: COVID-19 S425H210004 Area: Reporting Questioned Costs: $0 Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable reporting requirements. Responsible personnel should review reported amounts for accuracy prior to submission. Responsible personnel should establish and implement controls over compliance with applicable reporting requirements relative to reporting subawards in FSRS. Views of Responsible Officials: The agency followed the criteria stated in the finding. Improvements to monitoring controls have been implemented. Prior to the creating of any subrecipient account a copy of the FATA report be attached, as well as, creating a check list of subrecipient monitoring requirements prior to any payments being made.

Finding No.: 2023-026 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $0 Criteria: In accordance with the applicable equipment management requirements, grantees that acquire equipment with Federal funds are required to perform a physical inventory of the property and reconcile results with property records at least once every two years. Such property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. In addition, adequate maintenance procedures must be established to keep the property in good condition. Condition: GovGuam’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2023, the required biannual physical inventory and reconciliation were not performed. We are unable to assess the overall cumulative monetary value of this deficiency. However, the table below summarizes the level of total capital outlays for the program over the past five years. See the Notes to the SEFA for chart/table. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. Government of Guam requires more funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. Government of Guam Schedule of Findings and Questioned Costs, continued 74 Finding No.: 2023-026, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $0 Identification as a Repeat Finding: 2022-008 Recommendation: GovGuam should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system is near completion which will help automate the tracking and reporting of capital assets. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. In addition, the Agency will require all line agencies to designate a property manager to periodically track tagged assets on a revolving basis. Review of Assets acquired in FY2023 was completed, with FY2024 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.

Finding No.: 2023-027 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $477,823 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. A requirement for a particular proprietary item does not justify a sole source procurement if there is more than one potential bidder or offeror for that item. In cases of reasonable doubt, competition should be solicited. All procurement records shall be retained and disposed of in accordance with record retention guidelines and schedules approved by the Attorney General. Condition: Of 60 procurement transactions, aggregating $2.3 million of $3.5 million in total applicable non- payroll Program costs, we noted the following: COVID-19: 1. For two (or 3%), the small purchases method was used; however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. Government of Guam Schedule of Findings and Questioned Costs, continued 76 Finding No.: 2023-027, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $477,823 Condition, continued: a. The procurement of medical waste services includes five quotations, of which three indicate “no quote.” b. The procurement of computers includes six quotations, of which four indicate “no quote.” See the Notes to the SEFA for chart/table. COVID-19: 2. For five (or 8%), no procurement file was provided. The documentation that was provided pertained to payments of invoices and not the process of soliciting and selecting the vendor. See the Notes to the SEFA for chart/table. 3. For four (or 7%), documentation in the procurement file is insufficient to demonstrate compliance with sole source procurement. The language of the sole source justification indicates that the supply or service is available from more than one business. See the Notes to the SEFA for chart/table. Government of Guam Schedule of Findings and Questioned Costs, continued 77 Finding No.: 2023-027, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $477,823 Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $477,823 from Conditions 2 and 3. Identification as a Repeat Finding: Finding 2022-025 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: For condition 1, the procurement process was followed based on GAC Title 5 Chapter 5 §5213. For condition 2, the lease was procured by DOA. For condition 3, auditor to provide clarification regarding insufficiency of documentation.

Finding No.: 2023-028 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2301GUCCDF Area: Matching, Level of Effort, Earmarking Questioned Costs: $62,726 Criteria: In accordance with applicable matching, level of effort, earmarking requirements for the direct spending earmark, states and territories must spend not less than 70 percent of the Mandatory and federal and state share of Matching funds (Assistance Listing 93.596) to provide child care assistance to families who: (1) receive Temporary Assistance for Needy Families (TANF) assistance; (2) are attempting through work activities to transition off TANF; and (3) are at risk of becoming dependent on TANF (45 CFR section 98.50(e) and (f)). Condition: During FY 2023, expenditures recorded for ALN 93.596 do not appear to be for child care assistance to needy families. The Program expended approximately 61% for travel and 25% for supplies. Therefore, the required direct spending earmark is deficient, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable matching, level of effort, earmarking requirements for the direct spending earmark. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements for the direct spending earmark.. The reportable questioned cost is $62,726. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable matching, level of effort, earmarking requirements for the direct spending earmark. Prior to approving requisitions to be charged to ALN 93.596, responsible personnel should verify direct spending earmark levels. Government of Guam Schedule of Findings and Questioned Costs, continued 79 Finding No.: 2023-028, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2301GUCCDF Area: Matching, Level of Effort, Earmarking Questioned Costs: $62,726 Views of Responsible Officials: The agency agrees with the finding and will apply the recommendations moving forward. However, the Matching Level of Effort (MOE) earmarking is not a requirement in accordance with the Supplemental Terms and Conditions for the Child Care Mandatory and Matching Funds of the Child Care & Development Fund's Cost Sharing or Matching (Non-Federal Share) of Program Funding, page 2. Item 6 identifies that a state match is not required while Item 8 identifies that the MOE threshold applies to states only.

Finding No.: 2023-029 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Area: Period of Performance Questioned Costs: $40,714 Criteria: In accordance with applicable period of performance (POP) requirements, a non-federal entity may charge only allowable costs incurred during a federal award’s period of performance as specified in the terms and conditions of the federal award or in the approved extension. Condition: GovGuam charged costs to a federal award after the period of performance obligation end date, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not enforce monitoring controls over compliance with applicable period of performance requirements. Effect: GovGuam is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $40,714. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable period of performance requirements. Prior to charging costs to a federal award or liquidating obligations incurred under a federal award, responsible personnel should verify that the period of performance, including the liquidation end date, has not expired. Views of Responsible Officials: The agency agrees with the finding and will apply the recommendations moving forward.

Finding No.: 2023-030 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2301GUCCDD, 2301GUCCDF Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, ACF-696, Child Care and Development Fund Financial Report is due quarterly. Each fiscal year’s expenditure report must be separate; therefore, multiple reports are required if awards from more than one fiscal year are expended in a given quarter. Moreover, expenditures reported should be accurate and supported by underlying accounting records. Also, recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Condition: 1. Grant years 2019 through 2023 expenditures reported per ACF-696 are not accurately supported by underlying accounting records as follows: See the Notes to the SEFA for chart/table. 2. Subawards in the amount of $12,156,202 are not reported in FSRS. See the Notes to the SEFA for chart/table. Government of Guam Schedule of Findings and Questioned Costs, continued 82 Finding No.: 2023-030, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2301GUCCDD, 2301GUCCDF Area: Reporting Questioned Costs: $0 Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is reported because we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: Finding 2022-030 Recommendation: GovGuam should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records and perform reconciliation of the required reports. Responsible personnel should establish and implement controls over compliance with applicable reporting requirements relative to reporting subawards in FSRS. Views of Responsible Officials: The Agency disagrees with the finding of non-compliance as we have complied to submit the reporting in a timely manner to the federal agency. Due to the timing of required reporting, it may not align with reported AS400 expenditures after reporting has been posted. There is no provision in the reporting for adjustments of previously reported values. Moving forward all reporting will be reviewed and approved by the Federal and Compliance Section. Implementation of the Federal Module anticipated to be fully functional by end of FY2025 will automate and improve this process. For condition 2, the Agency will report first-tier subawards to the FSRS system. However, it is noteworthy to mention that the system will be expiring as of March 2025. Auditor Response: Timeliness of report submission is not an issue. We acknowledge that reported amounts may not align with post-reporting transactions in AS400. However, no documentation of contemporaneous transactions was provided to substantiate reported amounts, and no reconciliation was provided to explain the identified variances.

Finding No.: 2023-031 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: COVID-19 2001GUCCC3, COVID-19 2101GUCCC5, COVID-19 2101GUCD6, COVID-19 2101GUCSC6 Area: Subrecipient Monitoring Questioned Costs: $9,471,835 Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR 200 (Uniform Guidance), subpart F, met the audit requirements for a Single Audit. Condition: Of 40 subrecipients tested, aggregating $18.1 million of $33.7 million in amounts passed through to subrecipients, we noted the following: 1. For 23 (or 58%), the CCDF Program did not perform monitoring activities to ensure subrecipients spent funds in accordance with the terms and conditions of the subaward. See the Notes to the SEFA for chart/table. 2. For one (or 3%), the CCDF Program passed through $831,500 to Vendor Number 8S767075 during FY 2023. CCDF did not perform monitoring activities to verify whether the subrecipient met the Single Audit requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 84 Finding No.: 2023-031, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: COVID-19 2001GUCCC3, COVID-19 2101GUCCC5, COVID-19 2101GUCD6, COVID-19 2101GUCSC6 Area: Subrecipient Monitoring Questioned Costs: $9,471,835 Cause: GovGuam did not establish controls over compliance with applicable subrecipient monitoring requirements. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $9,471,835. Recommendation: GovGuam should establish and implement controls over compliance with applicable subrecipient monitoring requirements. Responsible personnel should consider obtaining periodic reports from subrecipients that describe how subgrant funds were used and reviewing such reports for compliance with terms and conditions of the subaward. Views of Responsible Officials: The Agency disagrees with these findings. As per the Information Memorandum ARP Act Child Care Stabilization Funds under the Qualified and Eligible Child Care Providers, Provider Reporting and Monitoring, the ARP Act does not include specific reporting requirements for child care providers receiving subgrants and any subgrant reporting requirements are at the discretion of the lead agency, page 21. Additionally, Lead Agencies that use other governmental or non- governmental subrecipients to administer the program must have written agreements in place outlining roles and responsibilities for meeting CCDF requirements. The contents of the written agreement may vary based on the role the subrecipient is asked to assume or the type of product undertaken, but must include, at a minimum, tasks to be performed, a schedule for completing tasks, a budget which itemizes categorical expenditures, and indicators or measures to assess performance. The Lead Agency has fulfilled this requirement in accordance with 45 CFR section 98.1. Government of Guam Schedule of Findings and Questioned Costs, continued 85 Finding No.: 2023-031, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: COVID-19 2001GUCCC3, COVID-19 2101GUCCC5, COVID-19 2101GUCD6, COVID-19 2101GUCSC6 Area: Subrecipient Monitoring Questioned Costs: $9,471,835 Auditor Response: The referenced Information Memorandum states, “At a minimum, lead agencies should collect the following information from child care providers receiving subgrants:…How funds were used….” No monitoring reports or other documentation was provided to substantiate the Agency’s monitoring and determination as to whether the subaward was used for authorized purposes, complied with the terms and conditions of the subaward, and achieved performance goals.

Finding No.: 2023-032 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2301GUCCDD, 2301GUCCDF Area: Special Tests and Provisions - Health and Safety Requirements Questioned Costs: $145,345 Criteria: In accordance with applicable special tests and provisions requirements, Lead Agencies must ensure that providers serving children who receive subsidies comply with all applicable health and safety requirements. In accordance with the Child Care Development Fund (CCDF) State Plan, Section 5.3 Health and Safety Standards and Training for CCDF Providers, all licensed and license-exempt child care providers must be able to demonstrate compliance with Guam Public Law 31-73, which outlines certain home/facility conditions, as part of the health and safety standards and other requirements prior to the receipt of any CCDF funds. Validations of these requirements are made by Guam Department of Public Health and Social Services (DPHSS) Licensing Office and DPHSS-Division of Environmental Health (DEH) during quarterly facility inspections and monitoring. A certification of compliance report of the Job-Site Inspection is issued by Division of Environmental Health and provided to Guam’s CCDF Program Office and Bureau of Social Services Administration (BOSSA) – Licensing Office. Additionally, all licensed and license-exempt child care providers must complete 15 hours of health and safety related training each year. Condition: Of 33 child care providers tested, aggregating $8.9 million of $14.2 million in Program benefits, we noted the following: 1. For four (or 12%), no DEH annual inspection report is on file for the child care provider who is exempt from licensing requirements. See the Notes to the SEFA for chart/table. 2. For all 33 child care providers, case file documentation is not sufficient to demonstrate that all relevant employees completed 15 hours of health and safety training. Government of Guam Schedule of Findings and Questioned Costs, continued 87 Finding No.: 2023-032, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2301GUCCDD, 2301GUCCDF Area: Special Tests and Provisions - Health and safety requirements Questioned Costs: $145,345 Cause: GovGuam did not effectively monitor license-exempt child care providers for compliance with applicable special tests and provisions for health and safety requirements. Effect: GovGuam is in noncompliance with applicable special tests and provisions for health and safety requirements. The reportable questioned cost is $145,345. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable special tests and provisions for health and safety requirements. Prior to approving an application for a subsidy, responsible personnel should verify that the identified child care provider has obtained a certification of compliance report from DPHSS-DEH accordingly. Views of Responsible Officials: The agency has issued notices of noncompliance to those unresponsive. Moving forward, the bureau will hold providers accountable by issuing a Letter of Warning (LOW) and a Correction Action Plan (CAP) from the Social Service Licensing Officer or Child Care Compliance Officer to ensure compliance with the standards. The Agency disagrees with Condition 1. License-exempt child care providers will not have an annual DEH inspection since they are not required to obtain a sanitary permit. Auditor Response: Condition 1: No other document was provided to substantiate compliance with applicable health and safety requirements.

Finding No.: 2023-033 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in CMS-64, Quarterly Statement of Expenditures for the Medical Assistance Program, should be supported by underlying accounting records. Condition: Reported expenditures are not supported by underlying accounting records, resulting in underreporting, as follows: See the Notes to the SEFA for chart/table. Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as reported expenditures represent allowable costs. Identification as a Repeat Finding: Finding 2022-032 Recommendation: GovGuam should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records, perform reconciliations and retain such documents to substantiate reported amounts. Responsible personnel should also coordinate with the centralized accounting division to identify changes and adjust the CMS-64 reports or underlying records accordingly prior to the submission of the CMS-64 reports. Government of Guam Schedule of Findings and Questioned Costs, continued 89 Finding No.: 2023-033, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The Agency acknowledges this finding and recognizes it as an ongoing issue related to the alignment of our reporting with the Department of Administration (DOA) financial system. One of the primary challenges arises from transactions that are not processed within the designated reporting period, which impacts on our initial submissions to CMS. Any adjustments or transactions made after the quarter's close, which were not captured in our previous reports, contribute to this issue. We understand that addressing this finding is a critical part of our corrective action measures. We are currently working on updating the existing Standard Operating Procedure (SOP) 2023-01, which governs interactions between the Department of Public Health and Social Services (DPHSS) and DOA/Division of Accounts. Since November 2024, we have been collaborating with DOA to revise this SOP with the goal of reconciling Medicaid and CHIP expenditures, as well as aligning reports from CMS-64 with the new Guam Financial Management Information System (GFMIS). Currently, PMS staff is in the process in finalizing the DRAFT SOP. We intend to have the DRAFT SOP completed and forwarded to DOA by Friday, January 31, 2025. If there are no changes to the SOP, we will work to have the SOP signed by all parties no later than February 14, 2025.

Finding No.: 2023-034 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Special Tests and Provisions – Refunding of Federal Share of Medicaid Overpayments to Providers Questioned Costs: $121,735 Criteria: In accordance with applicable special tests and provisions requirements relative to overpayments made to providers, states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment before the federal share must be refunded to the federal Centers for Medicare & Medicaid Services (CMS) via Form CMS-64 Summary, Line 9C1 – Fraud, Waste & Abuse Amounts, Line 9.C2-OIG Complaint False Claims Act, 9.D Other, 9.E. – RAC Collections, 9.F. – PERM Collections or 9.G. – MEQC Collections regardless of whether recovery is made from the provider. The state must credit the federal share to CMS either in the quarter in which the recovery is made or in the quarter in which the one-year period ends following discovery, whichever is earlier. Condition: During FY 2023, the Program reported overpayments to and recoupments from providers of $138,367 and $233,958, respectively. The schedule of overpayments and recoupment were not in sufficient detail to identify the discovery date. Therefore, it cannot be determined whether Federal share of overpayments is properly reported and refunded. Cause: GovGuam did not effectively monitor compliance with applicable special tests and provisions requirements relative to the refunding of overpayments made to providers. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements relative to the refunding of overpayments made to providers. The reportable questioned cost is $121,735 ($138,367 * 87.98% average FMAP). Identification as a Repeat Finding: Finding 2022-033 Government of Guam Schedule of Findings and Questioned Costs, continued 91 Finding No.: 2023-034, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Special Tests and Provisions – Refunding of Federal Share of Medicaid Overpayments to Providers Questioned Costs: $121,735 Recommendation: GovGuam should monitor compliance with applicable special tests and provisions requirements relative to the refunding of overpayments made to providers. Responsible personnel should prepare a schedule of overpayments to and recoupments from providers in sufficient detail to identify discovery dates of overpayments and to report the Federal share of overpayments on Form CMS- 64 quarterly. Views of Responsible Officials: The Agency acknowledges this finding and has developed a corrective action plan that includes a new Standard Operating Procedure (SOP), 2024-005, for the Intake and Processing of Overpayment Checks. This new SOP addresses a gap in our process for tracking overpayment checks and refunding the Federal Share of Medicaid Overpayments to Providers. Furthermore, we are also in the process of updating SOP 2023-03, which focuses on Public Health Professional (PHPro) Entry for Provider Overpayment Checks and Recoupments, to improve our tracking and monitoring of overpayment checks and recoupment reconciliations. Currently, we are still addressing updates to this SOP and require additional time to work with BHCFA staff(s) to gather more information in finalizing the SOP. We intend to complete this SOP no later than February 28, 2025.

