1602 program not included in DBAS independent audit
The Development Bank of American Samoa recorded an operating loss of close to $200,000 for the fiscal year that ended Dec. 31, 2013, compared to an operating loss of just over $1 million in the previous fiscal year, according to the audit report of DBAS, whose loan portfolio had a net value of more than $18 million in FY 2013.
The independent audit report, which was conducted by the U.S. auditing firm of RC Holsinger Associates, does not include an audit of the federally funded Section 1602 loan program, because it was not required by the bank management.
The audit report was released Mar. 28 to the DBAS board, which continues to be chaired by Sen. Nua Saoluaga.
According to highlights of the audit:
• in FY 2013, the bank recorded an operating loss of $194,297 on an asset base of $23.70 million as compared with an operating loss of $1.04 million on an asset base of $21.74 million for FY 2012, resulting in a significant drop in total expenses by $879,213. Additionally, total expenses fell due mainly to decreases in bad debt expenses by $796,011 and other expenses by $50,308 as a result of cutting costs in training and travel.
• total net position of the bank increased by $1.79 million from $21.26 million in FY 2012 to $23.05 million in FY 2013. The auditors say the majority of the increase resulted from Federal Emergency Management Agency (FEMA) grants of about $1.95 million for the construction of the new main DBAS building in Pago Pago.
• net value of the loan portfolio decreased by $363,712 from $19.29 million in FY 2012 to $18.93 million in FY 2013 because of the decreased amount of loan disbursements from $2.8 million in FY 2012 to $1.7 million, as lending during the year was “strictly based on available cash flow,” according to the report.
• The amount of total loans outstanding to employees, officers and board members increased from $690,064 in FY 2012 to $767,462 in FY 2013, according to auditors.
1602 PROGRAM — NOT AUDITED BECAUSE MANAGEMENT DECIDED NO NEED
The auditors also said their audit did not include compliance testing of the Section 1602 Low Income Housing Tax Credit (LIHTC) Program, in which American Samoa received $30.77 million in grant funds that were fully sub-awarded in 2010 to local property owners for the construction, acquisition, or rehabilitation of low income rental units.
Per the U.S. Treasury, the program — administered by DBAS — could be audited at the discretion of management said auditors, who pointed out that management “decided that this program did not need to be audited”.
However, it did note that grant funds for the program were fully disbursed by Dec. 31, 2011 and over 450 lower income rental units are to be built through Section 1602 Program. Auditors also pointed out that DBAS tracks the disbursement of grant funds to sub-awardees and the bank receives a management fee for the administration of the program.
Administration includes the overseeing of rentals and receiving a compliance monitoring fee of $40 per year per unit for each project owner, said auditors.
As previously reported by Samoa News, the Section 1602 program is currently the subject of a federal investigation.
Samoa News will report in future editions on other details from the audit report.