Though the scope of the audit was fiscal years 2013 through 2016, the O.I.G. retrieved financial records dating back to 2002. Photo: VI Consortium

The Audit made public by the Office of the Inspector General on Friday, Friday, October 25, 2019, unearthed what many US Virgin Islanders had long suspected, but never had proof to back up the claims; that fraud, waste and abuse were rampant in the executive branch of the government of the Virgin Islands. Photo: VI Consortium

Though the scope of the audit was fiscal years 2013 through 2016, the Office of the Inspector General (O.I.G.) retrieved records dating back to 2002, showing how government officials grossly overstepped their authority when spending taxpayer dollars.

In audit’s executive summary, the O.I.G. found that:

• There were no uniform regulations governing the use of credit cards and lines of credit.
• There were no internal controls to govern the use and accountability of credit transactions.
• As much as $1.1 million in credit transactions were not protected from fraud, waste and abuse.
• Credit purchases were made without first obtaining approved purchases orders.
• Travel expenses were incurred without authorization.
• At least $199,199 in purchases was made that did not conform to procurement regulations.
• At least $17,295 in travel expenses did not conform to travel regulation.
• Three agencies used credit card accounts for purchases inconsistent with applicable laws, policies and procedures, and best practices.
• Of $396,556 in charges reviewed, $31,867 was questioned.
• Credit cards charges without supporting documentation totaled $17,428.
• Personal charges totaled $10,642.
• Travel charges that were claimed more than once totaled $3,797.
• Credit card payments were not processed timely, resulting in finance charges and late fees.
• $881,167 in credit card charges were paid late, resulting in $23,288 in finance charges and late fees.

No Uniform Regulations 

“We found that the Executive Branch did not have uniform regulations to procure and govern the use of credit cards and lines of credit. Specifically, there were no regulations to govern, at a minimum: (i) how agencies entered into credit agreements/ lines of credit, (ii) the number of credit cards; (iii) the credit limits; and (iv) the approval process of employees/officials authorized to use credit cards and/or have access to the agencies’ line of credit,” reads the audit. “In addition, some Executive Branch agencies that entered into credit agreements did not establish internal controls to ensure, at a minimum, that the expenditures were authorized, valid, and business related, or that corrective action was taken when officials misused the credit card accounts.”

The O.I.G. attributed these conditions to the lack of established regulations in the Dept. of Finance and Property and Procurement on how executive branch agencies obtained and controlled credit cards and lines of credit. D.O.F. and P&P officials also failed to create internal controls to govern the use and accountability for credit accounts, according to the O.I.G.

The following list of government departments and agencies were reviewed:

1. Office of the Governor
2. The Dept. of Education
3. Office of the Lt. Governor
4. Bureau of Motor Vehicles
5. VI Energy Office
6. VI Fire Service
7. Sports, Parks, and Recreation
8. Property and Procurement

The O.I.G. audit found that the Dept. of Education and the Dept. of Sports, Parks and Recreation contacted Property and Procurement or Finance on how to proceed in establishing their credit accounts.

“While the two agencies sought and received advice and guidance from Finance and Property and Procurement, other agencies independently opened credit cards and lines of credit accounts with commercial merchants and local vendors,” reads the report.

Formal Internal Policies lacking 

We found that, except for the Education and the Governor’s Office’s credit cards, other Executive Branch agencies did not have formal internal policies and procedures for the management of their credit accounts. Agencies that did not establish internal policies and procedures increased their risk of unauthorized expenditures,” according to the audit.

The Dept. of Education enforced the policies and procedures established for credit use, the audit found. “Yet although the Office of the Governor created policies for credit use, these policies were not enforced,” reads to the audit report.

“Although agency officials indicated that they had a practice of reconciling monthly statements, we found that at least four of the eight audited agencies did not provide sufficient evidence to show that the agency regularly reconciled their hardware store credit cards,” the audit said.