Guam – In-kind donations and delayed deposits. Despite deficiencies with internal control, the Office of Public Accountability’s fiscal year 2018 audit of the Guam Visitors Bureau (GVB) did not identify material weaknesses.
GVB’s last three fiscal years have been historic “bests” with more than 1.5 million tourists arriving each year.
Guam’s top-two markets are Korea, at number one, with 753,000 visitors, and Japan at number two, with just over 500,000 visitor arrivals. The Philippines and Taiwan are two growing markets that the bureau continues to track.
However, the report noted potential challenges in accommodating more visitors by 2020.
GVB anticipates 1.75 million tourist arrivals by 2020, which requires 10,000 rooms. Currently, there are 8,883 available rooms for visitors with occupancy rates averaging 87 percent reaching its limits in accommodations.
With the pace of hotel development and the H-2B labor force issue, Guam may not be able to accommodate the increase in arrivals by 2020.
Another significant challenge is the declining infrastructure of Guam to include our parks, roads, and hotels. Guam must provide updated and easily accessible spectacles and sights for the visitor’s unique experiences.
The independent auditor listed four deficiencies under internal controls:
- Agent services and fees exceeded agreed amounts per contract when invoiced;
- $21,000 in cash and checks not timely deposited;
- No Board approval available to support $240,000 in sponsorships, and;
- $1.2 million of in-kind donations not timely recorded and no acknowledgement receipt of $718,000 in in-kind donations.
Other highlights of the audit report:
- In FY 2018, GVB received total TAF (Tourist Attraction Fund) appropriations of $27 million of which $4 million was for the Korean Visitors Market Pilot Program and $21.8 million for its operations. GVB received $614,000 less for its operations compared to the previous year of $1.7 million decrease.
- Operating expenses minimally increased by 3.8 percent from $23.6 million in FY2017 to $24.5 million.
Independent auditors Deloitte & Touche, LLP rendered an unmodified (clean) opinion on GVB’s financial statements and identified four deficiencies in its internal control.
GVB closed FY2018 with a net position of $1.7 million. This increased GVB’s cumulative net position to $13.7 million. The implementation of the Governmental Accounting Standards Board (GASB) Statement No. 75 resulted in adjustments of FY 2017 financial statements with the net position decreasing by $5.1 million.