The Office of the Virgin Islands Inspector General has issued the audit of Executive Branch credit cards and lines of credit practices and procedures. The audit objective was to determine if standard policies and procedures, practices and financial controls, exercised by Executive Branch agencies over the use of, and payment on, Government credit instruments are sufficient and adequate to safeguard Government funds.
We found that standard policies and procedures, practices and financial controls exercised by Executive Branch agencies over the use of, and payment on, Government credit instruments were not sufficient and adequate to safeguard Government funds. Specifically: (i) Department of Finance and Department of Property and Procurement officials did not establish standard regulations to govern how Executive Branch agencies entered into and managed credit card/lines of credit agreements; (ii) Executive Branch agencies used the credit card/lines of credit to make purchases without first obtaining purchase orders, or to travel without proper authorization; (iii) agency officials (a) submitted $17,428 in credit card expenses that were not supported by documentation to identify the items purchased, or their purpose; (b) charged $10,642 in unauthorized personal expenses; and (c) submitted $3,797 in duplicate expenses when cash advances and credit card charges covered the same costs; (iv) agency officials did not process payments totaling $881,167 in the timeframe required by law; and, (v) agency officials who were responsible for directly making payments to the credit card company on behalf of the Government did not always remit the full amount the Government provided, but instead made partial payments.
We attribute these conditions to: (i) Property and Procurement and Finance officials not being aware of the extent to which credit instruments were used in the Executive Branch; (ii) agency officials not establishing effective internal controls to manage the use of the credit instruments to protect against the financial risk of fraud, waste, and abuse; (iii) agency officials not requiring supporting documents to justify cash advances and credit account expenses; (iv) agency officials not adhering to the procurement policies of the Government; (v) agencies not following the Government-wide travel regulations; and, (vi) agency officials not adhering to payment regulations, as well as not ensuring that cardholders, responsible for paying on assigned credit accounts, remit payments timely.
As a result: (i) at least $1.1 million in credit transactions were not adequately protected, and thus placed at risk for fraud, waste, and abuse; (ii) credit purchases totaling at least $199,199 were made that did not conform to the Government’s procurement policies; (iii) travel and travel-related expenses totalling at least $17,295 did not conform to Government-wide travel regulations; (iv) Executive Branch agency officials could not ensure that credit account expenditures were legal, appropriate, and consistent with their operations; and, (v) $881,167 in credit account charges was paid late, causing $23,288 in finance charges and late fees.
We have made several recommendations to address the conditions and causes cited in this report. Our recommendations address the following areas: (i) management oversight; (ii) procurement; (iii) internal controls; and, (iv) payment process. To view the report, click here.