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Independent audit part 6: ASG’s long-term debt — the last of the series

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Compensated leave time, worker’s comp & other ‘notes’ of interest

Pago Pago, AMERICAN SAMOA — One of the American Samoa Government’s long term obligations is the “accrued compensated absences” which totaled more than $10.96 million at the close of fiscal year 2019, according to ASG audit financial report for FY 2019 by the auditing firm, Larson & Company PC.

The auditors explained that it’s ASG’s policy to permit employees to accumulate earned but unused vacation benefits, which will be paid to the employees upon separation from service.

Furthermore, vacation leave is fully vested when earned but accumulated vacation leave cannot exceed 60 days at the end of any calendar year. Sick leave is vested when earned and the accumulation is not limited.

They further explained that employees separated from service are compensated for unused accrued sick leave at the rate of 50% of sick leave in excess of 239 hours. Retiring employees with less than 30 years of service may apply accumulated unused sick leave for additional service credits.

According to the auditors, the liability for these compensated absences is recorded as long-term debt in the government-wide financial statements. The current portion of this debt is estimated based on historical trends.

Governmental Funds report only the compensated absence liability payable from expendable available financial resources, while the proprietary funds report the liability as it is incurred.


Auditors also say that ASG is self-insured for its worker’s compensation liability to pay compensation as defined under the Workers Compensation Act. And the administration of this self-insurance arrangement is handled through its Internal Service Fund, the Workers Compensation Fund. All funds, agencies and component units of the ASG participate in the Workers Compensation Fund.

At the end of FY 2019, the report says that the worker’s compensation is more than $2.68 million — with $457,976 claim payments made in FY 2019.


Auditors explained that ASG is self-insured for purposes of public liability. The Territory’s Tort Liability Act allows the government to be sued for personal injury or death caused by the negligent or wrongful act or omission of any employee of the government while acting within the scope of his/her employment.

And ASG continues to satisfy its obligations under the Government Tort Liability Act with an amount budgeted by the Fono each fiscal year, while the Attorney General’s Office is responsible for the acquisition and administration of this public liability.

The estimated liability for self-insured losses is $1,84 million as of Sept. 30, 2019, according to auditors, which notes that more than $1.35 million in claims and judgments were incurred in FY 2019, while only $579,178 was paid in claims and judgments.

No details were provided in the auditors on the incurred claims and judgements or the payments out.


The report also shows “notes” pertaining to several matters including long-term obligations. Among the notes is “Tax Abatements, which the report explains that ASG negotiates corporate and excise tax abatement agreements on an individual basis as allowed under local law.

This exemption allows business a tax reduction of up to 100% of corporate and excise taxes based on qualifications and tax abatement agreements authorized by the American Samoa Tax Exception Board. During the year ended September 30, 2019, the Territory abated corporate taxes totaling approximately $9.2 million from two commercial entities with operations in the Territory

The report didn’t identify the two companies but Samoa News understands that one of them is StarKist Samoa.

Another “Note” of interest describes the “Solid Waste Landfill Closure and Post-Closure Costs” saying that the Futiga Landfill is a two-cell solid waste landfill site. The first cell was operated for approximately thirty years before it was transferred to ASPA in February 1995. Upon transfer, the first cell was substantially filled and is currently considered full.

ASPA has operated the landfill since the transfer and has expanded the landfill to include a new section, approximately the same size and capacity as the original fill site. At September 30, 2019, the new landfill cell has a remaining estimated useful life of seven years.

The auditors say that total estimated closure and post-closure costs for the two landfill cells is $901,604 based on a 2003 study. However, the costs are subject to changes such as the effects of inflation, revision of laws and other variables.

Based on an opinion from the American Samoa Environmental Protection Agency, American Samoa has no local statutes governing the operation of municipal landfills and no regulations govern closure and post closure requirements.

Therefore, ASPA’s management believes that the Territory has no legal obligation under federal or local law to incur closure and post-closure costs for the two landfill sites and has not accrued any closure or post-closure costs as of September 30, 2019 and 2018, according to the auditors report.