Audit Story Archives - West Virginia Public Broadcasting

Mon, PE Power Customers To Receive Credit For Misused Funds

Monongahela Power and Potomac Edison company customers will receive a one-time fixed bill credit on their 2024 July bill.

The company’s combined 800,000 customers will receive a part of the $2.5 million dollar credit. An audit ordered by state regulators into the operations of the power companies revealed financial misconduct and called for greater accountability of lobbying expenses and better record keeping.

The audit followed both companies’ requests for a rate increase.

An accounting firm hired by the Public Service Commision to investigate the two power companies recommended further investigations into millions of dollars in fuel procurement and management consulting and suggested further reviews elsewhere.
Both companies are a subsidiary of FirstEnergy Corporation which paid a $230 million fine in 2021 as part of a deferred prosecution agreement for its role in a bribery scheme.

State Police Superintendent Tells Lawmakers Investigations, Changes Continue

Col. Chambers said investigations into hidden cameras, theft, rape, destruction of evidence and invasions of privacy are moving toward resolution.

Speaking to the Joint Standing Committee on Finance Monday, Interim State Police Superintendent Col. Jack Chambers said since he returned to the department after an earlier 26-year stint with the West Virginia State Police, he’s worked diligently to get numerous issues, including financial, clarified and cleaned up.

“I’m not gonna be able to do it overnight,” Chambers said. “I’m working with the help of the department. There are a lot of good people down there. Got a few we probably don’t need, but for the most part, we have a great department.”

He said investigations into hidden cameras, theft, rape, destruction of evidence and invasions of privacy are moving toward resolution.

Chambers told Finance Committee members that there were some questions on the sign off of time sheets and other clerical issues. He said after five days on the job he sent a directive out.

“There’s monitoring and steps of verification now to check off everybody’s timesheet,” Chambers said. “The West Virginia State Police is moving towards (using the automated payroll system) Kronos.”

Committee member Sen. Eric Tarr, R-Putnam, asked Chambers about the investigation into possible misuse of specified vehicle purchase and maintenance funds.

Chambers said the WVSP is fully complying with information requests from the Auditor’s Office. He said before his arrival, there may have been vehicle funds rerouted outside guidelines.

“Probably we used some of this money that was allowed for use and it wasn’t for vehicles, but for something else, because another fund was short,” Chambers said. “Do I think you’d have a bunch of money that people were going on vacations and things like that? Absolutely not.”

He pledged to follow all stipulations, policies, and guidelines for the tenure of his leadership.

“If we were outside those guidelines, then shame on us,” Chambers said. “I promise, if I’m there one year, two years, or six years or 12 years, I’m not gonna go outside the guidelines. I’ll just do without. It’s as simple as that.”

Audit: W.Va. Catholic Church Claimed $2 Million in Federal Small Business Relief Funds

The Diocese of Wheeling-Charleston received an almost $2 million loan from federal COVID-19 relief, according to an audit released Friday.

As the church faced a considerable revenue decline due to the pandemic and corresponding economic recession, it applied for a federal Paycheck Protection Program (PPP) loan in April and secured $1,996,372 through the program.

“There was no reason for our church employees, who pay taxes, to lose their jobs and possibly their homes when the government was making funds available precisely to keep people at work,” wrote Bishop Mark Brennan in a letter released with the audit Friday.

The funds were used to pay employee salaries and healthcare, according to accompanying documents. PPP loans are eligible for forgiveness if used for payroll and other select expenses, and the diocese plans to apply for forgiveness from the federal government.

While many dioceses rely on local parish contributions to fund operations, the West Virginia diocese relies on stock investment and mineral rights. Brennan wrote that the diocesan financial portfolio took a significant hit in the early months of the pandemic as both the stock market and oil prices declined.

As a result, the diocese cut staffing costs through early retirement options and attrition, restructured the diocesan health care plan, and permanently closed pastoral centers in Huttonsville and Kearneysville, leaving just the Charleston center open.

Brennan wrote that the diocese does not plan to apply for the second round of PPP funding under the latest federal relief bill passed in December.

