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Auditors expect clean opinion on University of Guam FY2025 finances; report flags federal‑grant reporting weakness
Summary
The University of Guam Board of Regents voted June 3 to release the FY2025 external audit showing an unqualified opinion, roughly $66.5 million in federal expenditures and a material weakness tied to grant reporting to the EDA; auditors also noted accounting restatements and internal‑control gaps on Davis‑Bacon payrolls.
The University of Guam Board of Regents on June 3 approved release of the university’s fiscal‑year‑ended September 30, 2025 external audit after auditors said they expect to issue an unqualified (clean) opinion for the financial statements and the compliance audit of major federal programs.
Auditors from Ernst & Young told the board the university recorded about $66.5 million in federal expenditures during the audit period and that, overall, the financial statements are relatively stable year over year. "At the conclusion of our audit we're expecting to issue unqualified or clean opinions," said RG Pagnayan, a partner with Ernst & Young, during the presentation.
Why this matters: a clean opinion affirms the reliability of the university’s financial statements for stakeholders and federal grantors, while the audit also identified specific weaknesses and changes that the university must address.
The auditors identified several reporting and accounting issues. They noted a material weakness in how amounts were reported to the Economic Development Administration (EDA), saying some reported figures did not align with the university’s financial records; auditors added that they have communicated with the federal grantor and that no corrective filing was required in that instance. The auditors also reported isolated internal‑control gaps related to Davis‑Bacon certified payrolls: in three of eight tested instances the university lacked documentation showing a completeness check of certified payroll submissions.
Auditors discussed restatements and accounting standard adoptions that affected the statements. The university adopted new GASB guidance on compensated absences, which led to an additional compensated‑absences liability of roughly $4 million based on the university’s internal study of leave usage. Auditors also described a correction of an error connected with an arrangement between the university and its foundation for construction of the School of Engineering and the Student Success Center: about $7.5 million of construction had been recorded on the university’s books as CIP but should have been presented as foundation activity. In addition, the auditors noted a building transfer: the Guam Community Residence (GCR) asset, with a referenced value of about $10 million, was written off and transferred to another government entity.
University staff said they will work with Ernst & Young and the Office of Public Accountability to publish the official report and to implement corrective action where required. "We will be working with not only our auditors but the Office of Public Accountability to officially have this release," a university representative said. The board voted to approve release of the audit report, and the university will proceed to publish the report and follow up on the auditors’ recommendations.
The audit presentation also flagged upcoming changes the university should monitor under new GASB pronouncements (notably GASB 103), which will affect MD&A disclosures and presentation of certain fund items beginning in the next fiscal year.
The board’s approval authorizes the university to publish the FY2025 external audit and to begin implementing the auditors’ corrective‑action recommendations and reporting‑procedure reviews.
