The Office of the Virgin Islands Inspector General issued a letter report on our follow-up review of recommendations made in the February 2022 report titled “Audit of Contract Administration at the Virgin Islands Waste Management Authority.” The objective of the follow-up review was to determine whether Waste Management implemented the recommendations made in the February 2022 audit report.

We found that Waste Management made improvements by: (1) establishing an electronic filing system for its procurement files, starting in Fiscal Year 2019; (2) establishing a process for the applicable Directors and the Procurement Division to review and approve contractors’ billed services; (3) implementing tipping fees for volume rather than for weight; (4) developing a realistic budget that aligns with revenues and expenses while continuing to restructure to bring some services in-house; (5) continuing to pay past obligations for contracted services incurred after the 2017 hurricanes; and (6) submitting a supplemental budget to the Office of Management and Budget for Fiscal Year 2022, which increased Waste Management’s allotment by $5 million to facilitate timely payments for contracted services.

While we found some improvements, some deficiencies we identified in the 2022 audit report remain. For example, Waste Management had not: (1) renewed contracts with its solid waste service providers or awarded new contracts, (2) established procedures for monitoring activities at the landfills and solid waste collections at bin sites, (3) documented their findings for bin site collections on St. Croix, and (4) provided evidence that landfill contractor’s work claims were adequately reviewed for reasonableness.

We attribute these deficiencies to Waste Management not following their procurement policy requiring competitive bidding, not establishing written procedures for landfill management and solid waste collection activities at bin sites, not establishing a uniform system for monitoring solid waste collection territory-wide, and not providing solid waste employees with vehicles necessary to perform their monitoring duties. Also, Waste Management is experiencing frequent staff turnover in the monitoring of solid waste collection. Furthermore, Waste Management contractors were not providing invoices promptly, hindering timely verification of the work performed and its associated costs.

As a result of Waste Management’s lag in implementing some recommendations, the agency remains unable to ensure that operations are conducted at the lowest cost and with the greatest benefit. It is also unable to ensure that services are properly performed for the cost paid. To view the report, click here.

The Office of the Virgin Islands Inspector General has issued the audit report on the surprise cash count at the Eldra Schulterbrandt Residential Facility. The objectives of the surprise cash count were to determine whether the Department of Health adequately accounted for and managed cash and other cash equivalents received on behalf of residents and whether residents’ bank accounts were adequately managed from 2022 to 2025.

We found inadequate controls and documentation for $2,652 in residents’ cash and cash equivalents, including $767 owed to five former residents. We also identified at least $17,005 in unexplained withdrawals from two residents’ bank accounts, with no documented justification or reimbursement, raising concerns about potential misuse or fraudulent activity.

We attribute these conditions to the Health officials’ lack of oversight and written internal controls. There were no reporting requirements or reports to Health’s upper-level management regarding the accounting for residents’ funds used and managed by the facility.

As a result, residents’ funds received and spent were not properly accounted for. One year passed before Health officials and residents regained access to cash and bank accounts. Additionally, there was an increased risk of fraud in residents’ bank accounts managed by Health.

We made several recommendations to address the causes of the findings in this report. Our recommendations covered accounting for and securing funds, adequate supervisory controls, reconciliation, and financial reporting. We also recommended consulting with relevant agencies to ensure that reimbursement for unauthorized withdrawals complies with approved government accounting standards. To view the report, click here.

The Office of the Virgin Islands Inspector General has issued the audit report of Administrative Functions of the VI Taxicab Commission. The objective of the audit was to determine if the Commission properly authorized the issuance of taxi licenses, inspected taxicabs, and accounted for medallions, collections, and expenses, in accordance with taxicab laws.

We found that the Taxicab Commission has not made significant improvements in its responsibility to maintain accurate medallion registries and implement biannual inspections of vehicles for hire. Additionally, for the audit period, fiscal years 2018 to 2022, we found that the Commission did not (a) follow established rules and regulations for medallions auctioned, nor (b) approve the issuance of taxi licenses in accordance with established laws, rules, and regulations. Also, the Commission failed to appropriately safeguard and account for revenue collections in accordance with best business practices.

We attribute these conditions to Commission officials: (i) not updating registry records promptly to reflect changes in medallion status; (ii) not implementing adequate oversight controls for maintaining medallion owners’ files, the medallion inventory, and the medallion transactions (buy, sell, transfer); (iii) deviating from their guidelines for medallions sold at auctions; (iv) bypassing the requirements to ensure that taxi operators met the minimum standards for a taxi operator’s license; (v) not addressing or resolving the long-standing issue of taxi operators’ contention with the biannual vehicle inspections; and (vi) lacking oversight over revenue collections. Also, the Commission is severely understaffed.

As a result, (i) information in some damaged medallion registries is at risk of being lost; (ii) information contained in the medallion registries and owners’ files cannot be independently relied upon to reflect the most current status of medallions; (iii) thirteen unsold medallions are unaccounted for; (iv) officials compromised the fairness of the auction process; (v) some taxi operators did not meet the minimum requirements needed for a taxi operators license; (vi) seven applicants who failed and three applicants for whom there is no evidence that they took the written exam, were granted a taxi operator’s license; (vii) the Commission risked public safety by not inspecting vehicles for hire; (viii) the Commission lost at least $170,310 in revenue due to vehicle inspection fees not being collected; (ix) the Commission encountered a 94% decrease in fines collected from citations issued each year; (x) the Commission’s revenue collections were not adequately accounted for; and (xi) late deposits and ERP postings hindered the accurate accounting and reporting of revenue, thereby increasing the risk of mismanagement of government funds.

