READ FULL POST AUDIT REPORT HERE
CHARLESTON, W.Va. — A legislative audit on the Department of Agriculture found extensive problems with financial controls within the agency. Agriculture Commissioner Walt Helmick sought to audit soon after taking the position which had been held for decades by Gus Douglass.
The preliminary report spotlighted shortcomings in the Rural Rehabilitation Loan Program, but the full audit report found other significant problems within the agency. House Speaker Tim Miley and Senate President Jeff Kessler, after getting the first look at the report before it was made public, forwarded the information to the U.S. Attorney for further investigation.
Auditors found problems with the loan program were largely a lack of internal control. There were no systems in place to reconcile payments made on the loans and a severe lack of documentation throughout the program. The loans were also made, according to auditors without sufficient appraisal or collateral. The report also found in some instances a conflict of interest in the loan approval and in some cases the money was not being used for agriculture purposes.
Auditors examined other areas of the Department of Agriculture which also showed problems. Areas of travel expense reimbursement, hospitality expenses, leasing programs, and the classification of one employee all had glaring errors.
The report claimed there were instances in which receipts for reimbursement of travel and lodging expenses had been fabricated. One instance was a campsite at the State Fair. The audit found Douglass sought reimbursement at 106.72 per night while another employee with a campsite next to Douglass’ sought reimbursement for 30 dollars a night.
“Upon contacting the Chief Executive Officer (CEO) over the State Fair of West Virginia, we found the former Commissioner was not charged for his campsite during the 2012 State Fair and that it was the policy of the State Fair to provide one free campsite to the Commissioner of the Department of Agriculture. Additionally,” the audit stated. “The CEO provided us with a copy of a page from the receipt book used by the State Fair and we determined the receipt accompanying the former Commissioner’s travel form was not a receipt from the State Fair receipt book.”
Auditors added there was one incident in which travel expenses were considered “extravagant.” The cost was 3,150 dollars to fly the commissioner from Charleston to Ravenswood for an event and then to a vacation spot in North Carolina. The return flight was included in the expense even though there were no passengers on the plane.
Mileage reimbursements were another area where the audit team explored.
“During our testing of travel expenditure documents, we noted 215 instances on 44 different travel reimbursement documents where employees claimed a mileage amount in excess of the recalculated distance for one or more trips. The largest mileage difference for one trip was 188 miles and the smallest was 11 miles. The total difference was approximately 8,000 miles and $4,000.”
The audit team also concluded the Department of Agriculture erred in the classification of the Department’s General Counsel as a full time state employee, which qualified them for PEIA insurance and state retirement.
“The WVDA improperly classified their General Counsel as a full-time employee for 21 years. Whether or not the individual was eligible to receive Public Employees Insurance Agency (PEIA) insurance benefits, Public Employees Retirement System (PERS), annual or sick leave and annual increment hinged on the individual’s classification as an employee.”
There were other areas of significant finding. The team explored allegations in the complaint of finances at the farmers markets and the Gutherie office were out of compliance with state spending rule.
“WVDA’s cash receipts were not adequately safeguarded from unauthorized use or disposition. The total revenue received during our audit period was approximately $23 million of which 4% was received in the form of cash and 96% was either received directly by the State Treasurer’s Office or was a non-cash transfer.”
The area of hospitality expenses delved into the cost of a meeting of the state’s Fairs and Festivals. Auditors said a deputy commissioner was improperly reimbursed 404 dollars for expenses related to the meeting without an itemized receipt. The audit team then obtained copies of the original itemized receipts, which showed several alcoholic beverages were purchased, totaling $41. That purchase was not in compliance with the department’s expenditure schedule. The beverage purchase increased the restaurant’s 20 percent gratuity by $8.
According to the audit 90 percent of hospitality charges were out of compliance with department policies and procedures.
The audit covered a time frame from July 1, 2011 to December 31, 2012.