ASG agrees to disallow close to $50,000 in SSBCI costs
The U.S. Treasury’s Office of Inspector General recommended — and the local Commerce Department has agreed — to disallow close to $50,000 in costs that were charged to the territory’s State Small Business Credit Initiative (SSBCI) program, in which American Samoa was awarded $10.5 million two years ago.
While $3.5 million was initially sent to the territory, none of that money has been expended for small business assistance under ASG’s collateral support program for small business, due to the unwillingness of the two local banks to participate.
The only money spent so far was for administrative costs, according to OIG’s audit released last week, which noted that American Samoa is awaiting approval from the feds for use of a venture capital program to be funded by the SSBCI program.
According to the audit report, the American Samoa Economic Stimulus and Recovery Office in February 2013 charged approximately $50,307 in administrative costs to its SSBCI program but only $1,151 of this amount — which was spent on expenses other than personnel and travel costs — was supported.
Of the remaining $49,156, the report says $38,250 was for program personnel salaries and $10,906 was for travel costs. Although American Samoa provided employee time-sheets to support its personnel costs, it could not demonstrate how the employees, who worked on multiple programs, had allocated their time to SSBCI, OIG said.
Further documents provided by American Samoa indicate that only $21,803 of the $38,250 in personnel costs was actually spent. Additionally, as of Dec. 31, 2013, American Samoa had spent $10,906 in travel costs for three employees to attend an SSBCI conference held by the U.S. Treasury in San Francisco.
In March 2012, the three employees submitted travel authorization forms, which estimated their travel costs to attend the meeting in San Francisco, and all received expense checks before the conference.
Auditors pointed out that in accordance with federal policies, costs incurred must be adequately supported by documentation. Additionally, ASG’s Territorial Office of Fiscal Reform ‘Travel and Transportation Policy Manual’ requires employees to file an expense report, along with expense receipts (meals and incidentals not included), used airline tickets, and proof of attendance at the meeting, within 30 days after travel.
Although U.S. Treasury confirmed that the employees had attended the conference, the OIG auditors said that none of the employees filed expense reports following the conference or produced receipts to show that the travel was accomplished, that expenses were supported by receipts, or that they had attended the conference.
Therefore, said OIG, the $49,155 in personnel and travel costs did not meet federal requirements that administrative costs be allocable, allowable, and reasonable. They said these costs should be disallowed by U.S. Treasury, which will also need to ensure that such costs are excluded from funds reported as being used in the Territory’s future Quarterly Reports.
According to OIG, its auditors corresponded by email with management and staff designated by American Samoa who were responsible for administering, managing, accounting for, and reporting on the SSBCI funds to assess whether American Samoa had documentation supporting administrative expenses charged to the SSBCI program, such as personnel costs, and hotel and other travel costs.
OIG recommended that U.S. Treasury disallow the $49,155 in personnel and travel costs and also ensure the costs are excluded from subsequent Quarterly Reports.
DOC director Keniseli Lafaele, who is now the designated administrator of SSBCI program, in a Jan. 30, 2014 letter responding to OIG’s request for comments on the draft audit explained that all three employees who traveled on SSBCI funds no longer work for ASG. He said ASG has been trying to locate these individuals (who might have left the islands) for purposes of substantiating their travel costs.
“American Samoa does acknowledge this finding, but remains hopeful that consideration will be given to the fact that this occurred prior to the start of this administration,” he wrote.
Then in his Mar. 17 response to the final OIG report, Lafaele said ASG’s consultant for the SSBCI program has recommended, and the governor has approved and ordered, these costs to be removed from the SSBCI program.
In its response, the U.S. Treasury said it disallowed the $49,155 in unsupported administrative costs and will deduct that amount from future disbursements, if any.
See Monday's Samoa News edition on other issues covered in the OIG audit.
In his Mar. 17 response to the entire final OIG report, Lafaele provided a brief summary of the challenges faced by the current administration which took office in January last year, as well as challenges face by American Samoa as a whole.
In summary, Lafaele noted: sixteen years of a previous Administration; the loss of one employer who employed approximately 20% of the working population (referring to COS Samoa Packing); the 2009 tsunami; an SSBCI plan which was not viable from the beginning; a national economic crisis affecting the entire country — especially the banking community; a new ASG administration and the immediate task of literally trying to save the lives of American Samoans without an accredited hospital, while developing a new SSBCI plan which, if approved would become “the engine of our economy and provide significant benefit and demonstration benchmarks should U.S. Treasury decide its usefulness to other states and/or territories."
“Respectfully, termination— or additional sanctions— recommended by the OIG report are not supported by the facts on the ground” in American Samoa, he said.