Finding No.: 2022-008 AL Program: 15.875 DOI Economic, Social and Political Development of the Territories AL Program: 93.323 HHS COVID-19 – Epidemiology and Laboratory Capacity for Infectious Diseases Area: Equipment and Real Property Management Area: Capital Assets Criteria: 1. In accordance with the applicable equipment management requirements, grantees that acquire equipment with Federal funds are required to perform a physical inventory of the property and reconcile results with property records at least once every two years. Such property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. In addition, adequate maintenance procedures must be established to keep the property in good condition. 2. Reconciliation with inventory records, capital asset ledgers and the general ledger should be timely performed. 3. Capital assets should be reviewed for ongoing pertinence to minimize the opportunity for misstatements and to identify retired assets that have been replaced, disposed, or that have no further value or use. 4. Capital assets should be recorded in accordance with the applicable capitalization policy. Condition: Equipment and Real Property Management 1. GovGuam’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2022, the required biannual physical inventory and reconciliation were not performed. Government of Guam Schedule of Findings and Questioned Costs, continued 38 Finding No.: 2022-008, continued AL Program: 15.875 DOI COVID-19 – Economic, Social and Political Development of the Territories AL Program: 93.323 HHS COVID-19 – Epidemiology and Laboratory Capacity for Infectious Diseases Area: Equipment and Real Property Management Area: Capital Assets Condition, continued: We are unable to assess the overall cumulative monetary value of this deficiency. However, the table below summarizes each of the Government of Guam FY 2022 major programs that has a level of total capital outlays over the past five years that is material to the major program. Additionally, relative to FY 2022 purchases, COVID-19 funding in the amount of $401,678 was used for ALN 15.875 and $303,998 for ALN 93.323. Capital Assets 2. Non-depreciable assets were overstated by $16.6M, and depreciable capital assets were understated by $33.2M. The general ledger was not reconciled to subsidiary ledgers. An audit adjustment was proposed to correct this misstatement. 3. Depreciation expenditures were understated by $61.9M. The general ledger was not adjusted to reflect current year depreciation. An audit adjustment was proposed to correct this misstatement. 4. For seven (or 100%) of seven assets tested, the asset was not made available for verification of physical existence. This condition is reiterated from the prior year audit report. 5. Capital assets were disposed and surveyed, but were not removed from the capital asset register. This condition is reiterated from the prior year audit report. Government of Guam Schedule of Findings and Questioned Costs, continued 39 Finding No.: 2022-008, continued AL Program: 15.875 DOI COVID-19 – Economic, Social and Political Development of the Territories AL Program: 93.323 HHS COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Area: Equipment and Real Property Management Area: Capital Assets Condition, continued: Capital Assets, continued 6. Capital assets were not recorded in accordance with the applicable capitalization policy. A total of $345K in assets were less than the $50,000 threshold per the applicable capitalization policy or were not capitalizable expenses. A subsequent adjustment was recorded to correct this misstatement. This condition is reiterated from the prior year audit report. 7. We noted that $5M in CIP additions tested were pertaining to one project amounting to $9M, which was already completed as of September 30, 2022, but not yet transferred to the proper account. A projected misstatement of capital assets for the current year of $15M is presented and included in the summary of uncorrected misstatements. 8. Management did not maintain a subsidiary ledger that accumulates costs per project. This condition is reiterated from the prior year audit report. Cause: DOA does not have sufficient and adequately trained personnel to maintain the capital asset records. Government of Guam Schedule of Findings and Questioned Costs, continued 41 Finding No.: 2022-008, continued AL Program: 15.875 DOI COVID-19 – Economic, Social and Political Development of the Territories AL Program: 93.323 HHS COVID-19 – Epidemiology and Laboratory Capacity for Infectious Diseases Area: Equipment and Real Property Management Area: Capital Assets Effect: GovGuam is in noncompliance with applicable equipment management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. This noncompliance applies to ALNs 15.875 and 93.323, for which cumulative capital outlays over the past five years exceed the program’s FY 2022 materiality level. Amounts reported as depreciable assets and non-depreciable assets – construction-in-progress may not be adjusted to reflect assets placed in service and reflect completed or abandoned projects, respectively. Such potential misstatements were mitigated through the proposed audit adjustment. Identification as a Repeat Finding: 2021-003 Recommendation: GovGuam should complete the required biannual physical inventory and reconciliations during FY 2023 and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as requesting Federal assistance, processing required reconciliations and reports, training personnel, and coordinating with other governmental units on property management requirements. GovGuam should record capital assets in accordance with the Government’s capitalization policy and should implement a policy to monitor replacements, disposals, transfers of assets and construction in progress by project. Additionally, we recommend management revisit the capitalization policy and consider including all vehicles as part of the reported capital asset inventory. The Division of Accounts should investigate if additional personnel trained in accounting reconciliations and processes are required to allow for timely review and recordation of capital assets. Furthermore, coordination with DPW and engineering firms must occur at project commencement so that accounts are established to track capital costs and to allow for the preparation of periodic reports documenting a project’s percentage of completion. Government of Guam Schedule of Findings and Questioned Costs, continued 42 Finding No.: 2022-008, continued AL Program: 15.875 DOI COVID-19 – Economic, Social and Political Development of the Territories AL Program: 93.323 HHS COVID-19 – Epidemiology and Laboratory Capacity for Infectious Diseases Area: Equipment and Real Property Management Area: Capital Assets Recommendation, continued: Equipment management has been a continuing finding in prior audit reports, and GovGuam management continues to be in the process of effecting corrective action to develop and fund an equipment management system. Views of Responsible Officials: With the new FMIS in its final phase and set to ‘go live’ January 2024, there will be a Fixed Assets Module in place that will help automate the tracking and reporting of capital assets. DOA will update the SOP for the Fixed Assets for capital asset reporting. In additional we will require all line agencies to designate a property manager to periodically track tagged assets on a revolving basis.

Finding No.: 2022-009 Federal Agency: U.S. Department of Agriculture AL Program: 10.542 Pandemic EBT Food Benefits (P-EBT) Federal Award No.: COVID-19 The Families First Coronavirus Response Act, Section 1101 Area: Reporting Questioned Costs: $0 Criteria: Applicable reporting requirements are, as follows: 1. FNS-292B, Report of Disaster Food Stamp Benefit Issuance, should be prepared and submitted. 2. Monthly issuances should be reconciled to actual benefit amounts; and other required key data reported on FNS-388, State Issuance and Participation Estimates, should agree to underlying records. Condition: 1. FNS-292B reports were not prepared and submitted. 2. Four months of monthly issuances per FNS-388 were not reconciled to actual benefit amounts reported on FNS-46, Issuance Reconciliation Report as follow: Government of Guam Schedule of Findings and Questioned Costs, continued 44 Finding No.: 2022-009, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.542 Pandemic EBT Food Benefits (P-EBT) Federal Award No.: COVID-19 The Families First Coronavirus Response Act, Section 1101 Area: Reporting Questioned Costs: $0 Condition, continued: 3. For four months tested, other required key data reported on FNS-388 did not agree to underlying records, as follows: b. Number of Participating People Government of Guam Schedule of Findings and Questioned Costs, continued 45 Finding No.: 2022-009, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.542 Pandemic EBT Food Benefits (P-EBT) Federal Award No.: COVID-19 The Families First Coronavirus Response Act, Section 1101 Area: Reporting Questioned Costs: $0 Condition, continued: c. Number of Participating Households Cause: 1. GovGuam recently requested access to FNS-292B in the Food Program Reporting System and assistance to complete and submit the reports. 2. GovGuam did not enforce monitoring controls over report preparations and over compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable FNS-292B and FNS-388 reporting requirements. No questioned cost is presented as we are unable to quantify the extent of the noncompliance. Identification as a Repeat Finding: Finding 2021-005 Government of Guam Schedule of Findings and Questioned Costs, continued 46 Finding No.: 2022-009, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.542 Pandemic EBT Food Benefits (P-EBT) Federal Award No.: COVID-19 The Families First Coronavirus Response Act, Section 1101 Area: Reporting Questioned Costs: $0 Recommendation: GovGuam should establish and implement controls over applicable reporting requirements. Responsible personnel should monitor the status of required reports well in advance of report due dates and should commence the necessary actions to effect accurate and complete submissions in a timely manner. Responsible personnel should also review underlying records, perform reconciliations, and retain such documents to substantiate reported amounts and required key data. Views of Responsible Officials: The agency (DPHSS) agrees with the findings and recommendations. The Bureau of Economic Security, Division of Public Welfare has been granted access to FNS -292 to ensure reports are submitted on time.

Finding No.: 2022-010 Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2022 7GU400GU4 Area: Special Tests and Provisions – EBT Reconciliation Questioned Costs: $0 Criteria: In accordance with applicable special tests and provisions requirements, States must have systems in place to reconcile all of the funds entering into, exiting from, and remaining in the system each day with the State’s benefit account with Treasury and electronic benefits transfer (EBT) contractor records. This includes a reconciliation of the State’s issuance files of postings to recipient accounts with the EBT contractor. The State must reconcile the financial and management data that comes from the EBT contractor to the SNAP issuance files and settlement data to ensure that benefits are authorized by the State and funds have been properly drawn down. Condition: For forty-three (or 66%) of sixty-five reconciliation dates tested, the reconciliation data contained no dates relative to signoffs, system extractions, or printing, etc., to substantiate whether the daily reconciliations occurred. Cause: GovGuam did not effectively monitor compliance with applicable EBT reconciliation requirements. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the EBT reconciliation. A potential misstatement of federal expenditures within the Schedule of Expenditures of Federal Awards and basic financial statements or related disclosures could exist undetected and uncorrected. No questioned cost is presented, as ending year balances between the State and the EBT contractor are reconciled. Identification as a Repeat Finding: Finding 2021-008 Government of Guam Schedule of Findings and Questioned Costs, continued 48 Finding No.: 2022-010, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2022 7GU400GU4 Area: Special Tests and Provisions – EBT Reconciliation Questioned Costs: $0 Recommendation: Responsible personnel should more closely monitor the EBT reconciliation process so that the required daily reconciliations are completed in accordance with applicable special tests and provisions requirements. If reconciliations are not feasible on a daily basis, GovGuam should consider seeking approval from the Grantor agency for an alternative reconciliation schedule. Views of Responsible Officials: DPHSS agrees with the recommendation. The Bureau of Economic Security, Division of Public Welfare is currently providing a copy of the daily reconciliation to Department of Administration, Division of Accounts. This has been in effect since June 1, 2022.

Finding No.: 2022-011 Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2022 7GU400GU4 Area: Special Tests and Provisions – ADP System for SNAP Questioned Costs: $41,370 Criteria: In accordance with applicable special tests and provisions requirements for the ADP system for SNAP, States must accurately and completely process and securely store all case files information for eligibility determination and benefit calculation. Condition: For five (or 13%) of forty case files tested, the data obtained from PHPro does not have files to substantiate all case file information inputted in the system, including the certification period. Cause: GovGuam did not effectively monitor compliance with applicable special tests and provisions requirements for the ADP System for SNAP. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the ADP System for SNAP. The reportable questioned cost is $41,370. Recommendation: GovGuam should more closely monitor processes over the ADP System for SNAP so that the required filing and documentation of data inputted into the PHPro system are in accordance with applicable special tests and provisions requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 50 Finding No.: 2022-011, continued Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2022 7GU400GU4 Area: Special Tests and Provisions – ADP System for SNAP Questioned Costs: $41,370 Views of Responsible Officials: DPHSS agrees with the finding. Effective 10/1/23 The Bureau of Economic Security, Division of Public Welfare supervisors are verifying documents and making sure it is complete and uploaded into the system. A checklist will be created to ensure all vital documents are completed and uploaded.

Finding No.: 2022-012 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Period of Performance Questioned Costs: $0 Criteria: In accordance with applicable period of performance (POP) requirements, a non-federal entity may charge only allowable costs incurred during a federal award’s period of performance. Unless the federal awarding agency authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award or in the approved extension. Condition: 1. GovGuam charged costs to a federal award after the period of performance ended, as follows: 2. GovGuam liquidated obligations of a federal award after the approved liquidation end date, as follows: Cause: GovGuam did not enforce monitoring controls over compliance with applicable period of performance requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 52 Finding No.: 2022-012, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Period of Performance Questioned Costs: $0 Effect: GovGuam is in noncompliance with applicable period of performance requirements. No questioned cost is presented because GovGuam subsequently obtained grantor-approved extensions with obligation end dates in 2023. Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable period of performance requirements. Prior to charging costs to a federal award or liquidating obligations incurred under a federal award, responsible personnel should verify that the period of performance, including the liquidation end date, has not expired. Views of Responsible Officials: The extension was granted by the Department of Interior.

Finding No.: 2022-013 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $1,370,831 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. 3. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Additionally, all contracts made by the non-Federal entity under the Federal award must contain applicable provisions. Contractors that apply or bid for an award exceeding $100,000 must file the required certification under the Byrd Anti-Lobbying Amendment (31 U.S.C. 1352). Each such contractor certifies that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, among others. Condition: Of 40 procurement transactions tested, aggregating $9.9M of $12.8M in total applicable non-payroll program expenditures, we noted the following: 1. For 1 (or 3%), the procurement was for travel services based on a rotation plan; however, the travel agency rotation log does not appear to demonstrate logical rotations. No questioned cost is reported since the rotation log does demonstrate the selection of various travel service providers during the fiscal year. Government of Guam Schedule of Findings and Questioned Costs, continued 54 Finding No.: 2022-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $1,370,831 Condition, continued: 2. For one (or 3%), the sole source method was used to procure software implementation and integration services under purchase order P216A04028, dated 06/09/2021, for $473,884. The written rationale stated that the supplier is the only provider of the required services. Such rationale is not sufficient, as it prevented other suppliers from competing for the opportunity to participate in this federally funded transaction. 3. For 8 (or 20%), no Byrd Anti-Lobbying certification was provided, as follows: No questioned cost is presented as we are unable to quantify the extent of noncompliance. Government of Guam Schedule of Findings and Questioned Costs, continued 55 Finding No.: 2022-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $1,370,831 Condition, continued: 4. For 12 (or 30%), no procurement file was provided. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $1,370,831 from Conditions 2 and 4. Identification as a Repeat Finding: Finding 2021-009 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 56 Finding No.: 2022-013, continued Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $1,370,831 Views of Responsible Officials: Procurement personnel will continue to enforce compliance with applicable procurement. A requirement of no less than three (3) price quotations to be on file, with evidence of solicitation from other potential suppliers to participate. In addition, a requirement for a “no quote” submission and to solicit from other potential suppliers should a “no quote” be received.

Finding No.: 2022-014 Federal Agency: U.S. Department of the Treasury AL Program: 17.225 Unemployment Insurance (UI) Federal Award No.: COVID-19 UI-34836-20-55-A-66 Grant Program: Pandemic Unemployment Assistance (PUA) Grant Program: Federal Pandemic Unemployment Compensation (FPUC) Area: Eligibility Questioned Costs: $159 Criteria: In accordance with applicable eligibility requirements, a claimant must be a U.S. citizen or if not a U.S. citizen, then approved to work on Guam, to receive a federal public benefit. Additionally, the claimant must certify that he/she is able and available to work. Condition: For 2 (or 3%) of 60 case files tested, case file documentation was not sufficient to support the claimant’s eligibility to receive federal public benefits. Cause: GovGuam did not effectively monitor compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $159 because the projected questioned cost exceeds the threshold. Identification as a Repeat Finding: Finding 2021-011 Recommendation: GovGuam should strengthen monitoring controls over recordkeeping to substantiate compliance with applicable eligibility requirements. Responsible personnel should obtain and file documents such as identification cards and updated activity logs to document communication with claimants prior to determining eligibility. Government of Guam Schedule of Findings and Questioned Costs, continued 58 Finding No.: 2022-014, continued Federal Agency: U.S. Department of the Treasury AL Program: 17.225 Unemployment Insurance (UI) Federal Award No.: COVID-19 UI-34836-20-55-A-66 Grant Program: Pandemic Unemployment Assistance (PUA) Grant Program: Federal Pandemic Unemployment Compensation (FPUC) Area: Eligibility Questioned Costs: $159 Views of Responsible Officials: The agency (Guam Department of Labor) agrees with the findings. The agency is currently working with both claimants to resolve the matter.

Finding No.: 2022-015 Federal Agency: U.S. Department of the Treasury AL Program: 17.225 Unemployment Insurance (UI) Federal Award No.: COVID-19 UI-34836-20-55-A-66 Grant Program: Pandemic Unemployment Assistance (PUA) Grant Program: Federal Pandemic Unemployment Compensation (FPUC) Area: Special Tests & Provisions – UI Program Integrity - Overpayments Questioned Costs: $475,704 Criteria: In accordance with applicable special tests and provisions requirements for overpayments, states should recover PUA and FPUC overpayments. Condition: Of 60 case files tested, aggregating $475,704 of $15.3 million in total overpayments of program benefits, we noted the following: 1. For 37 (or 62%), the notice of overpayment was mailed to the claimant during FY2022. No subsequent documentation was provided to substantiate recoupment of the overpayments, which total $475,704. 2. For 60 (or 100%), the notice of overpayment mailed to the claimant did not specify when payments are due. According to the requirements, claimants have a 30-day limit to repay the overpayments from the date the Notice of Determination was delivered. Cause: GovGuam did not effectively monitor compliance with applicable special tests and provisions requirements for overpayments. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for overpayments. The reportable questioned cost is $475,704. Identification as a Repeat Finding: Finding 2021-012 Recommendation: GovGuam should periodically monitor compliance with applicable special tests and provisions requirements for overpayments. Responsible personnel should timely perform quality control reviews and enforce recovery of overpayments. Government of Guam Schedule of Findings and Questioned Costs, continued 60 Finding No.: 2022-015, continued Federal Agency: U.S. Department of the Treasury AL Program: 17.225 Unemployment Insurance (UI) Federal Award No.: COVID-19 UI-34836-20-55-A-66 Grant Program: Pandemic Unemployment Assistance (PUA) Grant Program: Federal Pandemic Unemployment Compensation (FPUC) Area: Special Tests & Provisions – UI Program Integrity - Overpayments Questioned Costs: $475,704 Views of Responsible Officials: The Agency (Guam Department of Labor) states that based on the final determination for FY 2021 Finding No. 2021-012, USDOL determined that the costs are disallowed and subject to federal debt collection, however, collection efforts which is a required activity of the grant will have to continue. The amount that was allowed was overpayment recovery in the amount of $7,152,222.

