Government agencies using credit cards and lines of credit to do business recently got new guidelines on how to use them in ways that protect the government’s trustworthiness. The new rules, published by the Department of Property and Procurement, came about after the V.I. Inspector General’s Office published an audit of executive branch credit practices.
The Inspector General’s Report can be seen here” Audit of the Executive Branch Credit Cards
The audit took a look at 19 agencies over a six-year period and found that 14 rely on some form of credit as part of their operations. At the same time, Inspector General Steven Van Beverhoudt said the way credit cards and lines of credit are used was largely left up to the agencies themselves. As a result, auditors found the record keeping system incomplete or nonexistent.
Transactions worth almost $200,000 did not conform to government procurement policies, including travel arrangements which, by themselves, were valued at $17,295. Another $216,494 in credit card transactions were never approved.
Agencies incurred a total of $881,167 in credit use and allowed workers who made purchases to pay back over time. Auditors said that cost the government an additional $23,288 in late charges and fees. And $17,428 worth of purchases had so little documentation attached that auditors could not figure out if they covered business or personal expenses.
Details contained in the Sept. 30 report included figures from the fiscal years 2013 to 2016. The top agency for credit card and line of credit use was Finance at $1.12 million, followed by the Office of the Governor at $769,805.
The V.I. Fire Service used $157,048 worth of credit for the audit years examined. The lieutenant governor’s office was next with $152,526 in purchases. Almost every agency listed bought materials there.
Licensing and Consumer Affairs and the Fire Service used their credit tools at the auto supply shop. The V.I. Territorial Emergency Management Agency spent at hotels. Warehouse grocery stores were popular with Education and Human Services.
Finance, the governor’s office and lieutenant governor’s office favored the use of credit cards with no pre-set limits.
The most lavish purchase on credit noted in the audit report was one for $8,306 for dinnerware to be used by the governor’s office.
The most frequent place for agencies to plunk down a credit card were hardware stores.
Those findings and others led the inspector general to say at least $1.1 million was not adequately protected.
Van Beverhoudt said participation by officials from Property and Procurement and Finance was encouraged. Under Title 31, Section 232 of the Virgin Islands Code vests the procurement agency with the authority to administer purchase controls.
At the top of the recommendation list was a lack of uniform regulation governing the use of credit. By April, the procurement agency developed standard operating procedures for use of credit, starting from the time agency heads make application to banks and credit card companies.
Executive branch agencies have been directed to follow pre-approval procedures, to keep receipts and include them when reporting purchases. Workers using credit cards are being directed to pay the balance in full and on time.
But Van Beverhoudt urged Property and Procurement officials to take steps to ensure that procurement procedures are followed.
“We strongly recommend that Property and Procurement officials take the appropriate steps to control the use of credit cards and lines of credit to prevent agencies from circumventing the procurement process. These
recommendations will be classified as unresolved,” the report said.
Finance has been given until Dec. 30, 2020 to implement a new management system for protecting the government’s credit.