Guam – A management letter has been issued citing the Guam Housing Corporation [GHC] “with three recurring internal control deficiencies relative to loan documentation, rental policy, and stale-dated checks.”
The audit was conducted by independent auditors, Ernst & Young LLP and released by the Office of Public Auditor Monday.
Specifically the auditors found:
1. Rental Policy:
* GHC does not regularly conduct re-certification of tenant income eligibility to ensure compliance with the income limits set by HUD
* nor does GHC regularly conduct verification of employment
2. Loan Documentation:
* insurance policies of 3 borrowers had no typhoon insurance and had no duly approved insurance waivers.
* original loan file for one borrower is missing
3. Stale-Dated Checks:
* stale, dated checks from 3 customers totaling $2,054 that have been outstanding for over 6 months
In addition, GHC was cited for lacking documentation that supports its policy for Allowance for Loan and Lease Losses [ALLL].
The lack of documentation for its ALLL policy is called a “recurring significant deficiency” in an audit released Monday by the Guam Public Auditor. A significant deficiency is less severe than a material weakness, “but important enough to merit attention by those charged with governance.”
The auditors point out that GHC “did not measure the loss allowance as the difference between the carrying value of the loan, and the fair value of the collateral, less cost to sell, as required by accounting principals generally accepted in the United States.”
* GHC received an unqualified, clean, opinion from Ernst and Young.
* GHC revenue from sundry and rental income increased by $350K, from $2.6 million in FY 2011 to $3M in FY 2012.
* GHC expenditures decrease by $152K.
* GHC total operating expenses decreased by $152K
* GHC’s loan portfolio, which consists of loans from the Direct Loan Program and Revolving Loan Program, decreased by $437K, going from $31.3M in FY 2011 to $30.8M in FY 2012.