The Office of the Virgin Islands Inspector General has issued the audit of the specific administrative function of the Virgin Islands Board of Education. Our audit objective was to determine whether the Board carried out selected administrative functions related to retirement matters, financial controls, and contract administration, in accordance with established laws, policies and procedures, and rules and regulations. Our objective did not include the examination or review of the Board’s administrative functions regarding its loan and scholarship, and teacher certification programs.
Our audit found that the Board was not in compliance with various statutes of the Code and Executive Orders, in regards to retirement matters, financial controls, and contract administration. Specifically, the Board: (i) made unauthorized payments to an employee for a personal retirement account outside of the Government Employees’ Retirement System (GERS); (ii) violated the Code regarding the employment of a retired employee; (iii) did not clearly define the official duties for Board members to receive stipends; (iv) paid stipends in excess of the amount required by the Code; (v) paid Board members stipends while they were already being paid for regular working hours at their Government jobs; (vi) lacked effective controls over stipend payments; (vii) did not maintain sufficient meeting transcripts and committee reports; (viii) paid a higher travel per diem than what is allowed by the Government’s Travel Regulations; (ix) did not properly account for travel cash advances; (x) established two checking accounts without the knowledge and authorization of the Department of Finance (Finance); (xi) did not use one of the two checking accounts in accordance with its intended purpose; (xii) entered into contractual agreements without the approval and legal sufficiency of the Department of Property and Procurement (Property and Procurement) and the Department of Justice (Justice); and, (xiii) did not effectively monitor its contracts.
We attributed these conditions to: (i) the Board’s failure to follow the Code relative to the employee’s required membership in GERS; (ii) the Division of Personnel’s (Personnel) failure to question the deviation from the norm in the processing of the employee’s appointment documents; (iii) Finance’s failure to question payments to the employee from funds specifically intended for the Government’s retirement contributions to GERS; (iv) the Board’s failure to not properly monitor employment contracts with a contracted retiree; (v) the Board not considering stipend policies to be a priority; (vi) the Board allocating a $75 stipend instead of the $50 amount stipulated by the Code; (vii) the Board neglecting to monitor stipend payments; (viii) the Board not implementing adequate policies and procedures regarding stipends; (ix) the Board failing to implement adequate policies and procedures regarding its meeting transcripts and committee reports; (x) the Board allocating $125 instead of the $75 travel per diem rate required by the Government’s Travel Regulations; (xi) the Board not following the Government’s Travel Regulations; (xii) the Board not complying with Finance Memorandum No. 027-2010 regarding Government entities’ checking accounts; (xiii) the Board not following procurement laws of the Code; and, (ivx) the Board neglecting its management responsibilities over contract monitoring.
As a result, the Board: (i) expended a total of $141,853 over a ten-year period to an employee for a personal retirement account; (ii) allowed a contracted retiree to work more than the 600-hour limit, and to receive more than the $55,000 salary limit mandated by the Code; (iii) gave Board members free reign to claim stipends for various activities that could not be verified as official duties; (iv) overpaid stipends by as much as $9,925 in Fiscal Year 2016; (v) paid an extra $2,700 in stipends to Board members who were already being paid by their Government jobs; (vi) overpaid travel per diems by at least $34,800; (vii) did not ensure the repayment of a $1,992 cash advance payment to one of its members; (viii) expended over $2 million dollars from the checking accounts outside the purview of Finance in violation of Finance Memorandum No. 027-2010, thus placing these funds at risk; (ix) disbursed over $569,558 in contracts without the involvement of Property and Procurement; and, (x) paid $588,164 to a non-licensed contractor.
We made several recommendations to address the conditions and causes cited in the report. Our recommendations addressed the following areas: (i) retirement issues; (ii) financial controls; and, (iii) contract administration. To view the report, click here.