Finding No.: 2022-016 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Eligibility Questioned Costs: $1,053 Criteria: In accordance with applicable eligibility requirements, a grantee may only use funds provided in the Emergency Rental Assistance (ERA) program to provide financial assistance and housing stability services to eligible households. Eligibility is limited to households with income that does not exceed 80 percent of the median income for the area in which the household is located. Condition: For 1 (or 2%) of 60 case files tested, aggregating $308,951 of $16.7 million in total program rental assistance costs, documentation for case file number 21-02662 in the amount of $1,053 demonstrates a household member exceeded the income threshold. Therefore, the household is ineligible. Cause: GovGuam did not effectively monitor compliance with applicable eligibility requirements. GovGuam did not effectively document approvals within the case files for compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $1,053 because the projected questioned cost exceeds the threshold. Identification as a Repeat Finding: Finding 2021-017 Government of Guam Schedule of Findings and Questioned Costs, continued 62 Finding No.: 2022-016, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Eligibility Questioned Costs: $1,053 Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable eligibility requirements. Prior to approving applications, responsible personnel should verify that such documents as pay stubs and tax forms are on file to substantiate income eligibility. Views of Responsible Officials: Department of Administration does not agree with the questioned cost. The file in question does not match any amounts in said file. Additional, ERA did not have a cost threshold in the cycle by the case number. The claimant’s income was below the 30% threshold as per their documents submitted and therefore qualified for the program. Auditor Response: We acknowledge that the finding amount of $1,053 does not match the file amount of $1,150. The finding amount is based on the transaction amount sampled from the AS400 financial management system. The claimant’s household income, as documented in the case file, is below the 30% threshold of $49,100 because the monthly income amount was multiplied by only 5 months, with no documented rationale for using a partial year. Our recalculation of the annualized income is $55,858, which exceeds the threshold. Therefore, the household did not qualify for the program.

Finding No.: 2022-017 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, the number of unique homeowners assisted, and expenditures reported in monthly and quarterly reports, should be supported by underlying accounting records. Condition: The number of unique homeowners assisted and expenditures reported in the quarterly reports differ from amounts recorded in AS400, as follows: Expenditures: Cause: GovGuam did not effectively monitor compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is reported because the variances do not represent overpayments. Identification as a Repeat Finding: Finding 2021-018 Government of Guam Schedule of Findings and Questioned Costs, continued 64 Finding No.: 2022-017, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Reporting Questioned Costs: $0 Recommendation: GovGuam should strengthen monitoring controls over applicable reporting requirements. Responsible personnel should maintain underlying accounting records to substantiate reported amounts. Views of Responsible Officials: The timing of required reporting by the US Treasury may not align with reported AS400 expenditures after reporting has been posted. There is no provision in quarterly ERA reporting for adjustments of previously reported values. Moving forward all reporting will be reviewed and approved by the Federal and Compliance Section.

Finding No.: 2022-018 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Special Tests and Provisions Questioned Costs: $0 Criteria: In accordance with applicable special tests and provisions requirements, all redirected ERA1 award funds should be deposited to the official, authorized bank account of the receiving grantee in accordance with the ERA 1 Award Terms. Condition: No documents were provided to substantiate compliance. Cause: GovGuam did not establish and implement controls over compliance with special tests and provisions requirements. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements. No questioned cost is reported because we are unable to quantify the extent of noncompliance. Recommendation: GovGuam should establish and implement controls over compliance with applicable special tests and provisions requirements. Responsible personnel should maintain underlying accounting records to demonstrate that redirected funds are deposited, as required. Views of Responsible Officials: We disagree with this finding. Funds were properly deposited in the Federal account, which was subsequently moved to a different bank account to make sure the funds were not being comingled with other federal funds. We maintained identification for said funds, and moving forward will make sure that reconciliation is done in a timely manner. Auditor Response: No documentation was provided to substantiate the deposits.

Finding No.: 2022-019 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowners Assistance Program Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Cash Management Interest Liability: $82,083 Criteria: In accordance with applicable cash management requirements and the Treasury-State Agreement, the approved funding technique for Guam is Payment Schedule – Weekly, whereby the State shall request funds in an amount that is the prorated share of the lesser of (1) the annual grant divided by 52, or (2) the total amount of Federal funds expected to be paid out for program purposes during the year divided by 52. This funding technique is interest neutral. Condition: During FY 2022, GovGuam requested funds only one time on or about January 28, 2022 in the amount of $12,228,806. During FY 2022, GovGuam expended only $5,439,199, of which $178,020 was paid after September 30, 2022. The remaining cash advance as of 09/30/2023 was $6,967,627. The interest liability for the advance is estimated to be $82,083. Cause: GovGuam did not enforce controls over compliance with applicable cash management requirements. Effect: GovGuam is in noncompliance with applicable cash management requirements. The reportable interest liability and questioned cost is $82,083. Recommendation: GovGuam should implement monitoring controls over compliance with applicable cash management requirements. Prior to requesting Federal funds, responsible personnel should follow the guidelines described in the Treasury-State Agreement. If the approved funding technique is not followed, responsible personnel should calculate and remit interest earned on advances to the Federal Government. Government of Guam Schedule of Findings and Questioned Costs, continued 67 Finding No.: 2022-019, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowners Assistance Program Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Cash Management Interest Liability: $82,083 Views of Responsible Officials: The agency (Department of Administration) disagrees with this finding. Per Homeowner’s Assistance Fund guidance, funds are requested from US Treasury and remitted in advance. This is not a reimbursement program and not subject to the State Cash Management Improvement Act as is the case for other funding advances under American Rescue Plan Act of 2021. Auditor Response: We agree that funds are requested in advance. Advances are subject to the Cash Management Improvement Act and Treasury-State Agreement, and the OMB Compliance Supplement identifies cash management as a requirement that is subject to audit.

Finding No.: 2022-020 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, the number of unique homeowners assisted, and expenditures reported in interim and quarterly reports, should be supported by underlying accounting records. Condition: The number of unique homeowners assisted, and expenditures reported in the reports differ from amounts recorded in AS400, as follows: Expenditures: Cause: GovGuam did not effectively monitor compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is reported because the variances do not represent overpayments. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain underlying accounting records to substantiate reported amounts. Government of Guam Schedule of Findings and Questioned Costs, continued 69 Finding No.: 2022-020, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The timing of required reporting by the US Treasury may not align with reported AS400 expenditures after reporting has been posted. There is no provision in quarterly ERA reporting for adjustments of previously reported values. Moving forward all reporting will be reviewed and approved by the Federal and Compliance Section.

Finding No.: 2022-021 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Allowable Costs/Cost Principles Questioned Costs: $11,423 Criteria: In accordance with applicable allowable costs/cost principles requirements, costs must be necessary and reasonable for the performance of the Federal award in order to be allowable under the Federal award. Condition: For 1 (or 5%) of 22 non-payroll transactions tested, aggregating $60M of $160M in total non_x0002_payroll program costs, the cost of unoccupied hotel rooms during the period from 08/23/2020 through 10/31/2021 does not appear to be a necessary and reasonable. Of the total 74 rooms charged to the Program during the period, 67 rooms (or 91%) remained unoccupied at a daily rate of $150. Although we understand that mass reservations may have been necessary to secure rooms to accommodate unknown numbers of quarantined travelers in FY 2020, we are not aware of monitoring efforts and analytics to more accurately project the required number of room reservations and to minimize costs for unoccupied rooms when experience with the pandemic progressed in FY 2021. Cause: GovGuam did not effectively monitor compliance with applicable allowable costs/cost principles requirements. Effect: GovGuam is in noncompliance with applicable allowable costs/cost principles requirements. The reportable questioned cost is $11,423 because the projected questioned cost exceeds the threshold. Recommendation: GovGuam should effectively monitor program costs for compliance with allowable costs/cost principles requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 71 Finding No.: 2022-021, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Allowable Costs/Cost Principles Questioned Costs: $11,423 Views of Responsible Officials: To maintain effective isolation of infection person(s), these two facilities are the only facilities that could offer the required distance needed. It was not practical to only reserve a portion of the facility as it is unknown as to how many passengers would be arriving. Therefore, a reservation of portions of the hotel were needed for the uncertainty and to maintain separation from personnel not designated for direct quarantine duties. This was done to maintain an effective distance to avoid the spread of the virus, in turn this action help reduce the number of fatalities from over 3,000 to about 470.

Finding No.: 2022-022 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $5,986,031 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. 3. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Additionally, all contracts made by the non-Federal entity under the Federal award must contain applicable provisions. Contractors that apply or bid for an award exceeding $100,000 must file the required certification under the Byrd Anti-Lobbying Amendment (31 U.S.C. 1352). Each such contractor certifies that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, among others. Condition: Of 60 procurement transactions tested, aggregating $14.4M of $16.6M in total applicable non-payroll program expenditures, we noted the following: 1. For 3 (or 5%), documentation in the procurement file is insufficient to demonstrate compliance with sole source procurement: Government of Guam Schedule of Findings and Questioned Costs, continued 73 Finding No.: 2022-022, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $5,986,031 Condition, continued: 2. For 2 (or 5%), documentation in the procurement file is insufficient to demonstrate compliance with emergency procurement: 3. For 11 (or 18%), no Byrd Anti-Lobbying certification was provided, as follows: No questioned cost is presented as we are unable to quantify the extent of noncompliance. Government of Guam Schedule of Findings and Questioned Costs, continued 74 Finding No.: 2022-022, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $5,986,031 Condition, continued: 4. For 26 (or 43%), no procurement file was provided. Government of Guam Schedule of Findings and Questioned Costs, continued 75 Finding No.: 2022-022, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Procurement and Suspension and Debarment Questioned Costs: $5,986,031 Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $5,986,031 from Conditions 1, 2 and 4. Identification as a Repeat Finding: Finding 2021-020 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: Procurement personnel will continue to enforce compliance with applicable procurement. A requirement of no less than three (3) price quotations to be on file, with evidence of solicitation from other potential suppliers to participate. In addition, a requirement for a “no quote” submission and to solicit from other potential suppliers should a “no quote” be received.

Finding No.: 2022-023 Federal Agency: U.S. Department of The Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $0 Criteria: In accordance with applicable subrecipient requirements, a pass-through entity must: 1. Clearly identify to the subrecipient the award as a subaward by providing the ALN (Assistance Listings Number) and name. 2. Include the total amount provided to subrecipients from each Federal program. 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR 200, subpart F, met the audit requirements. Condition: For the year ended September 30, 2022, GovGuam reported $195.6 million in total program expenditures in the Schedule of Federal Awards (SEFA). A total of $104M represents amounts passed through to GovGuam line agencies and component units, . Of this amount, approximately $48.9 million represents payments for various programs administered by Guam Economic Development Authority (GEDA). Only $55.1 million was identified as amounts passed through to GovGuam line agencies and component units in the final SEFA, which did not include the amounts administered by GEDA. According to Executive Order No. 2021-22, dated September 7, 2021, “GEDA is appointed to serve as the Program processor for Guam, subject to continued monitoring and oversight by the Office of the Governor. The Administrator of GEDA shall serve as the official responsible for overseeing GEDA’s fulfillment of the Program, which includes the following items:…[(]i[)].. Implementing the Program, inclusive of drafting the application, standard operating procedures (SOP), and other relevant documentation. [(]ii.[)] Receiving and reviewing applications and submitting payment requests to the Department of Administration for disbursement to eligible small businesses.” Government of Guam Schedule of Findings and Questioned Costs, continued 77 Finding No.: 2022-023, continued Federal Agency: U.S. Department of The Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $0 Condition, continued: Similar language is documented in other executive orders, describing GEDA as the administrator of various programs funded by ALN 21.027 and describing GEDA’s responsibility to make eligibility determinations. Therefore, GEDA meets the definition of a subrecipient, and amounts administered by GEDA should be reported in the SEFA as amounts passed through to subrecipients. Cause: GovGuam did not properly identify amounts passed through to subrecipients and did not enforce compliance with applicable subrecipient monitoring requirements. The Department of Administration believes that GEDA is not a subrecipient. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. No questioned cost is reported because GEDA is undergoing a Single Audit for FY 2022. Identification as a Repeat Finding: Finding 2021-021 Recommendation: GovGuam should enforce compliance with applicable subrecipient monitoring requirements. Responsible personnel should monitor subrecipients for compliance with Single Audit Act requirements. Also, GovGuam should consider seeking guidance and confirmation from the Grantor Agency regarding the classification of GEDA as either a subrecipient or a contractor. Government of Guam Schedule of Findings and Questioned Costs, continued 78 Finding No.: 2022-023, continued Federal Agency: U.S. Department of The Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Section 9901 of the American Rescue Plan Act of 2021 Area: Subrecipient Monitoring Questioned Costs: $0 Views of Responsible Officials: As for Fiscal Year 2022, payments to beneficiaries under the GEDA program were made directly by DOA. GEDA was not in receipt of any funds and by that plain language cannot be considered a subrecipient. DOA determined in accordance with 2CFR 200.331 that GEDA was not a Subrecipient: Auditors may, but have not to date, requested access to GEDA and DOA records for verification eligibility. CFR§200.331 reads: “(c) Use of judgment in making a determination. In determining whether an agreement between a pass-through entity and another non-federal entity cast the latter as a Subrecipient or a contractor, the substance of the relations is more important than the form of the agreement. All the characteristics listed above may not be present in all cases, and the pass-through entity must use judgement in classifying each agreement as a subaward or a procurement contract.” Auditor Response: DOA’s determination differs from our judgement in classifying the agreement with GEDA. CFR§200.331 also reads: “ (a) Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient…. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity: (1) Determines who is eligible to receive what Federal assistance;… .” The substance of the relations is for GEDA to carry out a key portion of the Federal award by determining who is eligible to receive Federal assistance, as well as how much each beneficiary should receive, which is more important than the form of the agreement for DOA to act as a financial institution in writing the check. Therefore, GEDA meets the definition of a subrecipient, which is consistent with the fact that GovGuam did not subject the selection of GEDA to a procurement process. Examination by auditors of GEDA’s records as to beneficiary eligibility is not required because the compliance requirement of eligibility is not subject to audit per the OMB Compliance Supplement. Moreover, such eligibility tests would not address this finding relative to subrecipient monitoring. There is no evidence that DOA monitored GEDA’s eligibility determinations for FY 2022.

Finding No.: 2022-024 Federal Agency: U.S. Department of Education (ED) AL Program: 84.425 Education Stabilization Fund ED Subprogram: 84.425H Education Stabilization Fund – Governors (Outlying Areas) Federal Award No.: COVID-19 S425H210004 Area: Subrecipient Monitoring Questioned Costs: $2,140,366 Criteria: In accordance with applicable subrecipient requirements, a pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR 200, subpart F, met the audit requirements. Condition: Amounts passed through to subrecipient Guam Educational Telecommunications Corporation (GETC) totaled $2,140,366 during FY 2022. As such, PBS Guam is expected to be audited as required by the Single Audit Act and 2 CFR part 200. We are aware that the issued audit report on GETC’s FY 2022 financial statements was dated May 18, 2023. However, GETC did not obtain a Single Audit. Cause: GovGuam did not effectively monitor compliance with applicable subrecipient monitoring requirements. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $2,140,366. Identification as a Repeat Finding: Finding 2021-023 Recommendation: GovGuam should more closely monitor subrecipients in accordance with subrecipient monitoring requirements and should obtain the required Single Audits from its subrecipients, as applicable. Views of Responsible Officials: GETC will contact OPA and EY to start their Uniform Guidance Single Audit.

Finding No.: 2022-025 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $327,379 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. 3. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Additionally, all contracts made by the non-Federal entity under the Federal award must contain applicable provisions. Contractors that apply or bid for an award exceeding $100,000 must file the required certification under the Byrd Anti-Lobbying Amendment (31 U.S.C. 1352). Each such contractor certifies that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, among others. Government of Guam Schedule of Findings and Questioned Costs, continued 81 Finding No.: 2022-025, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $327,379 Condition: Of 18 procurement transactions tested, aggregating $3.8M of $4.8M in total applicable non-payroll program expenditures, we noted the following: 1. For 2 (or 11%), no Byrd Anti-Lobbying certification was provided, as follows: No questioned cost is presented as we are unable to quantify the extent of noncompliance. 2. For 3 (or 17%), no procurement file was provided: Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $327,379 from Condition 2. Identification as a Repeat Finding: Finding 2021-024 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 82 Finding No.: 2022-025, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $327,379 Views of Responsible Officials: The agency (DPHSS) agrees with the first condition advising moving forward they will create an SOP to ensure that the Byrd Anti-Lobbying Certification is included. The other 2 conditions they disagree with citing that all documentation was submitted to EY. Auditor Response: A prior reference number beginning with “D” represents a direct payment form. When procurement procedures are performed, the resulting prior reference number is either a purchase order number or a contract number. The documentation provided to EY did not constitute a procurement file for the service period covered by the direct payment forms.