We made several recommendations to address the causes of the findings included in this report. Our recommendations addressed medallions, taxi licenses, vehicle inspections and patrols, and collections. To view the report, click here.

The Office of the Virgin Islands Inspector General has issued the audit report of the Application of Employees’ Loan Payments – VI Water and Power Authority. The objective of the audit was to determine the extent to which WAPA remitted employees’ loan deductions to financial institutions on time, per authorized agreements.

We found that during Calendar Years 2021 and 2022, WAPA was, at times, up to eleven months late in remitting employees’ loan deductions to GERS.

We attribute these conditions to WAPA’s financial crisis and management’s decision to prioritize other obligations, such as fuel cost, over timely remitting GERS payments, and credit union deductions.

As a result, WAPA retirees could not receive their retirement income until all outstanding funds owed to GERS were paid. Additionally, employees were at risk of late loan payments to credit unions and denied prompt access to the portion of their deductions reserved for savings account deposits.

We made two recommendations to address the conditions and causes of the findings included in this report. Our recommendations addressed adherence to policy and internal controls. To view the report, click here.

The Office of the Virgin Islands Inspector General has issued the audit report of the Education Initiative Fund. The objectives of the audit were to determine whether the Department of Education: (1) accurately and timely disbursed the funds to the applicable schools; (2) monitored the schools’ accounting of the funds in accordance with applicable laws; and (3) expended funds and accounted for any undistributed and unused funds in accordance with the Code.

We found that while Education made some improvements since the V.I. Inspector General issued the 2011 audit report on the Fund, more improvement is needed in oversight to ensure that the Fund is adequately managed to meet the law’s requirements. Specifically, improvement is needed in (a) the consistent and complete application of the funding formula, (b) the timely disbursement of the schools’ Fund annual allotment, and (c) the appropriate accounting for and spending of the funds within the annual limits specified by the law.

Also, 13 years after the Office of the V.I. Inspector General recommended that Sections 3093 and 3100i of the law be merged to address ambiguous and contradictory statutes, both sections remain active.

We attribute these conditions to: (i) Education officials not always accurately calculating and timely disbursing the funds to schools; (iii) Education, in Fiscal Year 2021, not distributing funds to the territory’s schools, and (iii) Education officials not ensuring that schools adhere to the annual spending limit imposed on specific categories of expenses established by law, though generally identifying and holding schools accountable for individual unallowable expenses. In addition, many aspects of the law are outdated and have not been updated to address changing needs and inflationary measures. Also, although previously recommended and agreed to by the then Commissioner of Education that the law be merged, this was not accomplished.

As a result, (1) in Fiscal Year 2019, three St. Thomas/St John district schools received an advantage totaling $18,919 when Education officials inconsistently used year-end bank statements. Five other schools lost the ability to recoup a total of $16,762. This inconsistency caused the unequal treatment of the schools when determining the schools’ Fund allotment for the next year. (2) Also, because the Fund’s allocation formula was not consistently applied throughout all three phases to ensure fair distribution among the schools, in Fiscal Year 2019, two schools in the St. Thomas/St. John district did not receive a total of $4,590 because those schools were not compensated the extra $15 per student enrolled over 500. (3) The St. Croix district did not receive a total of $11,175 because step 3 of the formula, ensuring that both districts received equal funding, was either not effectuated or applied in Fiscal Years 2019 and 2020. (4) The funds were disbursed to schools as many as 27 months after the October 15th date set by law. (5) As of this report’s date, Education has not released as much as $1,350,000 of the 2021 annual school funding. (6) Schools exceeded the annual spending limit imposed on specific categories of expenses by $226,843. (7) There was at least $14,540 in unsupported expenses. (8) The schools’ monthly reports were not always completed according to Education’s reporting requirements. (9) For two years, $19,299 was expended from one school without accounting for those expenditures. (10) Education expended $5,195,162 in questionable costs from the Fund. (11) After 29 years since the law’s enactment, the law should be updated to account for changes in needs and the impact of inflation on administrative costs and the annual spending limits set on categories of expenses. Furthermore, the law’s merger and statutory updates are needed to remove the existing ambiguities and standing contradictions, thereby improving the Fund’s management. These findings highlight the need for improvement in oversight, reporting requirements, and updates to the law.

We made several recommendations to address the conditions and causes of the findings included in this report. Our recommendations addressed funding, expenditures, internal controls, and the law. To view the report, click here.

The Office of the Virgin Islands Inspector General has issued the Agriculture Revolving Fund Funding Sources and Usage inspection report. This report addressed the objective of whether the Fund monies were allotted and used in accordance with applicable laws, rules, and regulations.

We found that over six years, from 2016-2021, Agriculture did not receive $4,125,000 in funds from the General Fund and Tourism Revolving Fund as mandated by law: (i) $2,125,000 from the General Fund, and (ii) $2 million from the Tourism Revolving Fund.

This occurred because Agriculture was not allotted its 2016 – 2018 General Fund appropriations, and agency officials did not always request their budgeted allotment. They also did not make timely requests for their annual Tourism Revolving Fund allotment.

As a result, the Department was inhibited in its ability to meet its yearly objectives and further its mission. They did, however, properly use allotted funds.

We recommended that Agriculture:

• ensure that the appropriate department employees are aware of the funding mandates and the policies and procedures for obtaining those funds.
• initiate timely requests to OMB for the funds appropriated and mandated by law. To view the report, click here.

The Office of the Virgin Islands Inspector General released its Fiscal Year 2023 Audit Plan. There are various audits and inspections planned for 2023. To view the report, click here.