Embassy Hanoi and Consulate General Ho Chi Minh - OIG - US ...

SENSITIVE BUT UNCLASSIFIED
by the principal representative in addition to wages. An informal recommendation
was made for the post to initiate collection action for the incorrect payment and
disallow the expenditure in the future.
AMERICAN COMMUNITY ASSOCIATION
The American Community Association was established in October 1995 to
provide activities for the benefit and welfare of the embassy employees in Hanoi
and their families. Its primary operation is the American Club located on U.S.
government-owned property. In addition to free space, the embassy provides the
association subsidies for utilities and minor repairs.
The association has not been profitable. For the year ending December 31,
2003, the association lost $5,827, and for the year ending December 31, 2004, the
loss was $8,003. In the first few months of 2005, the association lost another
$1,082. The club is not generally used to any great extent by the official American
community, rather it is open to all non-Vietnamese passport holders who pay
membership fees. If not for these fees, the losses would be greater.
The American Community Association has not complied with the reporting
requirements in 6 FAM 557. The submission of the required semiannual financial
statements or audited financial statements for 2004 has not taken place. The
audited financial statements due May 1, 2004, in Washington were not submitted
until November 2004. Moreover, the association has not established internal
controls over food and beverages consumption at the American Club. OIG has
recommended in the Resource Management section of this report that the property
on which the club is located be sold.
Recommendation 22: Embassy Hanoi should terminate the operations of
the American Community Association following Department requirements.
(Action: Embassy Hanoi)
The American Community Association currently employs only Vietnamese
staff. In 2003, a U.S. citizen was hired to manage the association. Even though
governed by Department regulations, the American Community Association failed
to withhold and report federal income taxes to the Internal Revenue Service during
the term of the manager’s employment. According to 6 FAM 556, “Employee
associations are U.S. government instrumentalities for federal tax purposes. These
OIG Report No. ISP-I-05-28A, Inspection of Embassy Hanoi and CG Ho Chi Minh City, Vietnam, September 2005
SENSITIVE BUT UNCLASSIFIED
57 .