Finding No.: 2022-026 Federal Agency: Department of Health and Human Services AL Program: 93.558 Temporary Assistance for Needy Families Federal Award No.: 2022G996117 Area: Eligibility Questioned Costs: $2,010 Criteria: In accordance with applicable eligibility requirements, lead agencies must have in place procedures for documenting and verifying eligibility in accordance with the federal requirements, as well as the specific eligibility requirements selected by each Lead Agency in its approved Plan. Condition: Of 40 case files tested, aggregating $13.8K of $1.9M in total Program benefits, we noted the following: 1. For 1 or (3%), the benefit amount was not in accordance with the ratable reduction provision, as program benefits did not agree with 75% of the authorized amount. 2. For 1 (or 3%), the applicant did not meet the Pay for Performance work task requirement. 3. For 1 (or 3%), an overpayment was made to the applicant due to unacceptable processing of a notarized legal guardianship form. A court document is required. Cause: GovGuam did not effectively monitor compliance with applicable eligibility requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 84 Finding No.: 2022-026, continued Federal Agency: Department of Health and Human Services AL Program: 93.558 Temporary Assistance for Needy Families Federal Award No.: 2022G996117 Area: Eligibility Questioned Costs: $2,010 Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $2,010 because the projected questioned cost exceeds the threshold. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable eligibility requirements. Responsible personnel should review case files for accuracy and completeness prior to approving applications. Views of Responsible Officials: The agency (DPHSS) agrees with the findings. Moving forward they will develop SOP to make sure all proper documentation is in place prior to the approval of cases.

Finding No.: 2022-027 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.569 Community Services Block Grant Federal Award No.: 2101GUCOSR Area: Eligibility Questioned Costs: $187,600 Criteria: In accordance with applicable eligibility requirements, the State must identify recipients of Federal award benefits and maintain proper records for documenting and verifying eligibility in accordance with Federal requirements, approved State Plan, as well as the State Standard Operating Procedures. Condition: 1. There is no available list of recipients who received benefits in the amount of $160,705 charged to account no. 5101H211760PA105290. 2. Of 13 case files selected for testing, aggregating $26,895 of $350,663 total Program benefits, we noted the following: a. For six (or 46%), the case file was not provided for examination. b. For the remaining seven (or 54%), no documentation of family foster home visitation is maintained in the case files. Government of Guam Schedule of Findings and Questioned Costs, continued 86 Finding No.: 2022-027, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.569 Community Services Block Grant Federal Award No.: 2101GUCOSR Area: Eligibility Questioned Costs: $187,600 Condition, continued: c. For two (or 29%), the applicant did not meet the minimum required three letters of references. d. For one (or 8%), no social evaluation of the applicant, as well as home environment, is maintained in the case file. Cause: GovGuam did not effectively monitor compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $187,600. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable eligibility requirements. Responsible personnel should maintain a master file of eligible participants and should review case files for accuracy and completeness prior to approving applications. Views of Responsible Officials: The agency (DPHSS) agrees with the findings. Moving forward, DPHSS will develop an SOP and evaluation to ensure that the minimum requirements are met for references for family foster homes, and that they can be easily identified.

Finding No.: 2022-028 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, COVID-19 2101GUCDC6 Area: Allowable Costs/Cost Principles Questioned Costs: $675 Criteria: In accordance with applicable allowable costs/cost principles requirements, the award amount paid to program participants should be based on the stated calculation not exceeding $400,000 per business and should be adequately documented. Condition: Of 25 transactions tested, aggregating $7.4M of $29M in total Program non-payroll expenditures, we noted the following: 1. For 1 (or 4%), no underlying support was provided for costs charged to Federal award number 2001GUCCDF, as follows: 2. For 2 (or 8%), the child care provider reported expenses less than $400k, but received the maximum award from COVID-19 funding under Federal award number 2101GUCDC6. Cause: GovGuam did not effectively monitor compliance with applicable allowable costs/cost principles requirements. Effect: GovGuam is in noncompliance with applicable allowable costs/cost principles requirements. The reportable questioned cost at this finding is $675 from Condition 1. The questioned costs from Condition 2 are reported in Finding 2022-029. Government of Guam Schedule of Findings and Questioned Costs, continued 88 Finding No.: 2022-028, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2001GUCCDF, COVID-19 2101GUCDC6 Area: Allowable Costs/Cost Principles Questioned Costs: $675 Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable allowable costs/cost principles requirements. Responsible personnel should review case files for accuracy and completeness prior paying benefits. Views of Responsible Officials: The agency disagrees with the findings. The agency provided how the calculations were established by each priority to determine the amount that is allowed not to exceed $400k. Auditor Response: Our recalculation for each child care provider described above is based on documented case file data and shows that the $400k in benefits exceed the amount that is allowed, respectively.

Finding No.: 2022-029 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: COVID-19 2101GUCDC6 Area: Eligibility Questioned Costs: $25,979 Criteria: In accordance with applicable eligibility requirements, lead agencies must have in place procedures for documenting and verifying eligibility in accordance with the federal requirements, as well as the specific eligibility requirements selected by each Lead Agency in its approved Plan. Condition: For 2 (or 12%) of 17 case files tested, aggregating $7.5M of $20.7M in total Program benefits, we noted the case file documentation is insufficient to demonstrate that the provider exceeded $400k of combined expenses from specific calculations: (Part 1) 80% of projected monthly expenses, (Part 2) One-time expenses for previous or prospective renovations or improvements, and (Part 3) Net enrollment impact multiplied by monthly average cost of childcare. Cause: GovGuam did not effectively monitor compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $25,979. Identification as a Repeat Finding: Finding 2021-025 Government of Guam Schedule of Findings and Questioned Costs, continued 90 Finding No.: 2022-029, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: COVID-19 2101GUCDC6 Area: Eligibility Questioned Costs: $25,979 Recommendation: GovGuam should strengthen monitoring controls over compliance with eligibility requirements. Responsible personnel should review case files for accuracy and completeness prior to approving applications. Views of Responsible Officials: The agency (DPHSS) disagrees with the findings. The grant eligibility criteria in question are the CAPS21 Grant. All grantees demonstrated compliance with the eligibility criteria in the attached GY21 GU APRA Stabilization Notice of Award Supplemental Terms and Conditions on page 6 item 2 that was provided to EY. Auditor Response: We acknowledge that the child care providers are eligible to receive an amount of program benefits. However, our recalculation of benefits for each child care provider in the Condition above is based on documented case file data and shows that the child care provider received excess benefits.

Finding No.: 2022-030 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2019G999003, 2101GUCCDF, 2201GUCCDD, 2001GUCCC3, 2101GUCDC6, 2101GUCSC6, 2101GUCCC5, 2201GUCCDF Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, ACF-696, Child Care and Development Fund Financial Report is due quarterly. Each fiscal year’s expenditure report must be separate; therefore, multiple reports are required if awards from more than one fiscal year are expended in a given quarter. Moreover, expenditures reported should be accurate and supported by underlying accounting records. Condition: 1. Grant years 2020 and 2019 Quarterly ACF-696, Child Care and Development Fund Financial Report were not provided. Recorded expenditures per AS400 financial management system are as follows: Government of Guam Schedule of Findings and Questioned Costs, continued 92 Finding No.: 2022-030, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2019G999003, 2101GUCCDF, 2201GUCCDD, 2001GUCCC3, 2101GUCDC6, 2101GUCSC6, 2101GUCCC5, 2201GUCCDF Area: Reporting Questioned Costs: $0 Condition, continued: 2. Grant years 2021 and 2022 expenditures reported per ACF-696 are not accurately supported by underlying accounting records as follows: Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with applicable reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is reported because we are unable to quantify the extent of noncompliance. Recommendation: GovGuam should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records, perform reconciliation, and prepare and submit the required reports. Government of Guam Schedule of Findings and Questioned Costs, continued 93 Finding No.: 2022-030, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575/93.596 CCDF Cluster Federal Award No.: 2019G999003, 2101GUCCDF, 2201GUCCDD, 2001GUCCC3, 2101GUCDC6, 2101GUCSC6, 2101GUCCC5, 2201GUCCDF Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The agency (DPHSS) disagrees with the findings. CW is compliant with reporting requirements, however, unable to provide copies of report as requested due to lack of access. Requests have been made to the federal counterparts to obtain copies and will be provided. Moving forward agencies will also submit a copy to the Division of Accounts.

Finding No.: 2022-031 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Eligibility Questioned Costs: $150,061 Criteria: In accordance with applicable eligibility requirements, lead agencies must have in place procedures for documenting and verifying eligibility in accordance with the federal requirements, as well as the specific eligibility requirements selected by each Lead Agency in its approved Plan. Condition: Of 60 case files tested, aggregating $6.98M of $159.68M in total Program benefits, we noted the following: 1. For 2 (or 3%), the Social Security card number per the case file did not match the SS card number for one or more household members on the system. 2. For 1 (or 2%), the case file lacked documentation of a Notice of Action to indicate and inform participant of certification period and approved benefit amount. 3. For 1 (or 2%), the case file lacked documentation of a Renewal Form and limited identification of household information. Cause: GovGuam did not effectively monitor Program costs for compliance with GovGuam with applicable activities eligibility requirements. Government of Guam Schedule of Findings and Questioned Costs, continued 95 Finding No.: 2022-031, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Eligibility Questioned Costs: $150,061 Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $150,061 ($168,230 x 89.2% Federal share). Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable eligibility requirements. Responsible personnel should review case files for accuracy and completeness prior to approving applications. Views of Responsible Officials: The agency (DPHSS) agrees with the findings. Moving forward, DPHSS will develop an SOP and checklist to ensure that all applicants submit the proper documentation within a certain number of days.

Finding No.: 2022-032 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in CMS-64, Quarterly Statement of Expenditures for the Medical Assistance Program, should be supported by underlying accounting records. Conditions: Reported expenditures are not supported by underlying accounting records, resulting in underreporting, as follows: Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as reported expenditures represent allowable costs. Identification as a Repeat Finding: 2021-027 Recommendation: GovGuam should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records, perform reconciliations, and retain such documents to substantiate reported amounts. Responsible personnel should also coordinate with the centralized accounting division to identify changes and adjust the CMS-64 reports or underlying records accordingly prior to the submission of the CMS-64 reports. Government of Guam Schedule of Findings and Questioned Costs, continued 97 Finding No.: 2022-032, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Reporting Questioned Costs: $0 Views of Responsible Officials: The agency (DPHSS) agrees with the findings. Currently in Fiscal Year 2023, DPHSS and DOA have reviewed the CMS 64 reports prior to the submission to the grantor.

Finding No.: 2022-033 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Special Tests and Provisions – Refunding of Federal Share of Medicaid Overpayments to Providers Questioned Costs: $362,653 Criteria: In accordance with applicable special tests and provisions requirements relative to overpayments made to providers, states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment before the federal share must be refunded to CMS via Form CMS-64 Summary, Line 9C1 – Fraud, Waste & Abuse Amounts, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS either in the quarter in which the recovery is made or in the quarter in which the one-year period ends following discovery, whichever is earlier. Condition: During FY 2022, the Program reported overpayments to and recoupments from providers of $362,653 and $201,927, respectively. The schedule of overpayments and recoupment were not in sufficient detail to identify the discovery date. Therefore, it cannot be determined whether Federal share of overpayments is properly reported and refunded. Cause: GovGuam did not effectively monitor compliance with special tests and provisions requirements relative to the refunding of overpayments made to providers. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements relative to the refunding of overpayments made to providers. The reportable questioned cost is $362,653. Recommendation: GovGuam should monitor compliance with special tests and provisions requirements relative to the refunding of overpayments made to providers. Responsible personnel should prepare a schedule of overpayments to and recoupments from providers in sufficient detail to identify discovery dates of overpayments and to report the Federal share of overpayments on Form CMS_x0002_64 quarterly. Government of Guam Schedule of Findings and Questioned Costs, continued 99 Finding No.: 2022-033, continued Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Special Tests and Provisions – Refunding of Federal Share of Medicaid Overpayments to Providers Questioned Costs: $362,653 Views of Responsible Officials: The agency (DPHSS) agrees with the findings. Moving forward, DPHSS will develop an SOP and provide Overpayment letters to providers of the offset amount towards positive claims. If there are no positive claims, DPHSS will provide a letter to providers with a due date for the payment for those cases that were overpaid.

Finding No.: 2021-003 AL Program: 15.875 DOI Economic, Social and Political Development of the Territories AL Program: 20.509 DOT Formula Grants for Rural Areas and Tribal Transit Program AL Program: 66.600 EPA Environmental Protection Consolidated Grants for the Insular Areas - Program Support AL Program: 93.323 HHS COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Area: Equipment and Real Property Management Area: Capital Assets Questioned Costs: $0 Criteria: 1. In accordance with the applicable equipment management requirements, grantees that acquire equipment with Federal funds are required to perform a physical inventory of the property and reconcile results with property records at least once every two years. Such property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. In addition, adequate maintenance procedures must be established to keep the property in good condition. 2. Reconciliation with inventory records, capital asset ledgers and the general ledger should be timely performed. 3. Capital assets should be reviewed for ongoing pertinence to minimize the opportunity for misstatements and to identify retired assets that have been replaced, disposed, or that have no further value or use. 4. Capital assets should be recorded in accordance with the applicable capitalization policy. Condition: Equipment and Real Property Management 1. GovGuam performed the required comprehensive physical inventory of its property in January 2016; however, the required reconciliation was not completed. Since 2016 and as of September 30, 2021, the required biannual physical inventories and reconciliations have not been performed. We are unable to assess the overall cumulative monetary value of this deficiency. However, the table below summarizes each of the Government of Guam FY 2021 major programs that has a level of total capital outlays over the past five years that is material to the major program. Additionally, relative to FY 2021 purchases, COVID-19 funding was used for ALN 93.323. See Schedule of Findings and Questioned Costs for chart/table. Capital Assets 2. Non-depreciable assets were overstated by $20.9M and depreciable capital assets were understated by $43.8M. The general ledger was not reconciled to subsidiary ledgers. An audit adjustment was proposed to correct this misstatement. 3. Depreciation expenditures were understated by $59M. The general ledger was not adjusted to reflect current year depreciation. An audit adjustment was proposed to correct this misstatement. 4. All twelve (or 100%) of assets tested were not made available for verification of physical existence. This condition is a reiteration of conditions in the prior year audit. 5. Capital assets were disposed and surveyed, but were not removed from the capital asset register. See Schedule of Findings and Questioned Costs for chart/table. This condition is a reiteration of conditions in the prior year audit. 6. Capital assets were not recorded in accordance with the applicable capitalization policy. $345K were less than the $50,000 threshold per the applicable capitalization policy or were not capitalizable expenses. A subsequent adjustment was recorded to correct this misstatement. See Schedule of Findings and Questioned Costs for chart/table. This condition is a reiteration of conditions in the prior year audit. 7. For one (or 10%) of ten samples tested, transaction for $631,300 was capitalizable but not included in the capital asset register. A projected understatement of capital assets for current year of $13M may be presented and included in the summary of uncorrected misstatements. 8. For one (or 50%) of two samples tested, a capitalized project was understated by $782K (C180600540 and C180600541). 9. Construction costs were not easily identifiable by project. The capital asset subsidiary ledger included details of transactions from the general ledger and were not organized in a manner that can be identified by project. This condition is a reiteration of conditions in the prior year audit. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. GovGuam requires more funding and human resources to fully develop a reliable equipment management system. Effect: GovGuam is in noncompliance with applicable equipment management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. This noncompliance applies to ALNs 15.875, 20.509, 66.600, and 93.323, for which cumulative capital outlays over the past five years exceed the program?s FY 2021 materiality level. Furthermore, depreciable assets and amounts reported as construction in progress may be materially misstated. Such potential misstatements were mitigated through a proposed audit adjustment. Identification as a Repeat Finding: 2020-003 Recommendation: GovGuam should complete the required biannual physical inventory and reconciliations during FY 2022 and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as requesting Federal assistance, processing required reconciliations and reports, training personnel, and coordinating with other governmental units on property management requirements. GovGuam should continue implementing controls over timely tagging all equipment and over performing the required future inventories and reconciliations in accordance with applicable equipment management requirements. GovGuam should record capital assets in accordance with the Government?s capitalization policy and should implement a policy to monitor replacements, disposals, transfers of assets and construction in progress by project. Additionally, we recommend management revisit the capitalization policy and consider including all vehicles as part of the reported capital asset inventory. The Division of Accounts should investigate whether additional personnel well versed in accounting reconciliations and processes may be required to allow for timely review and recordation of capital assets, especially given the substantial capital asset construction that is undertaken by GovGuam. Furthermore, coordination with DPW and engineering firms must occur at project commencement so that accounts are established to track capital costs and to allow for the preparation of periodic reports documenting a project?s percentage of completion. Equipment management has been a continuing finding in prior audits, and GovGuam management continues to be in the process of effecting corrective action to develop and fund an equipment management system. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-005 Federal Agency: U.S. Department of Agriculture AL Program: 10.542 Pandemic EBT Food Benefits (P-EBT) Federal Award No.: COVID-19 The Families First Coronavirus Response Act, Section 1101 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, FNS-292B, Report of Disaster Food Stamp Benefit Issuance, should be prepared and submitted. Condition: FNS-292B reports were not prepared and submitted. Cause: GovGuam recently requested access to FNS-292B in the Food Program Reporting System to submit the reports. Effect: GovGuam is in noncompliance with applicable FNS-292B reporting requirements. Recommendation: GovGuam should establish and implement controls over reporting requirements. Responsible personnel should monitor the status of required reports well in advance of report due dates and should commence the necessary actions to effect accurate and complete submissions in a timely manner. Views of Responsible Officials: GovGuam?s Corrective Action Plan specifies agreement with the finding and provides planned corrective actions.

