Guam – An audit of the Guam Housing Corporation [GHC] reports that in November of last year, the Acting President of GHC issued $174,023 dollars in bonus to 20 of 23 employees, without Board Approval.
It is one of a number of troubling findings in an audit released by the Guam Office of Public Accountability.
The report on GHC’s Compliance and Internal Controls cited GHC for 2 material weaknesses and three significant deficiencies.
The 2 Material Weaknesses are:
1. * Long Lived Assets: The Lada Estates project was initially valued at $15.8M and later dropped to $10.6M
– GovGuam transferred 46 acres of land from to GHC to develop affordable housing units for 1st time home buyers known as the Lada Estate Project.
– Prior to October 1 2009 the land had a value of $15.8 million
– the construction site has suffered theft, damage to infrastructure and illegal dumping of trash
– GHC, believing the value of Lada Estates improvements was no longer recoverable, wrote down the value top $10.6 million.
2. Allowance for Loan and Lease Losses [ALLL]: The reserve allowance for loan and lease losses was over estimated.
– The ALL totaled about $3.4M, which is more than the average total delinquent loan balance of about $2.9M in prior years.
– GHC did not follow generally accepted accounting principals when it measured the loss allowance in determining the ALLL. As a result, a prior year period adjustment of $2.3M decreased the ALLL.
The 3 Significant Weaknesses are:
1. Merit Bonuses:
– In November 2010, the acting President of GHC issued $174,023 in merit bonuses to 20 out of 23 employees without Board Approval
– The top 3 highest merit bonuses were paid to senior management. 2 of the 3 employees who did not receive a merit bonus were unclassified employees.
2. Evaluation of Collateral:
– GHC foreclosed on a loan that was collateralized by wetland.
– The carrying cost of the acquired asset amounted to $96K, resulting in inadequate collateral.
3. Loan Approval:
– GHC approved a loan for an applicant with a history of bankruptcy within the last 5 years even though GHC’s lending policy prohibits such loans. No evidence of Board approval. [The loan is still performing].
