A regular Source feature, Undercurrents explores issues, ideas and events as they develop beneath the surface in the Virgin Islands community.
The Virgin Islands Inspector General’s Office will soon issue findings on an audit of property tax auctions conducted through the Lieutenant Governor’s Office, and is actively working on another three audits, all of which are expected to be public by or before December 2014.
It also has held preliminary discussions with the U.S. Department of the Interior’s auditing arm about a joint project to review activities of the Public Finance Authority, but that report is unlikely to be completed before next year.
Three more reports are in the works, audits of the Economic Development Authority’s tax incentive program; the school lunch program with emphasis on inventory controls and financial controls; and the Government Employees Retirement System’s alternative investment program.
Created in 1999 as an independent agency, the Inspector General’s Office is the prime auditing arm of the Virgin Islands government; it has authority to examine operations in all three branches of government and in semi-autonomous agencies such as the V.I. Water and Power Authority. Some audits are made by request; other subjects are chosen by the auditors.
The PFA audit, for instance, is being undertaken in response to a legislative request, said V.I. Inspector General Steven van Beverhoudt.
As for the audit of property tax auctions, “We received claims” of irregularities, van Beverhoudt said. There were “a lot of complaints of questionable activities in the way the bidding was going on.” He did not say whether those complaints were substantiated or discredited.
The audit process is generally lengthy and designed to be excruciatingly fair.
Field auditors have already gathered all the information for the property tax auctions audit and drafted findings, according to van Beverhoudt. As with any audit, there will be an exit meeting at which auditors discuss their findings with management from the target agency. After that the government has several weeks to make its written response.
Normally the Inspector General’s Office requests the response within three to four weeks of the exit meeting, but it is not uncommon for the audit subject to request an extension. Until the audited party makes its written response – or until it fails to do so in a reasonable amount of time – none of the findings are made public.
Van Beverhoudt estimated that the property tax auctions report will likely be published in August.
The report on the EDA tax incentive program is the audit next closest to publication. Van Beverhoudt said his office is currently revising its draft report. The audit was an offshoot of earlier work completed by the office examining the EDA loan program.
The school lunch program audit was also initiated internally, in part because it had not been closely examined for a long time, van Beverhoudt said. The first draft of that report by a field auditor just went to the audit supervisor for review.
Auditors are still gathering information on the GERS alternative investment program, he said. The report is being undertaken in response to the public outcry about some GERS loans to local businesses. In recent years there has been controversy over GERS involvement with Carambola Beach Resort and Seaborne Airlines.
Van Beverhoudt said he expects all of the audits actually in the works – except the PFA audit – to be public by the end of 2014, but only the property tax audit to be completed by the end of the fiscal year, Sept. 30.
That will make the second audit report completed in FY14. Last November, the IG issued an audit of the V.I. Bureau of Corrections Management Remedial Checking Account.
There are 13 staff members in the V.I. Inspector General’s Office, including van Beverhoudt. That’s five field auditors (four on St. Thomas and one on St. Croix), a deputy director, a chief of audits, an audit supervisor, a chief of investigation and three administrative staffers.
