PRJ audit cites excessive spending

Published 2:34 pm Wednesday, February 14, 2018

A memorandum regarding the Piedmont Regional Jail Authority audit from Robinson, Farmer, Cox Associates, a public accounting firm in the practice of governmental auditing and consulting services to local governments, cites 24 overnight stays at the Hilton Garden Inn in Glen Allen throughout the fiscal year ending on June 30, 2017, with only three charges including a documented purposed.

“Management had various travel expenses throughout the year with no documented purpose of the business trip or personnel involved,” officials cited in the memorandum. “Hotel charges were paid with jail credit cards with little support other than hotel bills and a travel expense detail form was not utilized. In addition, almost every hotel room throughout the years was booked under the superintendent’s name making it difficult to ascertain who occupied the rooms.”

According to the memorandum, on at least two occasions excessive charges were made, including a meal charge for three individuals totaling $173.46 excluding the tip.

“A hotel charge at the (Virginia Association of Regional Jails) conference included $50 per night in upgrades resulting in $285 in excess charges,” officials cited in the memorandum.

The memorandum cited that the jail’s travel policy states any reduction rates or free service received from public facilities including airlines, car rentals and motels by persons for whatever reason, utilizing the jail’s credit cards are reimbursed to the jail, not the individual.

“Any such credits, reduced rates or free services must be reported to the jail and will be deducted from the amount of travel expense claimed,” officials cited in the memorandum. “Failure to comply with this requirement may result in disciplinary action.”

According to the memorandum, the American Express statement, which was used to pay for approximately $103,000 in expenses between June 10, 2016, and July 22, 2017, earns rewards points.

“The rewards statement for the period of July 1, 2016-July 31, 2016 showed a balance of 60,063 points. However, no other statements were available for review, and staff was unable to obtain statements or information related to the balance or points activity,” officials said in the memorandum.

The release cited that their review of receipts disclosed that most hotel rooms are booked under Superintendent Donald Hunter or Captain Lanay Walker’s name.

“Any rewards earned from the hotel stays are not being tracked, reported and utilized to reduce travel costs in accordance with the travel policy,” officials said in the memorandum.

According to the memorandum, during FY17 various equipment and supplies uncharacteristic of jail operations were charged to jail credit cards.

“For instance, various table cloths, chafing dishes, a six gallon double base beverage dispenser, various sauce and stock pots, propane for deep fryers, a gazebo and two canopies costing $412.78, including $20.78 in taxes paid, a $1,300 event tent with sidewalls and two sandwich boards were purchased during the year,” officials said in the memorandum. “We reviewed the inventory list to verify that the event tent and other items were accounted for, but they were not included on the listing provided.”

The memorandum also cited discrepancies between ending balances for the operating account and the jail’s reconciled bank balance, the treasurer having reported $1,852.88 on June 30, 2017, and the jail’s reconciled bank balance being $5,794.65.

“The commissary activity is handled in a separate bank account and maintained in a separate QuickBooks account,” officials said in the memorandum. “During the year, a check was written from the commissary account for upholstering a vehicle and then reimbursed from the jail operating account. The operating account requires two signatures, but the check was needed immediately and paid with commissary funds.”

According to the memorandum, since those funds are restricted for specific purposes, they recommend that the funds not be used to advance operating expenses, even if later reimbursed. The audit found that gift cards are distributed to employees for employee recognition, but were not taxed as fringe benefits. According to IRS regulations, cash or cash equivalent items provided by an employer are never excludable from income.

“Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis and are taxable,” officials said in the memorandum.

De minimis means that something is too trivial or minor to merit consideration, especially in law.

The memorandum ended by stating that executive oversight is an area of improvement.

“Management sets a tone at the top. This refers to the ethical atmosphere that is created in the workplace by leadership. If the tone set by managers upholds ethics and integrity, employees will be more inclined to uphold those same values,” officials said in the memorandum. “Employees pay close attention to the behavior and actions of their supervisors, and they follow their leads. It is crucial to an organization’s success for executives and management to set an ethical example, or tone, of how their employees should behave in the workplace.”