“Some parishes, schools and Catholic charities do need that help, however, and the diocese will help those who qualify apply for it,” he wrote.

While the church received $2 million in federal relief it likely won’t have to repay, it finished the fiscal year 2020 with assets totaling $205 million in the form of cash, securities and mineral rights, according to the audit.

This was down from $223 million in total assets in 2019. The audit found that the diocese aims to draw only 5% of total assets annually but from 2019 to 2020 drew down around 8%.

An Associated Press investigation of the PPP published earlier this week found the Roman Catholic church nationwide received upwards of $3 billion while sitting on over $10 billion in cash, making it perhaps the largest single beneficiary of the program intended to provide loans to small businesses

In the past fiscal year, the diocese continued to untangle the financial and sexual scandals of the former bishop Michael Bramsfield.

The controversial Bishop’s Fund, a $17 million non-profit created by the former bishop to funnel money into projects around the state, was dissolved in early 2020 and the proceeds were used to formally separate the Wheeling hospital from the diocese.

As Pope Francis forbid Bramsfield from residing again in the state, the diocese also sold the former bishop’s residence for $1.2 million and canceled the lease on his Wheeling retirement home. Combine with $441,000 the disgraced bishop paid in restitution, a $1.6 million account was created for outreach to victims of sexual assault and abuse.

“Money cannot heal emotional and religious wounds, however, so we must keep praying and reaching out to victims and others affected by sexual harassment and abuse,” wrote Brennan.

Oil and gas royalties are a primary source of liquidity for the diocese, according to the audit. Mineral rights owned by the diocese on oil and gas in Texas, lost $3.2 million in 2020 and an additional $6.4 million in 2019.

“The current international energy environment enhances the volatility of the oil and gas industry,” Auditors wrote. “Changes in this environment could also have a significant impact on both the value of the assets recorded and the oil and gas royalties received.”

During a conversation on the economy and climate change with community leaders and Sen. Joe Manchin (R-W.Va.) in December of last year, Brennan said the diocese was considering divesting in oil and gas companies and was critically examining its mineral rights assets.

He expressed concern over climate change and the economic stability of these assets.

“To immediately let go of our ownership of the land that produces the gas and oil that sustains many of our parishes and schools and other agencies, that’s not going to happen tomorrow,” Brennan said. “But we are going to take a real look at it.”

State’s Return On $25 Million Venture Capital Investment Unclear, Audit Says

A report released today from the West Virginia legislative auditor found a loan program to venture capital firms for generating economic development in the state fell short of its goals, and state auditors struggled to determine what impact the program did have due to a lack of record-keeping.

“In summary, it is the legislative auditor’s opinion that the loan program did not achieve the intended outcomes and what was achieved is difficult to quantify,” the report found.

The loan fund was established by the legislature in 2002 through the Economic Development Authority (EDA) and gave loans totaling $24.5 million to seven venture capital firms.

According to the audit, two of the companies received $8 million through the EDA and did not invest any of the funds within the state.

The legislation creating the loan programs was intended to create jobs and businesses in West Virginia. The legislative auditor questioned how this goal could be met without guarantees to spend within the state from the companies given the money.

Another four companies were placed under the control of a court-ordered independent party before the completion of the program. As a result of the lack of return on investment, 99 percent of the loan fund remains unpaid.

The audit also found that the EDA did not effectively keep proper records as required by law. As a result, the audit could not quantify whether the program created jobs or businesses while the program likely did.

“The EDA did not utilize accounting methods capable of adequately and efficiently documenting the transactions for the $25 million loan program, nor did the EDA effectively generate and maintain hardcopy source records,” State auditors found in the report.

In a response to the audit, members of the current agency leadership said they did not know why their predecessors made the decisions they did. Based on data the agency collected, they said the program created 409 jobs in West Virginia.

The legislative auditor recommended the EDA move to comply with the law regarding record-keeping, and future investment programs have clear guidance on the expected outcomes.

The EDA’s response said the agency has purchased new account software and would welcome the other recommendations of the audit.

