GDOE audit questions $9.3M in federal spending, flags late financial close

The Guam Department of Education’s fiscal 2025 audit left auditors questioning $9.3 million in spending, including $4.3 million tied to a contract that lacked required wage-rate provisions.

The Office of Public Accountability said the audit was independently conducted by Ernst & Young LLP, and looked at compliance with the Child Nutrition Cluster, Special Education Cluster and Special Education — Grants for Infants and Families.

“GDOE received a qualified opinion on the Consolidated Grant to the Outlying Areas and Education Stabilization Fund (ESF), and has remained a high-risk grantee with the U.S. Department of Education (USEd) for the past 23 years,” OPA’s Financial Highlights said.

In a release Friday, GDOE said it closed fiscal 2025 with a $74.5 million General Fund balance, a decrease of $2.4 million from fiscal 2024. Local appropriations increased by $12.9 million. It also noted that expenditures increased by $79.4 million, while federal grants and contributions decreased to $183.3 million and federal grant receivables declined by $15.9 million to $84.6 million.

The department acknowledged that the audit identified areas that need corrective action, including three material weaknesses in internal control over financial reporting and compliance, and three material weaknesses and 11 significant deficiencies related to compliance over major federal programs. GDOE said the Single Audit reported $9.3 million in questioned costs, while six additional deficiencies were identified through the management letter.

The audit was completed about a year after the fiscal year ended. OPA reported on Finding 2025-001 that the trial balance “was not available for audit until March 2026.” OPA noted that earlier submissions before March “were revised due to certain discrepancies, leading to several closing adjustments posted by GDOE to reconcile account balances.”

GDOE Superintendent Judith Won Pat said her team prioritized addressing the audit timeliness and findings, stressing that the audit is an opportunity “to take an honest look” at GDOE’s financial practices and where improvement is needed.

“We are committed to addressing the findings, strengthening our internal controls, and ensuring that every dollar entrusted to GDOE is managed responsibly and in accordance with applicable requirements. Most importantly, our efforts to improve financial management will be aimed at our ability to direct resources towards our schools and students,” Won Pat said.

In addition, auditors found that the Schedule of Expenditures of Federal Awards, or SEFA, and supporting expenditure listings “were not timely reconciled and completed, resulting in multiple versions being provided during the audit.”

Auditors also found school financed-purchase liabilities overstated by about $10.13 million, and about $18.75 million in retiree healthcare costs paid by the Government of Guam had not been recorded.

The largest questioned cost, $4.26 million, is related to Invitation for Bid 009-2023 and involves a contractor agreement that lacked federal Davis-Bacon wage requirements. Certified payrolls were also not submitted.

Other findings involve cash management, procurement and vendor checks for federal debarment. Several are repeat findings.

Deficiencies identified through the audit relate to capital assets, OPEB census data, assessment of federal receivables collectability, SEFA preparation, federal financial reports and equipment and real property management.

Auditors’ examination of SEFA found federal expenditures were “initially underreported” by $399,000.

Though improvements are needed, GDOE said the fiscal 2025 audit did have some positive indicators.

Those include an increase in high school graduates from 1,527 to 1,649 and an increase in the graduation rate from 91.3% to 91.9%, GDOE said. Its total workforce decreased by 95 employees, from 3,205 in fiscal 2024 to 3,110 in fiscal 2025.

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