According to the latest audit released by the Office of Public Accountability, operating revenues fell by just under 1% due to a decline in "break bulk cargo" and the non-implantation of tariff increases.
During the same time, expenses increased by 5%. "The major increases were salaries and benefits and professional services," according to the audit.
Specifically, "salaries and benefits increased 14% or $2.4M from $17.6M to $20M which can be attributed to the hiring of 17 employees."
The independent audit conducted by Ernst & Young also issued "four findings that were significant deficiencies" in the area of cash management and the Davis Bacon Act.
One of those "significant deficiencies" cited in the Management letter to the Port's management, was the Port's hiring.
The managment letter observes:
"During 2011, the Authority hired a total of 33 full time and casual employees and 16 separated during the same year or a total of 364 active employees as of September 30, 2011 compared to 347 employees as of September 30, 2010 ... hiring was made in preparation for the military buildup and the Port Modernization Project. However, based on the most available infom\rmation, the military buildup will be delayed."
In addition the audit points out that the Port has "received a $50M grant from the Department of Defense and has been awarded a $54.5M loan from the United States Department of Agriculture (USDA) to fund Phase 1-A of the Port Modernization Program. No major improvements have been made in the Port’s facilities since its construction in 1969 with the exception of the repair of wharf F-5 in 1999."READ the FULL Audit
The auditors also report that Federal funding kept the Port of Guam in the black last year.
$5.3 million in Federal "capital and operating " contributions allowed the Port to end the 2011 Fiscal Year with a $2.5 million dollar increase in Net assets. Without those Federal funds, the Port would have experienced a loss of $1.9 million.
The auditors’ recommended "that management should establish specific procedures that would ensure timely disbursements of Federal funds and implement controls that would ensure progress payment requests received from the contractors are supported by certified payrolls."