The Office of the Virgin Islands Inspector General and the Office of Inspector General of the Department of the Interior have issued a joint management advisory report on the use of bond proceeds. During our audit of the VI Public Finance Authority, we uncovered poor procurement practices and major deficiencies in the management of projects paid for with bond proceeds; because of the magnitude of these deficiencies, which involved several Government of the Virgin Islands (GVI) agencies. To view the report, click here.

The Office of the Virgin Islands Inspector General and the Office of Inspector General of the Department of the Interior have issued a joint report on the operations of the VI Public Finance Authority. We determined that PFA did not maintain sufficient internal controls to safeguard assets and did not provide reasonable assurance that financial transactions and related reports were accurate, as evidenced by the $50 million in financial reporting discrepancies, conflicts of interest, and the $101.1 million in questionable expenditures we found during our fieldwork. To view the report, click here.

The Office of the Virgin Islands Inspector General has issued the audit of the Department of Education’s (Education) claims and reimbursement procedures for the School Lunch Program. The audit objectives were to: (i) determine whether the School Food Authorities (Authorities) have effective internal controls in place to ensure that districts’ meals offered and served comply with USDA nutrition and pattern requirements; (ii) assess whether the Authorities had sufficient internal controls to ensure that meal claims for reimbursement were completely and accurately reported; (iii) determine whether performance measures were established to ensure that decreases in claims were promptly assessed and corrective actions were taken; and, (iv) determine whether the Authorities have pursued opportunities for the districts to receive additional federal funds to help support the School Lunch Program. We found that within Education, there was a pervasive culture of non-compliance with federal regulations that govern the reimbursement of meals served in the Virgin Islands school system. Specifically, our audit found that: (i) federal reimbursement and entitlement food decreased during 2013 to 2015 school years; (ii) internal controls were not established to ensure that meal reimbursement claims were accurate and met federal guidelines; (iii) Education officials did not effectively maximize opportunities to obtain additional federal funds to sustain the School Lunch Program; and, (iv) Education officials did not ensure that meals offered and served complied with USDA nutrition and pattern requirements. We attributed these conditions to the reduction in student participation in the school meal program. As well as, Education officials: (i) not implementing recommended strategies to boost student participation; (ii) not establishing policies and procedures; (iii) not addressing the problem of poorly trained employees and understaffing; (iv) turning a blind eye to obvious non-reimbursable meal claims; (v) being placed in a position of a conflict of interest; (vi) continued non-compliance with federal regulations; and, (vii) not ensuring the availability and correct serving of menu items. As result: (i) over the three academic school years of our audit scope, there has been a funding loss of $1.7 million dollars; (ii) over 95,000 meals were improperly claimed, with anywhere from $32,000 to $259,000 in funds being placed in jeopardy of repayment to the USDA; (iii) unnecessary pressure may be placed on the territory’s local funds budgeted for the School Lunch Program; (iv) the territory lost certification that resulted in the loss of $206,000 in additional reimbursements; and, (v) students did not always receive the recommended daily nutritional supplement to aid in their academic performance and maintain good health. To view the report, click here.

The Office of the Virgin Islands Inspector General has issued the audit of the Department of Education’s (Education) inventory controls over the School Lunch Program. The audit objectives were to determine if Education: (i) administered its inventory systems for the School Lunch Program in accordance with established criteria; and, (ii) had controls in place to effectively safeguard and monitor School Lunch Program inventories. We found that Education officials did not adequately administer and manage the School Lunch Program inventory systems in accordance with established criteria and best practices. In addition, they did not adequately implement proper internal controls and safeguards to protect the inventory from the risk of loss due to fraud, theft, or negligence. Although there were some recent changes in the administration and management of the School Lunch Program, significant deficiencies still exist. Specifically, the audit found that Education officials: (i) did not maintain complete, accurate, consistent and current records of the receipt, distribution, and warehousing of inventory; (ii) modified or adjusted inventory records without proper or written justification; (iii) were negligent in securing and accounting for inventory received, delivered, stored, and/or used at district warehouses and schools; (iv) did not always conduct monthly and annual inventory reconciliations as required; (v) did not properly segregate warehouse duties; (vi) did not ensure that schools’ inventory management practices in the districts were uniform and consistent with federal and state requirements; (vii) used a system for ordering food items and planning cycle menus that was ineffective and inefficient; (viii) did not implement key recommendations made by a management and consulting firm; (ix) did not ensure the timely and complete installation and implementation of food service management software; (x) did not ensure that warehouse and school personnel had been given sufficient training to use the software; and, (xi) have failed at all levels of the department in their responsibility to ensure that the School Lunch Program was functioning in an efficient and effective manner. As a result: (i) Education officials did not accurately know the actual total values and quantities of inventory on hand as of specific times; (ii) School Lunch Program inventory was susceptible to the risk of loss due to negligence or unauthorized use; (iii) Education officials could not properly forecast and plan the ordering of food items to meet monthly cycle menu requirements; (iv) students participating in the School Lunch Program may not have been receiving meals with the nutritional value and requirements specified by the federal government; (v) Education officials expended more than $920,000 for consulting services and food management software and have not aggressively resolved issues to improve School Lunch Program operations; and, (vi) an inefficient and ineffective School Lunch Program has continued for decades, and unless significant improvements are made, the School Lunch Program will continue to be susceptible to fraud, waste and abuse. To view the report, click here.