Finding No.: 2021-006 Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2021 7GU400GU4 Area: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: In accordance with applicable allowable costs/cost principles requirements, SNAP net issuances recorded per the financial management system must be adequately documented to be allowable under Federal awards. Condition: SNAP expungements represent a household?s inactive SNAP electronic benefit transfer (EBT) benefits that have been removed from online access. Program expenditures appear overstated by $671,667 in expungements, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable allowable costs/cost principles requirements. Effect: GovGuam is in noncompliance with applicable allowable costs/cost principles requirements. No questioned cost is presented as the expungements were not issued to households. Recommendation: GovGuam should strengthen monitoring controls over applicable allowable costs/cost principles requirements. Responsible personnel at the Division of Accounts and Department of Public Health and Social Services should more closely coordinate to determine that SNAP EBT recorded in the financial management system is adequately documented. Views of Responsible Officials: GovGuam?s Corrective Action Plan specifies agreement with the finding and provides planned corrective actions.

Finding No.: 2021-007 Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Area: Procurement and Suspension and Debarment Questioned Costs: $41,849 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Condition: Of 18 procurement transactions tested, aggregating $516K of $735K in total applicable non-payroll program expenditures, we noted the following: 1. The small purchases method was used; however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. a. For one (or 6%), the procurement of data line installations includes three quotations, of which one indicates ?no quote.? b. For one (or 6%), the procurement of tape cartridges and bar codes includes three quotations, of which one indicates ?no quote.? c. For one (or 6%), the procurement of document scanners includes four quotations, of which two indicate ?no quote.? See Schedule of Findings and Questioned Costs for chart/table. 2. For three (or 17%), the emergency procurement method was used to procure office rental space for the Department of Public Health and Social Services State Office and Bureau of Economic Security under purchase order P216E00127, dated 12/04/2020 pursuant to Executive Orders 2020-03 ? 2020- 36 (Emergency Response to COVID-19). No positive quotations were on file for FY2021. The previous emergency procurement in FY2020 pursuant to Executive Order 2019-26 (Relative to Declaring a State of Emergency for the Department of Public Health and Social Services as a Result of Damage Suffered to its Mangilao Main Facility) had five positive quotations. The FY2020 emergency procurement results appear to have been used for FY2021. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $41,849 (50% share of $83,698). Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response and does not specify disagreement with the finding.

Finding No.: 2021-008 Federal Agency: U.S. Department of Agriculture AL Program: 10.551/10.561 SNAP Cluster Federal Award No.: 2021 7GU400GU4 Area: Special Tests and Provisions ? EBT Reconciliation Questioned Costs: $0 Criteria: In accordance with applicable special tests and provisions requirements, States must have systems in place to reconcile all of the funds entering into, exiting from, and remaining in the system each day with the State?s benefit account with Treasury and electronic benefits transfer (EBT) contractor records. This includes a reconciliation of the State?s issuance files of postings to recipient accounts with the EBT contractor. The State must reconcile the financial and management data that comes from the EBT contractor to the SNAP issuance files and settlement data to ensure that benefits are authorized by the State and funds have been properly drawn down. Condition: Of seventy-eight reconciliation dates tested, the reconciliation data contained no dates relative to signoffs, system extractions, or printing, etc., to substantiate whether the daily reconciliation occurred. Cause: DPHSS management did not effectively monitor compliance with applicable EBT reconciliation requirements. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the EBT reconciliation. A potential misstatement of federal expenditures within the Schedule of Expenditures of Federal Awards and basic financial statements or related disclosures could exist undetected and uncorrected. No questioned cost is presented, as ending year balances between the State and the EBT contractor are reconciled. Identification as a Repeat Finding: Finding 2020-005 Recommendation: DPHSS management should more closely monitor the EBT reconciliation process so that the required daily reconciliations are completed in accordance with applicable special tests and provisions requirements. If reconciliations are not feasible on a daily basis, responsible personnel should consider seeking approval from the Grantor agency for an alternative reconciliation schedule. Views of Responsible Officials: GovGuam?s Corrective Action Plan specifies agreement with the finding and provides planned corrective actions.

Finding No.: 2021-009 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D19AF00065 Area: Procurement and Suspension and Debarment Questioned Costs: $0 Criteria: In accordance with applicable procurement and suspension and debarment requirements, the procurement file must document the history of the procurement, including the rationale for the method of procurement, selection of contract type, basis for contractor selection, and the basis for the contract price. Condition: For one (or 6%), the small purchases method was used; however, less than three informal price quotations are on file. The procurement of lawn maintenance equipment includes four quotations, two of which indicate ?no quote.? Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. Identification as a Repeat Finding: Finding 2020-006 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response and does not specify disagreement with the finding.

Finding No.: 2021-010 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Area: Special Tests and Provisions - ATP Questioned Costs: $0 Criteria: In accordance with grant terms and conditions, costs may not be incurred, and work may not commence on a project until the Office of Insular Affairs (OIA) has issued an Authorization to Proceed (ATP). Condition: For one (or 4%) of 25 transactions tested for compliance, a total of $1,670,965 in costs were incurred under grant number D21AF10049 on 03/15/2021; however, the corresponding ATP was not issued by OIA until 03/31/2021. No questioned cost is presented because GovGuam subsequently obtained and provided an ATP from OIA on 06/06/2022 with an amended issuance date of 03/15/2021. Cause: GovGuam did not effectively perform monitoring controls over compliance with applicable grant terms and conditions for ATPs. Effect: GovGuam is in noncompliance with applicable grant terms and conditions for ATPs. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable grant terms and conditions for ATPs. Responsible personnel should review ATPs prior to approving Program costs and should document such reviews on file. Views of Responsible Officials: GovGuam?s Corrective Action Plan specifies agreement with the finding and provides planned corrective actions.

Finding No.: 2021-011 Federal Agency: U.S. Department of Labor AL Program: 17.225 Unemployment Insurance Federal Award No.: COVID-19 Pandemic Unemployment Assistance (PUA) Federal Award No.: COVID-19 Federal Pandemic Unemployment Compensation (FPUC) Area: Eligibility Questioned Costs: $23,299,123 Criteria: In accordance with applicable eligibility requirements, claimants are eligible to receive pandemic unemployment assistance and Federal pandemic unemployment compensation if they file an initial application and weekly certifications. Claimants who have been laid off or furloughed may qualify for weekly benefit of $345. Claimants still working but making less than $345 a week may qualify for PUA minus their wages. Condition: Of 60 case files tested, aggregating $1.3 million of $380.3 million in total program benefits, we noted the following: 1. For 29 (or48%), the case file documentation demonstrates ineligibility. See Schedule of Findings and Questioned Costs for chart/table. 2. For one (or 2%), the claimant was still working and made more than $345 for the week, yet received the full weekly PUA benefit. See Schedule of Findings and Questioned Costs for chart/table. 3. For five (or 8%), the claimant claimed to be unable and unavailable to work or attested that he/she is able to telework. See Schedule of Findings and Questioned Costs for chart/table. 4. A total of $23,278,954 in PUA overpayments was reported during FY 2021. Cause: Guam Department of Labor did not effectively monitor compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is at least $23,299,123. Identification as a Repeat Finding: Finding 2020-010 Recommendation: Guam Department of Labor should periodically monitor compliance with applicable eligibility requirements. Responsible personnel should timely perform quality control reviews and enforce recovery of overpayments. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-012 Federal Agency: U.S. Department of Labor AL Program: 17.225 Unemployment Insurance Federal Award No.: COVID-19 Pandemic Unemployment Assistance (PUA) Federal Award No.: COVID-19 Federal Pandemic Unemployment Compensation (FPUC) Area: Special Tests and Provisions ? UI Program Integrity - Overpayments Questioned Costs: $0 Criteria: In accordance with applicable special tests and provisions requirements for overpayments, states should recover PUA and FPUC overpayments. Condition: 1. For 5 (or 8%) of 60 case files tested, aggregating $1.3 million of $380.3 million in total program benefits, a notice of overpayment was mailed to the claimant after 09/30/2021; however, no subsequent documentation was provided to substantiate recoupment of the overpayment. See Schedule of Findings and Questioned Costs for chart/table. 2. For 49 (or 94%) of 52 case files tested, aggregating $765,056 of $11.4 million in total program benefits, a notice of overpayment was mailed to the claimant during FY 2021. For 46 of the 49 overpayment cases, no subsequent documentation was provided to substantiate recoupment of the overpayment, resulting in total questioned costs of $614,135. Cause: Guam Department of Labor did not effectively monitor compliance with applicable special tests and provisions requirements for overpayments. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for overpayments. No questioned cost is presented at this finding because related questioned costs are previously reported at Finding Number 2021-011. Recommendation: Guam Department of Labor should periodically monitor compliance with applicable special tests and provisions requirements for overpayments. Responsible personnel should timely perform quality control reviews and enforce recovery of overpayments. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-013 Federal Agency: U.S. Department of Labor AL Program: 17.277 WIOA National Dislocated Worker Grants / WIA National Emergency Grants Federal Award No.: COVID-19 DW-34678-20-60-A-66 Area: Eligibility Questioned Costs: $57,122 Criteria: In accordance with applicable eligibility requirements, only those who are dislocated workers or long-term unemployed for at least 27 weeks may participate in the Program. Case files should contain such documents as employment verification letters or separation letters. Condition: For 5 (or 8%) of 60 case files tested, aggregating $733,351 of $3 million in total program benefits, case file documentation was insufficient to substantiate eligibility, and the salary paid to the participant in FY 2021 is a questioned cost. 1. For 2 (or 3%), no document is in the case file to demonstrate that the participant is a dislocated worker or is long-term unemployed. See Schedule of Findings and Questioned Costs for chart/table. 2. For 1 (or 2%), the participant?s application indicates unemployment for only 26 weeks. See Schedule of Findings and Questioned Costs for chart/table. 3. For 1 (or 2%), the personnel action form indicates a job title of Community Service Representative, however, no such job title is specified in the applicable Guam Competitive Wage Act of 2014 or the General Pay Plan. Therefore, we are unable to determine the accuracy of the participant?s wages. See Schedule of Findings and Questioned Costs for chart/table. 4. For 1 (or 2%), the birthdate in the master file does not agree with the birthdate on the participant?s identification documents. As a corrective action, the Program Administrator updated the master listing. No questioned cost results because other case file documents demonstrate eligibility of the participant. See Schedule of Findings and Questioned Costs for chart/table. 5. For 27 (or 45%), no routing letter checklist is in the case file to demonstrate that the case file was reviewed for accuracy and completeness by the former Program Administrator. As a corrective action, the successor Program Administrator reviewed the files and created a routing letter checklist. No questioned cost results from this test of monitoring controls. Cause: Guam Department of Labor did not effectively monitor compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $57,122. Recommendation: Guam Department of Labor should periodically monitor compliance with applicable eligibility requirements. Responsible personnel should timely perform and document quality control reviews. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-014 Federal Agency: U.S. Department of the Treasury AL Program: 21.019 Coronavirus Relief Fund Federal Award No.: COVID-19 Area: Activities Allowed or Unallowed Questioned Costs: $732,791 Criteria: In accordance with applicable activities allowed or unallowed requirements, payments must be used to cover costs that are: 1. Necessary expenditures incurred due to the public health emergency with respect to COVID-19; 2. Not accounted for in the government?s most recently approved budget as of September 15, 2020; and 3. Incurred during the period that begins on March 1, 2020 and ends on December 30, 2021. Condition: For 5 (or 26%) of 19 non-payroll transactions tested, aggregating $3.6M of $57.1M in total non-payroll program costs, the cost does not appear to be a necessary expenditure incurred due to the public health emergency with respect to COVID-19, as follows: a. Credit card fees absorbed by various GovGuam agencies. Although we understand that the absorption of credit card fees may have been necessary to encourage online payments, we are not aware of analytics to determine pre- and post-COVID usage of credit cards and associated fees. No credit card statements were provided to substantiate fees charged. See Schedule of Findings and Questioned Costs for chart/table. b. Unoccupied hotel rooms during the period from 08/23/2020 through 05/08/2021. Of the total 2,183 rooms used during the period, 1,273 rooms (or 58%) remained unoccupied at a rate of $175 or $120. Although we understand that mass reservations may have been necessary to secure rooms to accommodate unknown numbers of quarantined travelers, we are not aware of 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. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable activities allowed or unallowed requirements. Effect: GovGuam is in noncompliance with applicable activities allowed or unallowed requirements. The reportable questioned cost is $732,791. Identification as a Repeat Finding: 2020-011 Recommendation: GovGuam should more closely monitor program costs for compliance with activities allowed or unallowed requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response and states that credit card statements are available for Condition a. above. Auditor Response: The credit card statements were not provided.

Finding No.: 2021-015 Federal Agency: U.S. Department of the Treasury AL Program: 21.019 Coronavirus Relief Fund Federal Award No.: COVID-19 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements for special reporting, each prime recipient of the Fund shall provide a quarterly Financial Progress Report that contains COVID-19 related costs incurred during the covered period. The prime recipient?s quarterly Financial Progress Report submission should be supported by the data in the prime recipient?s accounting system. Condition: No reports were provided. Cause: GovGuam did not effectively perform monitoring controls over reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements for special reporting. No questioned cost is presented as we are unable to quantify the impact of noncompliance. Identification as a Repeat Finding: 2020-012 Recommendation: GovGuam should enforce compliance with applicable reporting requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a response that quarterly reports are submitted. Auditor Response: Copies of the submitted reports were not provided.

Finding No.: 2021-016 Federal Agency: U.S. Department of the Treasury AL Program: 21.019 Coronavirus Relief Fund Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $4,244,106 Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity must: 1. Clearly identify to the subrecipient the award as a subaward by providing the ALN (Assistance Listings Number) and name. 2. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR part 200, subpart F, met the audit requirements. Condition: For the year ended September 30, 2021, GovGuam reported $53.1 million in total program expenditures in the Schedule of Expenditures of Federal Awards (SEFA). A total of $11.3 million represents amounts passed through to GovGuam line agencies and component units, including a total of $4,244,106 million to Guam Economic Development Authority (GEDA) for the Guam Small Business Pandemic Assistance Grant ($1,273,106) and the Small Business Rent Assistance Grant Program ($2,971,000). According to Executive Order (EO) No. 2020-18, dated June 1, 2020, ?GEDA is designated as the entity responsible for the administration of the Guam Small Business Pandemic Assistance Grant?.The Administrator of GEDA is designated as the official responsible for overseeing the program which includes the following items:?[(]b[)]. Creating the program inclusive of application, promotional materials, standard operating procedures, and other relevant documentation. [(]c.[)] Receiving and reviewing applications in a timely manner and periodically reporting a payment schedule to the Department of Administration for check issuance to small businesses.? Similarly, EO 2020-40, dated November 23, 2020, states, ?GEDA is designated as the entity responsible for the administration of the [Small Business Rent Assistance Grant] Program?.The Administrator of GEDA is designated as the official responsible for overseeing the program which includes the following items:?[(]a[)]. Creating the Program inclusive of application, standard operating procedures, and other relevant documentation. [(]b.[)] Receiving and reviewing applications and reporting a payment schedule to the Department of Administration for check issuance to eligible small businesses.? As such, GEDA is expected to be audited as required by the Single Audit Act and 2 CFR part 200. We are aware that the audit report on GEDA?s FY 2021 financial statements was issued and dated April 6, 2022. However, it appears GEDA was not subjected to a Single Audit. Cause: GovGuam did not enforce compliance with applicable subrecipient monitoring requirements. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $4,244,106. Identification as a Repeat Finding: 2020-013 Recommendation: GovGuam should enforce compliance with applicable subrecipient monitoring requirements. Responsible personnel should monitor subrecipients for compliance with Single Audit Act requirements. Also, GovGuam should consider seeking guidance and confirmation from the Grantor Agency regarding the classification of GEDA as either a subrecipient or contractor. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response as to why GEDA was not a subrecipient and states, ?Auditors may request access to GEDA and DOA records for verification of eligibility.? Auditor Response: An examination of GEDA?s and DOA?s records as to eligibility would not address this finding relative to subrecipient monitoring. Based on our understanding of the substance of the relations between GEDA and DOA, GEDA was a subrecipient because GEDA administered the Program.

Finding No.: 2021-017 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Area: Eligibility Questioned Costs: $58,214 Criteria: In accordance with applicable eligibility requirements, a grantee may only use funds provided in the Emergency Rental Assistance (ERA) program to provide financial assistance and housing stability services to eligible households. Eligibility is limited to households with income that does not exceed 80 percent of the median income for the area in which the household is located. Condition: For 5 (or 8%) of 60 case files tested, aggregating $628,698 of $5.2 million in total program rental assistance costs, case file documentation was not sufficient to substantiate the participant?s income. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor case files for compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $58,214. Recommendation: GovGuam should establish and implement controls over recordkeeping to substantiate compliance with applicable eligibility requirements. Responsible personnel should obtain and file such documents as pay stubs and tax forms to verify household income prior to determining eligibility. Views of Responsible Officials: GovGuam?s Corrective Action Plan states, ?Files have been provided to auditors for verification.? Auditor Response: The files that were provided did not contain sufficient documentation relative to participants? incomes.

Finding No.: 2021-018 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, expenditures reported in quarterly reports should be supported by underlying accounting records. Condition: Expenditures reported in the quarterly reports differ from amounts recorded in AS400, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively perform monitoring controls over reporting requirements. Effect: GovGuam may be in noncompliance with applicable reporting requirements. No questioned cost is presented as the reported amounts do not represent overpayments. Recommendation: GovGuam should strengthen monitoring controls over applicable reporting requirements. Responsible personnel should maintain underlying accounting records to substantiate reported amounts. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a response and does not specify disagreement with the finding.

