Public Law 26-26 repealed and reenacted Chapter 3 of Title 17 of the Guam Code Annotated. Chapter 3, Section 3210 required the Guam Education Board (GEB) to create rules and regulations necessary to regulate conduct of fund-raising activities on the part of students, to safeguard the funds raised by such activities, and for the audit of such funds.

Board Policy 715 Management of Non-Appropriated Student Activities Funds, specifies two types of Non-Appropriated Fund (NAF): Student Activity Funds (SAF) and Campus Activity Funds or Trust and Agency Fund (TAF). SAF are cash raised, with the GEB’s approval, by students for student organization activities. TAF are cash proceeds from activities such as the DEED program, rent, lab, parking, food contractors, wet garbage, and donations. SAF and TAF are Agency Funds held in trust by the school for the benefit of the student organization, of the whole student body. 

NAF is among the high risk areas identified in the IAO’s Audit Assessment. It has also been a finding in GDOE’s Single Audit Reports for 14 consecutive years (FY 2001 to 2014). In the 14 year period, NAF was subject to inadequate accounting controls as a result of:

• Inadequate accounting and reporting
• Accounting for NAF is frequently vested in personnel incapable of handling the task
• Disregard for NAF requirements by principals andtreasurers tasked with NAF documentation maintenance
• NAF documentation requirements were not met (missing required signatures, cash count sheets, and bank and Munis receipts)
• Supporting documents for expenditures and bank reconciliations were lacking
• Bank statements identified less in deposits than recorded receipts
• Opening balances did not reconcile to prior year ending balances
• Bank reconciliations were not timely and accurately performed
• Receipts not recorded in the correct periods
• Untimely deposits

FY 2014 was the first year for full reporting of NAF in GDOE’s FMIS which allowed IAO access and monitoring capabilities on a daily basis resulting in the discovery of issues more timely. To maintain momentum and continual progress regarding the administration of NAF, the IAO has been tasked to work with the Deputy Superintendent of Educational Support and Student Learning (ESCL) in ensuring the transparency and accountability of all non-appropriated funds managed at the school level. Improved controls, a new FMIS, continual training, and the newly established internal audit team have led to better accountability and reporting of NAF. As a result of IAO’s oversight, NAF findings were reduced to a Management Letter comment for FY’s 2015 and 2016. However, NAF is still a deficiency, and further improvements still need to be made.

Pursuant to PL 26-26 and Board Policy 715, the IAO is responsible for reviewing and evaluating the internal control environment regarding the administration of NAF funds at the schools, and providing assurance to GDOE management on whether the control structure is functioning as intended. IAO’s reviews will identify risks and internal control weaknesses, and provide recommendations for improvement. Compliance reviews will be performed by the IAO on an annual basis.  Furthermore, for monitoring and assurance purposes, the IAO will routinely monitor schools with high variances on ending NAF balances.  Such reviews will include, but is not limited to, verification of cash transactions and ledger balances. Results of these reviews will be posted on a quarterly basis. See below for results of the quarterly reviews.

For 14 years, NAF was a finding in Guam Department of Education (GDOE)'s Fiscal Year (FY) 2001 to FY 2014 Single Audit reports. In June 2016, NAF was reduced to a comment in GDOE's FY 2015 Management Letter. This represents the best performance over the accountability and audit of NAF.  Improved controls, a new Financial Management System, continual training, and the new internal audit team have lead to better accountability and  reporting of NAF. However, NAF is still a deficiency, and further improvements still need to be made.  

FY 2016 was the third year for the full reporting of NAF on GDOE's Financial Management Information System ("FMIS" or "Munis"). This allowed Internal Audit Office (IAO) access and monitoring capabilities on a daily basis resulting in the discovery of issues more timely. Deficiencies noted in the FY 2016 audit include: 

1. Opening balances did not reconcile to prior year ending balances for 12 of the 41 public schools. For the 12 schools, receipts of $3,448 and disbursements of $30,674 were not reported in the correct period. 
2. Bank reconciliations were not timely and accurately performed. Additionally, mistakes were made with bank reconciliations. Variances between the schools' bank reconciliations and ending cash balances were noted. 
3. Bank statements identified less in deposits than recorded NAF receipts; indicating that cash collections were not accurately reported in Munis or may not have been remitted to the bank. 
4. Of 158 receipts aggregating $86,955 and 153 disbursements aggregating $116,163 tested, certain transactions did not appear to meet NAF documentation requirements.