George Willie, certified public accountant of Bert Smith and Company, discussed 2019 and 2020 audits of the V.I. Waste Management Authority on Friday at the start of the Authority’s two-day annual meeting at the Company House Hotel.
Auditing WMA continues to be difficult, Willie said, but the 2020 audit was more manageable than the previous year ending Sept. 30, 2019, partially because the agency adhered to more deadlines.
“There is a marked improvement in accounting, but you still have issues,” he said. “From an auditor’s point of view, you needed perhaps more manpower in the accounting function.”
Issues considered to be significant deficiencies by the auditors were: incompleteness and timely recording of financial transactions; insufficient capital asset monitoring and reconciliation; incorrect classification of expenditures; missing or incomplete support documents for disbursements; and grants management.
Issues that need improvement, Willie said, include misclassified expenditures, the timeliness of internal controls, and fixed assets needing to be “cleaned up.” He said staff should better define expenditures and take fixed assets off their books that actually belong to the central government.
Overall revenues decreased from $50 million in 2019 to $47 million in 2020. Willie pointed out there was more funding from the federal government in 2019 and more from the local government in 2020. Greater local government appropriations in 2020 but less federal money, he explained.
Willie continued citing the continuing high number of vendor obligations. Accounts payable was decreased from $47 million to $43 million in 2020, but he warned that although the net pension liability fell from $60 million to $51 million, the government was not likely to pay pensions to retirees as long as contributions were delinquent.
The bottom line net deficit improved from $7 million to $3 million in 2020.
While talking about the accounting firm’s rating, Willie cited the reasons for a qualified audit. (A qualified opinion indicates any limitations on the scope of the audit and may describe certain information that could not be verified, according to accountingtools.com.)
In the 2020 audit, the accountants were unable to determine if certain expenditures were properly classified. Also, certain capital assets used in operations were titled to the local government and were not recorded or depreciated properly in the WMA financial statements, the CPA added.
Additionally, some assets damaged in the hurricanes of 2017 did not have detailed descriptions or were not identified. He pointed out that assets acquired since 2020 have been properly recorded, but damaged assets were not eliminated yet from records.
“In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements referred to above present fairly, in all material respects, the net position of the Virgin Islands Waste Management Authority as of September 30, 2020, and the results of its operation and its cash flows for the year ended in accordance with accounting principles generally accepted in the United States of America,” the auditors wrote.
Also, Friday afternoon, WMA administrators reported on their departments. Erika Callwood, human resources director, said there are 22 newly hired employees, and they are on track to be at full capacity by the end of the year.
Lorna Nichols Minkoff, director of communications, listed activities to educate the public about WMA, such as in-school presentations, information posted to social media and television, and promotions during the St. Thomas Carnival and the St. Croix Agrifest.
Daryl Griffith, chief financial officer, told board members his department is working to prepare audits for 2021 to 2026, a procurement policy, and handling tipping fees. Their goals include training staff, digital filing, and developing a contractor checklist.
The annual meeting continued Saturday with planning meetings and tours of facilities.
Directors who attended the Friday session included Keith Richards, chair, Diana Collingwood, vice-chair, and Laurence J. Richards. Derek Gabriel, commissioner of V.I. Public Works, was absent.