Finding No.: 2021-019 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Period of Performance Questioned Costs: $2,082,892 Criteria: In accordance with applicable period of performance requirements, recipients may only use funds to cover costs incurred during the period beginning on March 3, 2021 and ending on December 31, 2024. Condition: Expenditures incurred prior to March 3, 2021, were charged to the Program. For service periods that included periods both within and outside the period of performance, only the prorated cost for the noncompliant period is a questioned cost. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor Program costs for compliance with applicable period of performance requirements. Effect: GovGuam is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $2,082,892. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable period of performance requirements. Prior to charging costs to the Program, responsible personnel should scrutinize invoices to ascertain that the costs were incurred during the period of performance. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-020 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Procurement and Suspension and Debarment Questioned Costs: $93,953 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. 2. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Condition: Of 8 procurement transactions tested, aggregating $17.2M of $21.9M in total applicable non-payroll program expenditures, we noted the following: 1. For one (or 12%), the sole source method was used to procure case management services under purchase order P206E00409, dated 07/09/2020, for $111,144, The written rationale stated that the supplier is the only provider of the required services. Such rationale is not sufficient, as it prevented other suppliers from competing for the opportunity to participate in this federally funded transaction. See Schedule of Findings and Questioned Costs for chart/table. 2. For two (or 25%) under one purchase order number P216E00021, the emergency procurement method was used to procure janitorial services for COVID-19 isolation facilities. The procurement file includes three quotations, of which one indicates ?no quote.? Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in this federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. See Schedule of Findings and Questioned Costs for chart/table. 3. For four (or 50%) under one purchase order number P206E00601, the emergency procurement method was used to procure COVID-19 isolation facilities. The procurement file includes four quotations, of which three indicate ?no quote.? Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in this federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $93,953. Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response and does not specify disagreement with the finding.

Finding No.: 2021-021 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $7,429,479 Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity must: 1. Clearly identify to the subrecipient the award as a subaward by providing the ALN (Assistance Listings Number) and name. 2. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR part 200, subpart F, met the audit requirements. Condition: For the year ended September 30, 2021, GovGuam reported $96.6 million in total program expenditures in the Schedule of Expenditures of Federal Awards (SEFA). A total of $31.1 million represents amounts passed through to GovGuam line agencies and component units, including $7.4 million to Guam Economic Development Authority (GEDA) for the Guam Small Business Pandemic Assistance Grant. According to Executive Order No. 2021-22, dated September 7, 2021, ?GEDA is appointed to serve as the Program processor for Guam, subject to continued monitoring and oversight by the Office of the Governor. The Administrator of GEDA shall serve as the official responsible for overseeing GEDA?s fulfillment of the Program, which includes the following items:?[(]i[)]. Implementing the Program, inclusive of drafting the application, standard operating procedures (SOP), and other relevant documentation. [(]ii.[)] Receiving and reviewing applications and submitting payment requests to the Department of Administration for disbursement to eligible small businesses.? As such, GEDA is expected to be audited as required by the Single Audit Act and 2 CFR part 200. We are aware that the audit report on GEDA?s FY 2021 financial statements was issued and dated April 6, 2022. However, it appears GEDA was not subjected to a Single Audit. Cause: GovGuam did not enforce compliance with applicable subrecipient monitoring requirements. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $7,429,479. GOVERNMENT OF GUAM Schedule of Findings and Questioned Costs, Continued Year Ended September 30, 2021 55 Finding No.: 2021-021, Continued Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Subrecipient Monitoring Questioned Costs: $7,429,479 Recommendation: GovGuam should enforce compliance with applicable subrecipient monitoring requirements. Responsible personnel should monitor subrecipients for compliance with Single Audit Act requirements. Also, GovGuam should consider seeking guidance and confirmation from the Grantor Agency regarding the classification of GEDA as either a subrecipient or contractor. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response as to why GEDA was not a subrecipient and states, ?Auditors may request access to GEDA and DOA records for verification of eligibility.? Auditor Response: An examination of GEDA?s and DOA?s records as to eligibility would not address this finding relative to subrecipient monitoring. Based on our understanding of the substance of the relations between GEDA and DOA, GEDA was a subrecipient because GEDA administered the Program.

Finding No.: 2021-022 Federal Agency: U.S. Environmental Protection Agency AL Program: 66.600 Environmental Protection Consolidated Grants Federal Award No.: M009061390 Area: Procurement and Suspension and Debarment Questioned Costs: $1,411 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. Condition: Of 7 procurement transactions tested, aggregating $343K out of $435K in total non-payroll program expenditures, we noted the following: 1. For one (or 14%), the sole source method was used to procure two-way radios under purchase order P216A00017, dated 09/29/2020, for $1,470, The written rationale stated that no other supplier would be suitable or acceptable due to the delay and additional costs that would result from transitioning to a new supplier. Such rationale is not sufficient, as it prevented other suppliers from competing for the opportunity to participate in this federally funded transaction. See Schedule of Findings and Questioned Costs for chart/table. 2. The small purchases method was used; however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transactions. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. a. For one (or 14%), the procurement of preventative maintenance of lab equipment includes three quotations, of which two indicate ?no quote.? b. For one (or 14%), the procurement of lab equipment includes four quotations, of which three indicate ?no quote.? See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $1,411, as the projected question cost exceeds the threshold. Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response and does not specify disagreement with the finding.

Finding No.: 2021-023 Federal Agency: U.S. Department of Education AL Program: 84.425 Education Stabilization Fund Federal Award No.: COVID-19 84.425H Education Stabilization Fund ? Governors (Outlying Areas) Requirement: Subrecipient Monitoring Questioned Costs: $1,214,942 Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity must: 1. Clearly identify to the subrecipient the award as a subaward by providing the Assistance Listing Number (ALN) and name. 2. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR part 200, subpart F, met the audit requirements. Condition: Although ALN 84.425 is not a major program in FY 2021, the Guam Office of Public Accountability identified that the Guam Educational Telecommunications Corporation (PBS Guam), a component unit of GovGuam, expended $1,214,942 in Program funds passed through from GovGuam during FY 2021. In GovGuam?s Memorandum of Understanding document, GovGuam clearly identified to PBS Guam that it is a ?subgrantee? and provided the AL number and name. As such, PBS Guam is expected to be audited as required by the Single Audit Act and 2 CFR part 200. We are aware that the issued audit report on PBS Guam?s FY 2021 financial statements was dated March 10, 2022. However, it appears PBS Guam was not subjected to a Single Audit. Cause: GovGuam did not effectively monitor compliance with applicable subrecipient monitoring requirements. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. The reportable questioned cost is $1,214,942. Recommendation: GovGuam should more closely monitor subrecipients in accordance with subrecipient monitoring requirements and should obtain the required Single Audits from its subrecipients, as applicable. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-024 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases Area: Procurement and Suspension and Debarment Federal Award No.: COVID-19 NU50CK000531 Questioned Costs: $121,277 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. 3. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. Condition: Of 22 procurement transactions tested, aggregating $1.2M out of $2.3M in total applicable non-payroll program expenditures, we noted the following: 1. For two (or 9%), no procurement file was provided. The two transactions comprise one direct payment for office space rental, as follows: See Schedule of Findings and Questioned Costs for chart/table. 2. For five (or 23%), the small purchases method was used; however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transactions. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. a. The procurement of biological safety cabinet certification includes four quotations, of which three indicate ?no quote? under direct payment request D211703047. b. The procurement of fifteen dual wireless headsets includes three quotations, of which two indicate ?no quote? under purchase order P216A02987. c. The procurement of COVID testing kits includes three quotations, of which two indicate ?no quote? under purchase order P216A03986. d. The procurement of laboratory supplies and equipment includes three quotations, of which two indicate ?no quote? under purchase order P216A04666. e. The procurement of non-emergency transportation services between isolation facilities and the hospital includes three quotations, of which one indicates ?no quote? under purchase order P216E00043. See Schedule of Findings and Questioned Costs for chart/table. 3. For three (or 14%), the emergency procurement method was used; however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transactions. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. a. The procurement of two seven-passenger vehicles includes four quotations, of which two indicate ?no quote? under P206E00695. b. The procurement of SARS-COVID-2 antibody assay test kits includes four quotations, of which three indicate ?no quote? under P216E00208. c. The procurement of laboratory equipment includes three quotations, of which one indicates ?no quote? under P216E00236. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $121,277. Identification as a Repeat Finding: Finding 2020-015 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response and does not specify disagreement with the finding.

Finding No.: 2021-025 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575 Child Care and Development Block Grant Federal Award No.: 2001GUCCDF, G-1901GUCCDD Area: Eligibility Questioned Costs: $260,040 Criteria: In accordance with applicable eligibility requirements, lead agencies must have in place procedures for documenting and verifying eligibility in accordance with the federal requirements, as well as the specific eligibility requirements selected by each Lead Agency in its approved Plan. Condition: Of 60 case files tested, aggregating $581,751 of $6.2M in total Program benefits, we noted the following: 1. For 29 or (48%), the case file documentation is insufficient to demonstrate eligibility. The case files lacked such documentation as child care applications, verifications of employment/student enrollment, child birth certificates, parent identification documents, and/or verifications of residency. See Schedule of Findings and Questioned Costs for chart/table. 2. For one (or 2%), Case Number 202004946 earned more than the applicable poverty guideline and is ineligible to receive program benefits. See Schedule of Findings and Questioned Costs for chart/table. 3. For seven (or 12%), the child care provider is not included in the approved listing of licensed child care providers. See Schedule of Findings and Questioned Costs for chart/table. 4. For four (or 7%), the child care certificate rate does not agree with child care listing. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $260,040. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable eligibility requirements. Responsible personnel should review case files for accuracy and completeness prior to approving applications. Views of Responsible Officials: GovGuam?s Corrective Action Plan specifies agreement with the finding and provides planned corrective actions.

Finding No.: 2021-026 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.575 Child Care and Development Block Grant Federal Award No.: 2001GUCCDF, G-1901GUCCDD Area: Special Tests and Provisions ? Health and Safety Requirements Questioned Costs: $22,755 Criteria: In accordance with applicable special tests and provisions requirements, lead agencies must verify and document that child care providers serving children who receive subsidies meet requirements pertaining to health and safety. Condition: For four (or 7%) of sixty child care providers tested, no documentation was provided to demonstrate that the child care provider meets applicable health and safety requirements. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor child care providers for compliance with applicable special tests and provisions for health and safety requirements. Effect: GovGuam is in noncompliance with applicable special tests and provisions for health and safety requirements. The reportable questioned cost is $22,755 as the projected questioned cost exceeds the threshold. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable special tests and provisions for health and safety requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan specifies disagreement with the finding for the reason that the child care providers tested are not licensed with BCCS, but are certified with CCDF, and they renew their CCDF certification annually. Auditor Response: No documentation was provided to demonstrate compliance by the child care providers.

Finding No.: 2021-027 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in CMS-64, Quarterly Statement of Expenditures for the Medical Assistance Program, should be supported by underlying accounting records. Conditions: Reported expenditures are not supported by underlying accounting records, resulting in underreporting, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as reported expenditures represent allowable costs. Identification as a Repeat Finding: 2020-017 Recommendation: GovGuam should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records, perform reconciliations, and retain such documents to substantiate reported amounts. Responsible personnel should also coordinate with the centralized accounting division to identify changes and adjust the CMS-64 reports or underlying records accordingly prior to the submission of the CMS-64 reports. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-028 Federal Agency: U.S. Department of Health and Human Services AL Program: 93.778 Medical Assistance Program Federal Award No.: 75X0512 Area: Special Tests and Provisions ? Provider Eligibility (Screening and Enrollment) Area: Special Tests and Provisions ? Provider Health and Safety Standards Questioned Costs: $188,206 Criteria: In accordance with applicable special tests and provisions requirements, the State Medicaid agency must revalidate the enrollment of all providers regardless of provider type at least every 5 years. Conditions: 1. For three (or 12%) of twenty-five providers tested, no updated agreement with the State Medicaid Agency was provided. See Schedule of Findings and Questioned Costs for chart/table. 2. For one (or 4%) of twenty-five providers tested, no medical license was provided for a physician who performed services under claim number 2109021300110 in the amount of $179,772 at provider number AOE. The physician is not included in the list of licensed physicians maintained at the Guam Department of Public Health and Social Services. Cause: GovGuam did not effectively monitor compliance with special tests and provisions requirements relative to the revalidation of enrollment between all providers and the State Medicaid agency at least every 5 years. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements. The reportable questioned cost is $188,206. Recommendation: GovGuam should strengthen monitoring controls over compliance with applicable special tests and provisions requirements relative to the revalidation of enrollment between all providers and the State Medicaid agency. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2021-029 Federal Agency: U.S. Department of Homeland Security AL Program: 97.042 Emergency Management Performance Grants Federal Award No.: EMF-2019-EP-00001 Area: Procurement and Suspension and Debarment Questioned Costs: $15,020 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations specify that every procurement shall be made by competitive sealed bidding, with certain exceptions, including the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Sole source procurement is not permissible unless a requirement is available from only a single supplier. In cases of reasonable doubt, competition should be solicited. Condition: Of 6 procurement transactions tested, aggregating $39K out of $137K in total applicable non-payroll program expenditures, no competition was sought in FY 2021 for the purchase of website hosting and maintenance services. The vendor selection was made based on the small purchases method used in FY 2020 under P206A01387, dated 12/17/2019. In essence, sole source procurement was applied despite availability of the services from more than one supplier. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The reportable questioned cost is $15,020, as the projected questioned cost exceeds the threshold. Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides a detailed response and does not specify disagreement with the finding.

