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Procurement

Audit: Guam Ancestral Lands Commission revenue, expenses increase | Guam News

An audit of the Guam Ancestral Lands Commission’s fiscal year 2019 finances showed the commission’s net income increased, in large part due to telecom company AT&T’s payment of its use of government land for an undersea cable landing station.

AT&T hadn’t paid rent on the land for more than a decade, from January 2007 to September 2019, the Guam Office of Public Accountability stated in a summary of the audit report.

In October 2019, GALC entered into an agreement with AT&T to settle the commission’s claim for $4.9 million for the unpaid use of the Tanguisson Cable Station.

AT&T paid the full amount in November 2019.

The commission’s revenues in the 2019 budget year increased by $2.7 million, from $3.3 million in fiscal 2018, the audit report states. 

The $4.9 million revenue increase was, however, offset by the $2.5 million in proceeds from the sale of land that was recorded in fiscal 2018 instead of fiscal 2019, the audit states. GALC derived its rental revenues from its six lease agreements with one- to 50-year terms with private and government entities.

Total expenditures increased by $902,000, from $195,000 in fiscal 2018 to $1.1 million in fiscal 2019.

This was due mainly to the 712% increase of $752,000 in management fees the commission paid for the Guam Economic Development Authority’s services, according to the audit report.

GEDA is providing lease management services to the commission.

GEDA’s increased fees pertained to AT&T’s lease payments of $4.9 million.

In a 2006 memorandum of agreement, GEDA retains a certain percentage of the rent collected as payment for its lease management services.

The commission will reevaluate GEDA’s role as a provider of property management services on GALC leased properties, the OPA’s audit summary states. An increase in salaries by $100,000 also accounted for the increase in the entity’s expenditures, the audit report states.

The commission was created through Public Law 25-45 to serve as a conduit for conveying returned federal excess lands to their original landowners.

In October 2011, GALC was merged with the Department of Land Management and the Chamorro Land Trust Commission.

However, in January 2019, GALC was reestablished as a separate agency from DLM, with its own administrative director.

Other findings

The audit report also states the total investment in land and other real estate at the government of Guam-wide level was valued at $450 million as of fiscal 2019, a decrease of $8.6 million, which is associated with CLTC. GALC’s land inventory is valued at $6.7 million, which remains the same for fiscal 2019 since there was no lease executed during the year, the audit report states.

In fiscal 2019, the independent auditors identified one material weakness pertaining to incomplete recording and untimely reconciliation of general ledger balances against the subsidiary ledgers. These weaknesses resulted in misstatements of general ledger account balances, which were corrected during the audit process. Specifically:

  • Untimely bank reconciliations and incomplete recording of collections;
  • Undeposited cash balance of $175,000;
  • Receivables, deferred revenues, lease revenues and management fees not updated; and
  • Operational expenditures and government appropriations were not reported in the financial statements.

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