TAO’s Performance Audit of Visitors Bureau draws attention to lack of policies and procedures

Pago Pago, AMERICAN SAMOA — The Territorial Audit Office’s Performance Audit of the American Samoa Visitors Bureau for three fiscal years ending Sept. 30, 2022 revealed “several areas that require the Bureau’s attention due to the lack of policies and procedures,” according to TAO audit report, to the governor and the Fono and publicly released last week.

Part three of the Samoa News coverage of the Bureau’s first-performance audit by TAO, looks at the lack of policies and procedures finding, as well as a summary of the recommendations, along with summary response from the Bureau — that are included in the performance report.

According to TAO, the findings from the audit of the Bureau found several areas that require attention and improvement. “The reported issues stemmed from the lack of policies and procedures,” it says.

BOARD OF DIRECTORS

TAO declared: “The Board [of directors] did not fully comply with its mandated duties and responsibilities” as contained in local law.

According to TAO, the Bureau’s Internal Control Policy on “Law and regulation compliance” requires that the Board of Directors monitor the activities of the Bureau through inspection of financial reports; review of the financial and internal control audits; periodic visits to the Bureau during operating hours, and attendance at monthly board meetings.

Additionally, the Board shall ensure compliance to the applicable laws and regulations through the implementation of the financial internal control policies, planning programs that adhere to the rules of grantors, and daily interaction in the programs of the Bureau.

TAO also provided in its report a summary of provisions of the laws. For example, “the board shall meet at least once a month and hold special meetings when necessary. It shall record and keep minutes of all such meetings and make said minutes available for public inspection.”

However, TAO said that its “scrutiny of available meeting minutes, review of policies and procedures and supporting documentation” noted the following:

•           The Bureau lacked documentation that the Board fulfilled its roles in relation to reviewing internal controls, inspecting and reviewing financial reports, performing periodic visits to the Bureau during working hours, and attending monthly board meetings. To provide proper oversight, the Board should be aware of the processes and internal controls of the Bureau.

•           The Board plays a vital role in monitoring the financial health of the Bureau and has a fiduciary responsibility to do so. The financial reports prepared by the outside accounting firm contained no “Notes to the Financial Reports.” Such information is the responsibility of the Board and management and is important in that they describe the practices and reporting policies and accounting methods and additional information that cannot be shown on the face of the balance sheet and operating revenue and expenditure statement themselves.

•           The Board lacked evidence that it authorized payments to outgoing Board members. Board members are not allowed to get paid unless approved by a Board resolution. Although a discussion regarding this matter was recorded in the unsigned Board minutes of September 29, 2022, the Board neither adopted a formal resolution authorizing the questionable payment of $1,000 to the two outgoing Board members nor requested that these payments be repaid.

•           Board members have not complied with the local law mandate for regular monthly meetings and have not ensured that complete minutes of its Board meetings are recorded. The purpose of Board minutes is to capture essential motions, decisions, and significant discussions pertaining to the Board meeting agenda.

CONFLICT OF INTEREST

“The Board and individual Board members should address potential conflicts of interest due to their involvement in the tourism industry in American Samoa,” TAO suggests.

(Samoa News points out that Board members and the travel industry they represent are outlined in local law.)

TAO noted that the Board comprised senior public servants, airline and travel industry, and business personnel. “As such, Board members may have potential conflicts of interest with their involvement in Bureau’s decisions making process,” it says and suggested that applicable and relevant practices require employees and officers to disclose any conflict of interest.

Additionally, conflicts of interest should be disclosed and documented on a form and filed with the Executive Director’s office or any other place as approved by management. Furthermore, a waiver may be granted to a person with a properly disclosed conflict of interest if approved by the Board. If a waiver is granted, the person may be allowed to participate in discussions related to the conflict but should abstain from voting on any matter in which a conflict exists.

TAO said it reviewed the available Board of Directors meeting minutes, policies and procedures and supporting documentation and noted the following:

•           The Board has no formal documented conflict of interest policy that memorializes the current practice. Formalized written policies and procedures are critical to provide clarity, continuity and consistency of operations.

•           An officer of the Bureau was providing recording services to the Bureau at a cost of $600 per recording.

•           A consultant writing contracts for third party vendors on behalf of the Bureau was paid $150 per hour.

“Without a formal conflict of interest policy, the Board is at greater risk that officers vote on issues that pose a private or a business conflict of interest,” TAO said. “Moreover, there is an increased risk of negative public perception in the absence of a formalized policy.”

TAO said the Board of Directors should avoid conflicts of interest within the Bureau and officers should not receive direct benefit from the Bureau without Board authorization.

STANDARD OPERATING PROCEDURES

According to the auditors, the Bureau’s Standard Operating Procedures (SOP) are outdated, and explained that the Bureau currently operates on internal control policies and procedures written in 2009.

“Without SOPs, the Bureau must rely on the institutional knowledge of the director, the deputy and executive assistant to effectively carry out their duties and manage the Bureau,” said TAO.

PAYMENT VOUCHERS

The auditors found that “Accounts Payable Vouchers were incomplete and were not signed.” TAO said that it’s review of 65 accounts payable (AP) vouchers sampled revealed that 17 voucher forms lacked any signatures and 17 check vouchers contained only one approval signature, instead of the two required signatures.

EMPLOYEE TRAVEL POLICIES

Internal Control Policy on Work Duty Travel states “airfares shall be booked at the full economy airfare rate for flights up to 8 hours in duration (per sector only, point to point) and business class rate for flights over eight (8) hours in duration (per sector only, point to point etc.).”

However, TAO said that the audit noted one instance in which an employee flew business-class on a return flight from Hawaii to American Samoa instead of the required economy class.

The employee was reimbursed for the business class total of $1,646.56, including taxes and fees, instead of the economy airfare for a flight from Honolulu to Pago Pago.

TAO said the Bureau has an established policy on employee reimbursements and the employee should have repaid the difference of the business class ticket and the economy ticket.

RECOMMENDATIONS

TAO offered six recommendations. The first one, is that the Board of Directors must comply with requirements of local law, such as minutes of all Board meetings be recorded and made available.

In its response, the Bureau informed TAO that the Board of directors has elected a secretary and has set a monthly date for Board meetings. “These two measures ensure better oversight from the Board,” according to the response.

The second recommendation is for the Bureau to establish and implement a formal conflict of interest policy, which includes employees and officers, and the policy should be approved by the Board of Directors.

The Bureau responded that a ‘Conflict of Interest’ document will be completed.

Also recommended by TAO is for the Bureau to update its Standard Operating Procedures (SOP) instructions that formally articulate key Bureau functions to ensure operational continuity.

The Bureau responded that its by-laws clearly identify Board responsibilities and will be reviewed and modified as deemed necessary by the Board.

The Bureau acknowledged and concurred with the other three-recommendations by TAO, which are:

•           Bureau must adhere to its policies and procedures and that all required information on accounts payable vouchers forms should be filled and satisfactorily completed.

•           To provide accountability on the funding spent on travel, all travel authorization forms must be approved by the Board for any management traveling on behalf of Bureau.

•           The Bureau’s management should comply with its internal control policies and procedures on employee travels.