Finding No.: 2021-030 Federal Agency: U.S. Department of Homeland Security AL Program: 97.050 Presidential Declared Disaster Assistance to Individuals and Households ? Other Needs Federal Award No.: COVID-19 4495DRGUSPLW Area: Eligibility Questioned Costs: $1,825,740 Criteria: In accordance with applicable eligibility requirements, recipients of the Other Needs Assistance (ONA) ? Supplemental Payments for Lost Wages Assistance (LWA) must demonstrate the following: 1. The individual was a recipient of at least $100 per week for any of the following benefits, beginning back to August 1, 2020: a. Unemployment compensation, including Unemployment Compensation for Federal Employees (UCFE) and Unemployment Compensation for Ex-Service members (UCX); b. Pandemic Emergency Unemployment Compensation (PEUC); c. Pandemic Unemployment Assistance (PUA); d. Extended Benefits (EB); e. Short-Time Compensation (STC); and 2. The individual must submit a self-certification that the individual is unemployed, partially unemployed, or unable or unavailable to work due to disruptions caused by COVID-19. Condition: 1. Recorded expenditures of LWA benefits do not agree with the recipient listing. See Schedule of Findings and Questioned Costs for chart/table. 2. Guam Department of Labor?s (GDOL?s) vendor for the HireGuam website did not implement the $100 threshold for the 02/02/2021 batch of LWA benefits, which resulted in $892,350 in LWA paid to ineligible recipients. GDOL was aware of the issue prior to our testing of eligibility and is in the process of correcting the issue with the vendor. Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The reportable questioned cost is $1,825,740. Recommendation: GovGuam should enforce monitoring controls over reconciliations and over compliance with eligibility requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-003 CFDA Program: 15.875 DOI Economic, Social and Political Development of the Territories CFDA Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Equipment and Real Property Management Area: Capital Assets Questioned Costs: $0 Criteria: 1. In accordance with the applicable equipment management requirements, grantees that acquire equipment with Federal funds are required to perform a physical inventory of the property and reconcile results with property records at least once every two years. Such property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. In addition, adequate maintenance procedures must be established to keep the property in good condition. 2. Reconciliation with inventory records, capital asset ledgers and the general ledger should be timely performed. 3. Capital assets should be reviewed for ongoing pertinence to minimize the opportunity for misstatements and to identify retired assets that have been replaced, disposed, or that have no further value or use. 4. Capital assets should be recorded in accordance with the applicable capitalization policy. Condition: Equipment and Real Property Management 1. GovGuam performed the required comprehensive physical inventory of its property in January 2016; however, the required reconciliation was not completed. As of September 30, 2020, the required biannual physical inventory and reconciliation were not performed. We are unable to assess the overall cumulative monetary value of this deficiency. However, the table below summarizes each of the Government of Guam FY 2020 major programs that have a level of total capital outlays over the past five years that is material to the major program. See Schedule of Findings and Questioned Costs for chart/table. Capital Assets 2. Twelve assets were not made available for verification of physical existence. 3. Capital assets were not recorded in accordance with the applicable capitalization policy. $345K were less than the $50,000 threshold per the applicable capitalization policy or were not capitalizable expenses. A subsequent adjustment was recorded to correct this misstatement. See Schedule of Findings and Questioned Costs for chart/table. 4. Construction costs were not easily identifiable by project. Capital asset subsidiary ledger included details of transactions from the general ledger and were not organized in a manner that can be identified by project. 5. Construction in progress was understated by $19M related to the Layon Landfill Cell#3. An audit adjustment was proposed to correct this misstatement. 6. Depreciation expenditures were overstated by $4.8M due to items that were depreciated in excess of the acquisition costs. Additionally, an understatement of depreciation expenditures was also identified of $2.3M due to assets that were not depreciated for current year. An audit adjustment was proposed to correct this misstatement. 7. Capital assets were understated by $4.5M which includes retention release payments associated with CWIP infrastructure additions and a $350K escrow payment for the purchase of Hesler building. 8. Capital assets were disposed and surveyed, but were not removed from the capital asset register. See Schedule of Findings and Questioned Costs for chart/table. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. GovGuam requires more funding and human resources to fully develop a reliable equipment management system. Effect: GovGuam is in noncompliance with applicable equipment management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. This noncompliance applies to CFDAs 15.875 and 93.323, for which cumulative capital outlays over the past five years exceed the program?s FY 2020 materiality level. Furthermore, depreciable assets and amounts reported as construction in progress may be materially misstated. Such potential misstatements were mitigated through the proposed audit adjustment. Identification as a Repeat Finding: 2019-008 Recommendation: GovGuam should complete the required biannual physical inventory and reconciliations during FY 2021 and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as requesting Federal assistance, processing required reconciliations and reports, training personnel, and coordinating with other governmental units on property management requirements. GovGuam should continue implementing controls over timely tagging all equipment and over performing the required future inventories and reconciliations in accordance with applicable equipment management requirements. GovGuam should record capital assets in accordance with the Government?s capitalization policy and should implement a policy to monitor replacements, disposals, transfers of assets and construction in progress by project. Additionally, we recommend management revisit the capitalization policy and consider including all vehicles as part of reported capital asset inventory. The Division of Accounts should investigate whether additional personnel well versed in accounting reconciliations and processes may be required to allow for timely review and recordation of capital assets, especially given the substantial capital asset construction that is undertaken by GovGuam. Furthermore, coordination with DPW and engineering firms must occur at project commencement so that accounts are established to track capital costs and to allow for the preparation of periodic reports documenting a project?s percentage of completion. Equipment management has been a continuing finding in prior audits, and GovGuam management is still in the process of effecting corrective action to develop and fund an equipment management system. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-004 Federal Agency: U.S. Department of Agriculture CFDA Program: 10.551/10.561 SNAP Cluster Federal Award No.: 207GUGU4S2514 Area: Special Tests and Provisions ? ADP System for SNAP Questioned Costs: $2,096 Criteria: In accordance with applicable special tests and provisions requirements, the State?s Automated Data Processing (ADP) system for SNAP must accurately and completely process and store all case file information for eligibility determination and benefit calculation. Condition: For 1 (or 4%) of 25 case files tested, aggregating $11,945 out of $114.6 million in total SNAP benefits, the case file information did not include a full application form or mayor?s certification to substantiate the household size of four members in the ADP system. Therefore, the accuracy of the ADP system for eligibility determination and benefit calculation cannot be validated. See Schedule of Findings and Questioned Costs for chart/table. Cause: DPHSS management did not effectively monitor the ADP System for compliance with applicable special tests and provisions. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the ADP System. Projected questioned costs exceed $25,000, and the known questioned cost is $2,096. Identification as a Repeat Finding: 2019-002 Recommendation: Responsible personnel should enforce monitoring and recordkeeping controls over compliance with applicable special tests and provisions requirements. Responsible personnel should maintain complete case file information to substantiate the accuracy of the ADP system data. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-005 Federal Agency: U.S. Department of Agriculture CFDA Program: 10.551/10.561 SNAP Cluster Federal Award No.: 207GUGU4S2514 Area: Special Tests and Provisions ? EBT Reconciliation Questioned Costs: $0 Criteria: In accordance with applicable special tests and provisions requirements, States must have systems in place to reconcile all of the funds entering into, exiting from, and remaining in the system each day with the State?s benefit account with Treasury and electronic benefits transfer (EBT) contractor records. This includes a reconciliation of the State?s issuance files of postings to recipient accounts with the EBT contractor. The State must reconcile the financial and management data that comes from the EBT contractor to the SNAP issuance files and settlement data to ensure that benefits are authorized by the State and funds have been properly drawn down. Condition: Of fifty-two reconciliation dates tested, the reconciliation data contained no dates relative to signoffs, system extractions, or printing, etc., to substantiate whether the daily reconciliation occurred. Cause: DPHSS management did not effectively monitor compliance with applicable EBT reconciliation requirements. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the EBT reconciliation. A potential misstatement of federal expenditures within the Schedule of Expenditures of Federal Awards and basic financial statements or related disclosures could exist undetected and uncorrected. No questioned cost is presented, as ending year balances between the State and the EBT contractor are reconciled. Identification as a Repeat Finding: Finding 2019-003 Recommendation: DPHSS management should more closely monitor the EBT reconciliation process so that the required daily reconciliations are completed in accordance with applicable special tests and provisions requirements. If reconciliations are not feasible on a daily basis, responsible personnel should consider seeking approval from the Grantor agency for an alternative reconciliation schedule. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-006 Federal Agency: U.S. Department of the Interior CFDA Program: 15.875 Economic, Social and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $218,183 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations, specify the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Condition: Of 25 procurement transactions tested, aggregating $13.5 million out of $16.3 million in total non-payroll program expenditures, we noted the following: 1. For one (or 4%), the small purchases method was used to procure construction services to upgrade interior bay lighting at a gym under purchase order P206P00504, dated 01/16/2020, for $62,588. The bid abstract lists only two positive quotations, with one specified as a ?no quote.? We further noted that purchase order P206P00503, also dated 01/16/2020, was for $56,300 and was awarded to the same contractor for construction services to refurbish the interior wood arena flooring at the same gym. Since total construction services at the gym exceeded $100,000, formal bid procedures should have been performed. Instead, it appears the procurement was artificially divided. See Schedule of Findings and Questioned Costs for chart/table. 2. For two (or 8%), the small purchases method was used to procure construction services for the Guam Department of Parks and Recreation?s public restrooms and recreational facilities at various locations under purchase order P206P00509, dated 04/30/2020, for $66,600 and purchase order P206P00510, dated 05/07/2020, for $88,995. Given the consecutive purchase order numbers, nearness of dates, and similarity of projects, it appears formal bid procedures should have been performed for the procurement of total construction services in excess of $100,000. Instead, it appears the procurement was artificially divided. Additionally, for P206P00509, four contractors were solicited, with one withdrawing due to scheduling conflicts with current projects; for P206P00510, six contractors were solicited, including the contractor who had withdrawn from P206P00509, as well as two others from P206P00509, and excluding the second lowest bidder from P206P00509. See Schedule of Findings and Questioned Costs for chart/table. 3. For one (or 4%), the emergency procurement method was used to procure three ambulances in April 2020. The procurement file includes three quotations, of which one indicates ?no quote.? Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in this federally funded transaction. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The total questioned cost is $218,183. Identification as a Repeat Finding: Finding 2019-004 Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-007 Federal Agency: U.S. Department of the Interior CFDA Program: 15.875 Economic, Social and Political Development of the Territories Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in SF-425, Federal Financial Report, should be accurate and supported by underlying accounting records. Condition: Reported expenditures for the semi-annual reporting period ended 06/30/2020 are not supported by underlying accounting records, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as reported expenditures represent allowable costs. Recommendation: GovGuam should enforce monitoring controls over reconciliations and over compliance with reporting requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-008 Federal Agency: U.S. Department of Justice CFDA Program: 16.034 Coronavirus Emergency Supplemental Funding Program Area: Procurement and Suspension and Debarment Questioned Costs: $0 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. In accordance with Government of Guam procurement regulations, emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Condition: Of 13 procurement transactions tested, aggregating $934,293 out of $1,046,005 in total non-payroll program expenditures, the emergency procurement method was used, however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transactions. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. 1. For two (or 15%), only one quotation was obtained to procure ambulances. See Schedule of Findings and Questioned Costs for chart/table. 2. For four (or 31%), the procurement file for N95 masks includes four quotations, of which three indicate ?no quote.? See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-009 Federal Agency: U.S. Department of Labor CFDA Program: 17.225 Unemployment Insurance Federal Award No.: Pandemic Unemployment Assistance (PUA) Federal Award No.: Federal Pandemic Unemployment Compensation (FPUC) Area: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: In accordance with applicable allowable costs/cost principles requirements, in order to be allowable under Federal awards, costs must be determined in accordance with generally accepted accounting principles and should be net of applicable credits. Condition: For three (or 5%) of 60 claimants tested, aggregating $1,065,353 out of $376.7 million in total program benefits, the Claims Register reported double the weekly rate of $345 for PUA and/or $600 for FPUC during certain weeks in FY 2020. During a week when a direct deposit was rejected by the bank, the Program issued a paper check to the claimant. However, in the Claims Register, both the direct deposit and the paper check for the approved weekly amount were recorded as benefits, without a corresponding credit for the canceled payment. Based on our examination of the Payment Register and cancelled direct deposits, we noted that the claimant did not receive overpayments. Therefore, no questioned cost is presented. See Schedule of Findings and Questioned Costs for chart/table. Cause: Guam Department of Labor did not effectively monitor the Claims Register for double-recorded benefits and did not reflect credits for the canceled direct deposits. Effect: GovGuam is in noncompliance with applicable allowable costs/cost principles requirements, and program costs are overstated. Recommendation: Guam Department of Labor should periodically monitor compliance with applicable allowable costs/cost principles requirements. When direct deposits are rejected by the bank, responsible personnel should record the credit in the Claims Register so that benefits in the AS400 financial management system accurately reflect benefits for each claimant. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-010 Federal Agency: U.S. Department of Labor CFDA Program: 17.225 Unemployment Insurance Federal Award No.: Pandemic Unemployment Assistance (PUA) Federal Award No.: Federal Pandemic Unemployment Compensation (FPUC) Area: Eligibility Questioned Costs: $6,626 Criteria: In accordance with applicable eligibility requirements, claimants are eligible to receive pandemic unemployment assistance and Federal pandemic unemployment compensation if they file an initial application and weekly certifications. Condition: For four (or 7%) of 60 case files tested, aggregating $1,065,353 out of $376.7 million in total program benefits, a notice of overpayment was mailed to the claimant after 09/30/2020; however, no subsequent documentation was provided to substantiate recoupment of the overpayment. See Schedule of Findings and Questioned Costs for chart/table. Cause: Guam Department of Labor did not effectively monitor compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. Projected questioned costs exceed $25,000, and the known questioned cost is $6,626. Recommendation: Guam Department of Labor should periodically monitor compliance with applicable eligibility requirements. Responsible personnel should timely perform quality control reviews and enforce recovery of overpayments. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-011 Federal Agency: U.S. Department of the Treasury CFDA Program: 21.019 Coronavirus Relief Fund Area: Activities Allowed or Unallowed Questioned Costs: $399,830 Criteria: In accordance with applicable activities allowed or unallowed requirements, payments must be used to cover costs that are: 1. Necessary expenditures incurred due to the public health emergency with respect to COVID-19; 2. Not accounted for in the government?s most recently approved budget as of March 27, 2020; and 3. Incurred during the period that begins on March 1, 2020 and ends on December 30, 2020. Condition: For 2 (or 9%) of 23 non-payroll transactions tested, aggregating $5.2 million out of $51.6 million in total non-payroll program costs, the cost does not appear to be a necessary expenditure incurred due to the public health emergency with respect to COVID-19, as follows: a. Credit card fees absorbed by various GovGuam agencies. Although we understand that the absorption of credit card fees may have been necessary to encourage online payments, we are not aware of analytics to determine pre- and post-COVID usage of credit cards and associated fees. No credit card statements were provided to substantiate fees charged. b. Unoccupied hotel rooms during the period from 08/24/2020 through 08/31/2020. Of the total 144 rooms reserved each day during the period, an average of 142 rooms were unoccupied each day at a rate of $66 per day. Although we understand that mass reservations were necessary to secure rooms to accommodate unknown numbers of quarantined travelers, we are not aware of 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. See Schedule of Findings and Questioned Costs for chart/table. For one (or 20%) of five payroll transactions tested, aggregating $15,565 out of $13.5 million in total payroll program costs, an overpayment of $138 was processed for Employee Number 3774 for the pay period ended 04/25/2020. The employee was overpaid 28.5 hours of 10% hazardous pay and underpaid 2 hours of night differential and 9 hours at 5% of base rate. Cause: GovGuam did not effectively monitor compliance with applicable activities allowed or unallowed requirements. Effect: GovGuam is in noncompliance with applicable activities allowed or unallowed requirements. The total questioned cost is $399,830. Recommendation: GovGuam should more closely monitor program costs for allowability in accordance with activities allowed or unallowed requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-012 Federal Agency: U.S. Department of the Treasury CFDA Program: 21.019 Coronavirus Relief Fund Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements for special reporting, each prime recipient of the Fund shall provide a quarterly Financial Progress Report that contains COVID-19 related costs incurred during the covered period. The prime recipient?s quarterly Financial Progress Report submission should be supported by the data in the prime recipient?s accounting system. By no later than September 21, 2020, prime recipients shall submit via the GrantSolutions portal the first detailed quarterly report, which shall cover the period March 1 through June 30, 2020. Condition: GovGuam provided a copy of the required quarterly Financial Progress Report on May 24, 2021. Certain reported expenditures differ from data in the AS400 accounting system, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: As of GovGuam?s report submission in September 21, 2020, accounting adjustments were ongoing in the accounting system. Effect: GovGuam is in noncompliance with applicable reporting requirements for special reporting. No questioned cost is presented as we are unable to quantify the impact of noncompliance. Recommendation: GovGuam should enforce compliance with applicable reporting requirements. Accounting adjustments in the AS400 accounting system should be reflected in future progress reports. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-013 Federal Agency: U.S. Department of the Treasury CFDA Program: 21.019 Coronavirus Relief Fund Area: Subrecipient Monitoring Questioned Costs: $0 Criteria: In accordance with applicable subrecipient monitoring requirements, a pass-through entity must: 1. Clearly identify to the subrecipient the award as a subaward by providing the CFDA (Catalog of Federal Domestic Assistance) number and name. 2. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This includes the verification that subrecipients expected to be audited as required by 2 CFR part 200, subpart F, met the audit requirements. Condition: For the year ended September 30, 2020, GovGuam reported $64.8 million in total program expenditures in the Schedule of Expenditures of Federal Awards (SEFA), which included $21.7 million in amounts passed through to GovGuam line agencies and component units. However, the SEFA did not separately present the $21.7 million as amounts passed through to subrecipients, including $15.8 million to Guam Economic Development Authority (GEDA). According to Executive Order No. 2020-18, dated June 1, 2020, ?GEDA is designated as the entity responsible for the administration of the Guam Small Business Pandemic Assistance Grant?.The Administrator of GEDA is designated as the official responsible for overseeing the program which includes the following items:?[(]b[)]. Creating the program inclusive of application, promotional materials, standard operating procedures, and other relevant documentation. [(]c.[)] Receiving and reviewing applications in a timely manner and periodically reporting a payment schedule to the Department of Administration for check issuance to small businesses.? As such, GEDA is expected to be audited as required by the Single Audit Act and 2 CFR part 200. We are aware that the audit report on GEDA?s FY 2020 financial statements was issued on March 31, 2021. However, it appears GEDA did not have a Single Audit. Cause: GovGuam did not enforce compliance with applicable subrecipient monitoring requirements. Effect: GovGuam is in noncompliance with applicable subrecipient monitoring requirements. No questioned cost is presented at this finding as the U.S. Office of Management and Budget extended the submission date of the Single Audit reporting package to six months beyond the normal due date. However, a potential questioned cost of $15,780,370 may exist if the required Single Audit reporting package is not submitted by December 31, 2021. Recommendation: GovGuam should enforce compliance with applicable subrecipient monitoring requirements. Responsible personnel should monitor GEDA?s compliance with requirements for its FY 2020 Single Audit reporting package submission by 12/31/2021. Also, GovGuam should consider seeking guidance and confirmation from the Grantor Agency regarding the classification of GEDA as either a subrecipient or contractor. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-014 Federal Agency: U.S. Department Health and Human Services CFDA Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Period of Performance Questioned Costs: $47,259 Criteria: In accordance with applicable period of performance requirements, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 90 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. Condition: The period of performance end date for Grant No. 5 NU50CK000373-05-00 was July 31, 2019. Therefore, the liquidation end date was October 31, 2019. Although expenditures were obligated during the period of performance, liquidations occurred after October 31, 2019, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor compliance with applicable period of performance requirements. Effect: GovGuam is in noncompliance with applicable period of performance requirements. The total questioned cost is $47,259. Recommendation: GovGuam should monitor compliance with applicable period of performance requirements. Prior to charging expenditures to a Federal award, responsible personnel should verify the period of performance dates so that payments occur before the liquidation end date. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-015 Federal Agency: U.S. Department Health and Human Services CFDA Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Area: Procurement and Suspension and Debarment Questioned Costs: $0 Criteria: In accordance with applicable procurement and suspension and debarment requirements, when procuring property and services under a Federal award, a state must follow the same policies and procedures it uses for procurements from its non-Federal funds. Government of Guam procurement regulations, specify the following: 1. The small purchases method applies to procurements less than $25,000 for supplies and services and less than $100,000 for construction, and procurement requirements shall not be artificially divided so as to constitute a small purchase. For small purchases, no less than three positive written quotations from businesses shall be solicited, recorded and placed in the procurement file. 2. Emergency procurement shall be made with such competition as is practicable under the circumstances, and the procurement agent must solicit at least three informal price quotations. Condition: Of 13 procurement transactions tested, aggregating $271,425 out of $614,831 in total non-payroll program expenditures, either the small purchase method or emergency procurement method was used, however, less than three informal price quotations are on file. Given the ease of emailing capabilities and official social media platforms, other potential suppliers should have been solicited and given an opportunity to participate in the federally funded transactions. No questioned cost is presented as the procurement can be viewed as being technically compliant based on existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. with existing GovGuam procurement regulations and guidance from the Office of the Attorney General of Guam. Small Purchases Method 1. For one (or 8%), the procurement file for 12V replacement battery DC 14AHRs includes five quotations, of which three indicate ?no quote.? See Schedule of Findings and Questioned Costs for chart/table. 2. For one (or 8%), the procurement file for scientific equipment includes five quotations, of which four indicate ?no quote.? See Schedule of Findings and Questioned Costs for chart/table. Emergency Procurement ? COVID 19 Funding 3. For one (or 8%), the procurement file for scientific equipment includes five quotations, of which four indicate ?no quote? from Guam-based suppliers. The equipment was purchased from a supplier not based on Guam, and no other quotes from off-Guam suppliers were solicited. See Schedule of Findings and Questioned Costs for chart/table. 4. For one (or 8%), the procurement file for pipette laboratory supplies includes four solicitations, to which GovGuam received responses of one quote, two with a ?no quote,? and one non-response. See Schedule of Findings and Questioned Costs for chart/table. 5. For one (or 8%), the procurement file for biohazard-related laboratory supplies includes five quotations, of which three indicate ?no quote.? See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. Recommendation: Responsible procurement personnel should enforce compliance with applicable procurement requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-016 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.778 Medical Assistance Program Federal Award No.: 2005GQ5MAP Area: Eligibility Questioned Costs: $226,368 Criteria: In accordance with applicable eligibility requirements, such documents as proof of residency, notice of action, and recertification forms should be maintained on file to substantiate eligibility determinations. Condition: For one (or 2%) of 60 case files tested, aggregating $2.3 million out of $98.2 million in total program expenditures for benefits to participants, the recertification forms are not on file. Furthermore, the prior certification was extended on 08/13/2017 for the certification period from 11/30/2017 through 07/31/2018, and no written rationale for the extension is on file. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively manage case files and monitor eligibility determinations for compliance with applicable eligibility requirements. Effect: GovGuam is in noncompliance with applicable eligibility requirements. The total known questioned cost is $226,368 (89.2% Federal share of $253,776). Identification as a Repeat Finding: 2019-005 Recommendation: Responsible personnel should enforce recordkeeping and monitoring controls over maintaining compliance with applicable eligibility requirements. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-017 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.778 Medical Assistance Program Federal Award No.: 2005GQ5MAP, 2005GQ5ADM Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in CMS-64, Quarterly Statement of Expenditures for the Medical Assistance Program, should be supported by underlying accounting records. Condition: Reported expenditures are not supported by underlying accounting records, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as reported expenditures represent allowable costs. Identification as a Repeat Finding: 2019-006 Recommendation: GovGuam should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records, perform reconciliations, and retain such documents to substantiate reported amounts. Responsible personnel should also coordinate with the centralized accounting division to identify changes and adjust the CMS-64 reports or underlying records accordingly prior to the submission of the CMS-64 reports. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2020-018 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.778 Medical Assistance Program Federal Award No.: 2005GQ5MAP Area: Special Tests and Provisions ? Refunding of Federal Share of Medicaid Overpayments to Providers Questioned Costs: $413,154 Criteria: In accordance with applicable special tests and provisions requirements relative to overpayments made to providers, states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment before the federal share must be refunded to CMS via Form CMS-64 Summary, Line 9C1 ? Fraud, Waste & Abuse Amounts, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS either in the quarter in which the recovery is made or in the quarter in which the one-year period ends following discovery, whichever is earlier. Condition: During FY 2020, GovGuam recovered a total of $447,272 in overpayments made to providers. GovGuam?s schedule of overpayments and recoupments was not in sufficient detail to identify the dates of the initial overpayments. Based on Federal rates applicable in FY 2020, the Federal share of the recovered overpayments is $413,154, none of which was reported on Form CMS-64 during FY 2020 for refunding to CMS. See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not effectively monitor compliance with special tests and provisions requirements relative to overpayments made to providers. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements. The total known questioned cost is $413,154. Recommendation: GovGuam should monitor compliance with special tests and provisions requirements. Personnel responsible for the preparation and submission of Form CMS-64 should identify and report the required Federal share of overpayments made to providers on a quarterly basis. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides planned corrective actions and does not specify disagreement with the finding.

