Audit 4883

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.: 2022-010 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.: 2022-010 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.: 2022-008 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.: 2022-012 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.: 2022-008 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.: 2022-012 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.: 2022-008 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.: 2022-025 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.: 2022-008 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.: 2022-025 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.: 2022-026 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.: 2022-028 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.: 2022-028 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.: 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.: 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.: 2022-010 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.: 2022-010 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.: 2022-008 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.: 2022-012 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.: 2022-008 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.: 2022-012 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.: 2022-008 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.: 2022-025 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.: 2022-008 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.: 2022-025 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.: 2022-026 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.: 2022-028 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.: 2022-028 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.: 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.