Finding No.: 2019-001 Federal Agency: U.S. Department of Agriculture (USDA) CFDA Program: 10.551/10.561 SNAP Cluster Federal Award No.: 197GUGU4S2514 Area: Eligibility Liability Amount: $589,871 Criteria: A State?s eligibility and benefit amount determinations, both underpayment and overpayment, and the correctness of actions to deny, terminate, or suspend benefits must be accurate. The payment error rate is the combined value of overpayments and under payments to participating households, and any State with a payment error rate greater than 6 percent is required to effect corrective action. A State with persistently high error rates is assessed fiscal liabilities based on the amount of benefits issued in error. A liability amount shall be established when, for the second or subsequent consecutive fiscal year, the Food and Nutrition Service (FNS) determines that there is a 95 percent statistical probability that a State?s payment error rate exceeds 105 percent of the national performance measure for payment error rates, which is 7.36 percent for FY 2019. Condition: On July 6, 2020, FNS determined that Guam?s payment error rate for FY 2019 is 11.89% and that FY 2019 is the second consecutive year that Guam exceeded 105 percent of the national performance measure. Cause: FNS determined that DPHSS management failed to act upon updated information reported by households on their wages and salaries, and further, that many errors are the result of information not being reported by households (e.g., incomplete applications). Effect: FNS established a FY 2019 Guam liability of $589,871. GovGuam?s check payment to USDA-FNS for the full amount is dated August 7, 2020. Recommendation: FNS recommends that Guam (1) adopts the best practices shared in the Keys to Payment Accuracy, (2) considers modernization efforts, and (3) evaluates the application, interview process and household notices to ensure requirements are communicated to applicants in clear understandable terms. Views of Responsible Officials: Department of Public Health and Social Services provided a corrective action plan to (1) implement case review on all cases processed by Eligibility Specialists (ESs) every day under the direct supervision of the Social Service Supervisor (SSS) I and monitoring by Bureau of Economic Security (BES) Program Administrator. SSS I will require all Eligibility Specialist Supervisors (ESSs) to conduct 90% to 100% supervisory reviews of ES eligibility determinations before case finalization, and (2) create and recruit additional four ESS positions, recruit the six vacant ES positions in the current staffing pattern, and request for additional new four ES positions for recruitment. BES will ensure that all new recruits will be trained especially in the interpretation of policies, manuals, and most importantly, in the navigation of the Ph/pro eligibility system. GovGuam?s Corrective Action Plan provides details to address the finding and recommendation.

Finding No.: 2019-002 Federal Agency: U.S. Department of Agriculture CFDA Program: 10.551/10.561 SNAP Cluster Federal Award No.: 197GUGU4S2514 Area: Special Tests and Provisions ? ADP System for SNAP Questioned Costs: $3,935 Criteria: In accordance with applicable special tests and provisions requirements, the State?s Automated Data Processing (ADP) system for SNAP must: (1) accurately and completely process and store all case file information for eligibility determination and benefit calculation; (2) automatically cut off households at the end of their certification period unless recertified; and, (3) provide data necessary to meet Federal issuance and reconciliation reporting requirements. Condition: Of 25 case files tested, we noted the following: 1. For 1 (or 4%), the case file was not provided for examination: See Schedule of Findings and Questioned Costs for chart/table. 2. For 2 (or 8%), the ADP benefit calculations exceeded the expected benefits based on USDA guidelines: See Schedule of Findings and Questioned Costs for chart/table. 3. For 1 (or 4%), the household exceeded income limits and was terminated in the prior year through a Notice of Action dated 03/14/2018; however, the ADP system continued to process issuances during FY 2019 from 10/2018 through 02/2019: See Schedule of Findings and Questioned Costs for chart/table. Cause: DPHSS management did not effectively monitor the ADP System for compliance with applicable special tests and provisions. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the ADP System. Projected questioned costs exceed $25,000, and the known questioned cost is $3,935. Recommendation: Responsible personnel should enforce monitoring and recordkeeping controls over compliance with applicable special tests and provisions requirements. Responsible personnel should assess the ADP system to identify and correct any system-related processing errors. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides details to address the finding and recommendation.

Finding No.: 2019-003 Federal Agency: U.S. Department of Agriculture CFDA Program: 10.551/10.561 SNAP Cluster Federal Award No.: 197GUGU4S2514 Area: Special Tests and Provisions ? EBT Reconciliation Questioned Costs: $0 Criteria: In accordance with applicable special tests and provisions requirements, States must have systems in place to reconcile all of the funds entering into, exiting from, and remaining in the system each day with the State?s benefit account with Treasury and electronic benefits transfer (EBT) contractor records. This includes a reconciliation of the State?s issuance files of postings to recipient accounts with the EBT contractor. The State must reconcile the financial and management data that comes from the EBT contractor to the SNAP issuance files and settlement data to ensure that benefits are authorized by the State and funds have been properly drawn down. Condition: Of fifty-four reconciliation dates tested, the reconciliation data contained no dates relative to signoffs, system extractions, or printing, etc., to substantiate whether the daily reconciliation occurred. Cause: DPHSS management did not effectively monitor compliance with applicable EBT reconciliation requirements. Effect: GovGuam is in noncompliance with applicable special tests and provisions requirements for the EBT reconciliation. A potential misstatement of federal expenditures within the Schedule of Expenditures of Federal Awards and basic financial statements or related disclosures could exist undetected and uncorrected for as long as 5 months. No questioned cost is presented, as ending year balances between the State and the EBT contractor are reconciled. Identification as a Repeat Finding: Finding 2018-002 Recommendation: DPHSS management should more closely monitor the EBT reconciliation process so that the required daily reconciliations are completed in accordance with applicable special tests and provisions requirements. If reconciliations are not feasible on a daily basis, responsible personnel should consider seeking approval from the Grantor agency for an alternative reconciliation schedule. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides details to address the finding and recommendation.

Finding No.: 2019-004 Federal Agency: U.S. Department of the Interior CFDA Program: 15.875 Economic, Social, and Political Development of the Territories Area: Procurement and Suspension and Debarment Questioned Costs: $517,250 Criteria: In accordance with applicable procurement and suspension and debarment requirements, emergency procurement is allowable when there exists a threat to public health, welfare, or safety under emergency conditions as declared or approved by the Governor. Furthermore, only costs resulting from proper procurements should be charged to Federal awards. Condition: For four (or 13%) of 31 transactions tested, aggregating $6.7 million out of $14.4 million in total nonpayroll program expenditures, emergency procurement was used either monthly or bimonthly to procure services for the Guam Medical Referral Assistance Office relative to serving families who have to travel for medical care. However, the procurement file does not contain sufficient documentation to substantiate existing emergency conditions that prevented formal bid procedures in advance of the known contract expiration dates. Furthermore, the procurement authority documented on the purchase orders indicate that the Chief Procurement Officer ratified a solicitation or award of a contract that was determined to be in violation of the law. Federal expenditures associated with the noncompliant procurement method are questioned costs. See Schedule of Findings and Questioned Costs for chart/table. During FY 2019, GovGuam charged the Federal program a total of $517,250 under eight such noncompliant procurements with the same contractor for the months of October 2018 through June 2019. Cause: GovGuam did not effectively plan for the expiration of existing contracts and did not enforce compliance with applicable procurement requirements. Effect: GovGuam is in noncompliance with applicable procurement requirements. The total questioned cost is $517,250. Identification as a Repeat Finding: 2018-003 Recommendation: Responsible personnel should closely monitor the expiration dates of existing contracts and should commence procurement procedures in sufficient time to allow for formal bid procedures accordingly. Furthermore, the responsible procurement personnel should enforce compliance with applicable procurement requirements. If noncompliant procurement methods are subsequently ratified by the Chief Procurement Officer and are to be charged to Federal awards, the responsible personnel should consider seeking prior approval from the Grantor agency. Views of Auditee and Planned Corrective Actions: GovGuam?s Corrective Action Plan provides details to address the finding and recommendation.

Finding No.: 2019-005 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.778 Medical Assistance Program Federal Award No.: 1905GQ5MAP Area: Eligibility Questioned Costs: $2,312 Criteria: In accordance with applicable eligibility requirements, such documents as application worksheets, social security cards, proof of citizenship, proof of residency, notice of action, verification of employment forms, and recertification forms should be maintained on file to substantiate eligibility determinations. Furthermore, information should be requested from other agencies in the State and other State and Federal programs in verifying the financial eligibility of an individual. Conditions: Of 60 case files tested, aggregating $5 million out of $128.2 million in total program expenditures for benefits to participants, we noted the following: 1. For 1 (or 2%), the case file was not provided for examination. See Schedule of Findings and Questioned Costs for chart/table. 2. For 1 (or 2%), the social security number of one household member was incorrectly entered in the PHPro system, and therefore, the household member was not subjected to the Income Eligibility Verification System (IEVS). The PHPro system did not automatically generate an error report to notify the eligibility specialist of the incorrect social security number. See Schedule of Findings and Questioned Costs for chart/table. Subsequently, in response to the finding, GovGuam corrected the social security number in the PHPro system and regenerated an IEVS report that substantiated the eligibility of the household. Therefore, no questioned cost is presented for this finding. Cause: GovGuam did not effectively manage case files and monitor eligibility determinations for compliance with applicable eligibility requirements. Furthermore, GovGuam was not aware of the PHPro system issue. Effect: GovGuam is in noncompliance with applicable eligibility requirements. Projected questioned costs exceed $25,000, and the total known questioned cost is $2,312. Recommendation: Responsible personnel should enforce recordkeeping and monitoring controls over maintaining compliance with applicable eligibility requirements. Furthermore, responsible personnel should assess the PHPro system to identify and correct any system-related processing weaknesses relative to edit checks and error notifications. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides details to address the finding and recommendation.

Finding No.: 2019-006 Federal Agency: U.S. Department of Health and Human Services CFDA Program: 93.778 Medical Assistance Program Federal Award No.: 1905GQ5MAP Area: Reporting Questioned Costs: $0 Criteria: In accordance with applicable reporting requirements, amounts reported in CMS-64, Quarterly Statement of Expenditures for the Medical Assistance Program, should be supported by underlying accounting records. Conditions: Reported expenditures are not supported by underlying accounting records, as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: GovGuam did not enforce monitoring controls over reconciliations and over compliance with reporting requirements. Effect: GovGuam is in noncompliance with applicable reporting requirements. No questioned cost is presented as reported expenditures represent allowable costs. Recommendation: GovGuam should enforce monitoring controls over compliance with reporting requirements. Responsible personnel should review underlying accounting records, perform reconciliations, and retain such documents to substantiate reported amounts. Responsible personnel should also coordinate with the centralized accounting division to identify changes and make adjustments to the CMS-64 reports or underlying records accordingly prior to the submission of the CMS-64 reports. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides details to address the finding and recommendation.

Finding No.: 2019-008 CFDA Program: 15.875 DOI Economic, Social and Political Development of the Territories Area: Equipment and Real Property Management Area: Capital Assets Questioned Costs: $0 Criteria: 1. In accordance with the applicable equipment management requirements, grantees that acquire equipment with Federal funds are required to perform a physical inventory of the property and reconcile results with property records at least once every two years. Such property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sale price of the property. In addition, adequate maintenance procedures must be established to keep the property in good condition. 2. Reconciliation with inventory records, capital asset ledgers and the general ledger should be timely performed. 3. Capital assets should be reviewed for ongoing pertinence to minimize the opportunity for misstatements and to identify retired assets that have been replaced, disposed, or that have no further value or use. 4. Capital assets should be recorded in accordance with the applicable capitalization policy. Condition: Equipment and Real Property Management 1. GovGuam performed the required comprehensive physical inventory of its property in January 2016; however, the required reconciliation was not completed. As of September 30, 2019, the required biannual physical inventory and reconciliation were not performed. We are unable to assess the overall cumulative monetary value of this deficiency. However, the table below summarizes each Government of Guam FY 2019 major program that has a level of total capital outlays over the past five years that is material to the major program. See Schedule of Findings and Questioned Costs for chart/table. Capital Assets 2. Reconciliation of capital assets was continuously ongoing 8 months after fiscal year end with thirty-two post-closing adjustments were recorded to adjust capital assets. a. Construction in progress included projects of approximately $47.7M with no additional expenditures related to the projects in FY2019 or were identified to be substantially completed as of 09/30/19. An adjustment was subsequently recorded to transfer these assets as depreciable as of 09/30/19. b. One asset was not made available for verification of physical existence. Description Cost P056A01742-Portable Astro Digital W/ENH Software $ 550,000 c. Capital assets were not recorded in accordance with the applicable capitalization policy. $345K in assets were less than the $50,000 threshold per the applicable capitalization policy or were not capitalizable expenses. A subsequent adjustment was recorded to correct this misstatement. See Schedule of Findings and Questioned Costs for chart/table. 3. Construction costs are not easily identifiable by project. The capital asset subsidiary ledger included details of transactions from the general ledger and were not organized in a manner that can be identified by project. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. GovGuam requires more funding and human resources to fully develop a reliable equipment management system. Effect: GovGuam is in noncompliance with applicable equipment management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. This noncompliance applies to CFDA 15.875, for which cumulative capital outlays over the past five years exceed the FY 2019 materiality level. Furthermore, depreciable assets and amounts reported as construction in progress may be materially misstated. Such potential misstatements were mitigated through the proposed audit adjustment. Identification as a Repeat Finding: 2018-004 Recommendation: GovGuam should complete the required biannual physical inventory and reconciliations during FY 2020 and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as requesting Federal assistance, processing required reconciliations and reports, training personnel, and coordinating with other governmental units on property management requirements. GovGuam should continue implementing controls over timely tagging all equipment and over performing the required future inventories and reconciliations in accordance with applicable equipment management requirements. GovGuam should record capital assets in accordance with the Government?s capitalization policy and should implement a policy to monitor replacements, disposals, transfers of assets and construction in progress by project. The Division of Accounts should investigate whether additional personnel well versed in accounting reconciliations and processes may be required to allow for timely review and recordation of capital assets, especially given the substantial capital asset construction that is undertaken by GovGuam. Furthermore, coordination with DPW and engineering firms must occur at project commencement so that accounts are established to track capital costs and to allow for the preparation of periodic reports documenting a project?s percentage of completion. Equipment management has been a continuing finding in prior audits, and GovGuam management is still in the process of effecting corrective action to develop and fund an equipment management system. Views of Responsible Officials: GovGuam?s Corrective Action Plan provides details to address the finding and recommendation.

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