W.Va. PSC 'Disappointed' With Frontier's Plans To Improve Service

An audit of Frontier Communications in March found that the state’s main landline phone provider isn’t doing enough preventative maintenance on its infrastructure for landline phones.

After the telecommunications company promised to make improvements in its response to the audit two months ago, the West Virginia Public Service Commission said Friday it was “disappointed by the omission of any meaningful detail” in Frontier’s response to the audit.

Now, the PSC is ordering Frontier to provide by the end of July specific details, such as how much Frontier plans to spend on upgrades, and when improvement projects will begin.

The audit, which was published with redactions in March, was part of a two-year investigation the PSC announced in 2018.

News got out in April from Ars Technica, a science and technology website, that Frontier had improperly redacted its public version of the audit.

Frontier unsuccessfully tried to redact lines detailing how the company has lost thousands of phone and internet customers in West Virginia in the last 10 years as people switched to other telecommunications providers, according to auditors.

Frontier is still asking the Public Service Commission to keep a redacted version of its audit on the PSC website, even though the unredacted findings have been publicized by Ars Technica and West Virginia Public Broadcasting in April.

Commissioners are still considering a records request from West Virginia Public Broadcasting for the unredacted version.

The PSC investigation kicked off in August 2018, after union leaders for Frontier field staff complained of faulty landline phone service in areas of the state with little to no cell service. Customers in areas with poor service have said frequent and long-lasting outages hinder the ability of local businesses to thrive, and in one case it prevented a Grant County family from calling 911.

The PSC selected a third party auditing firm to examine Frontier’s work in West Virginia in July 2019.

For the last decade, Frontier has had a legal obligation to provide quality landline phone service to most of the state as West Virginia’s “carrier of last resort,” a status the company took on after acquiring former Verizon territory.

In April, Frontier filed for Chapter 11 bankruptcy.

Emily Allen is a Report for America corps member.

Frontier Weighs In On Phone, Internet Audit

Frontier Communications responded on Thursday to a recent audit regarding the quality of its landline phone service in West Virginia, which is regulated by the state Public Service Commission.

The audit, completed in March, found Frontier has lost thousands of phone and internet customers in the last decade, and roughly half of its experienced field employees are due to retire in the next five years. The audit also stated Frontier is not doing enough preventative maintenance on its more than 49,000 miles of infrastructure, which serves roughly 300,000 landline customers and 170,000 DSL internet customers.

The commission called for an audit more than two years ago after complaints from Frontier customers and a union representing Frontier employees. According to staff for the commission, they received approximately 2,000 complaints related to Frontier’s landline phone service in the last year.

The commission eventually selected a third-party auditing firm for the job at the end of July 2019. Frontier sent the finished audit to the commission on March 18.

In its Thursday response to the audit, Frontier addressed several — but not all — of the findings and recommendations auditors made.

According to Frontier, the audit did not “fully appreciate or adequately detail the reality of the difficulties” Frontier faces, including the “heavy burden” of operating in a “rural and difficult-to-serve” region. Frontier voluntarily acquired much of this area in 2010 from Verizon, agreeing at the same time to various additional reporting and service conditions set by the commission.

Not only did Frontier request the commission impose similar conditions on other phone providers in the state, but it asked the commission to consider creating a fund to help Frontier and other companies “support the continued universal availability of affordable telecommunications services in West Virginia.”

Frontier filed for Chapter 11 Bankruptcy in the Southern District of New York on April 14.

Auditors stated they had a difficult time understanding the full financial picture of Frontier’s operations in West Virginia, because overhead costs like employee benefits are budgeted at a corporate level, along with major improvement projects that happen on the state level.

Frontier rejected auditors’ recommendation to budget these allocations more locally, saying their process now is more efficient.

The company said it is prepared to implement other recommendations from auditors, to address backlogs in preventative maintenance work and to improve the company’s 25 worst performing areas in the state.

Frontier did not address a recommendation from auditors to plan for the mass retirement of experienced field employees, who are responsible for restoring service to customers during outages and other maintenance work, nor did Frontier address any of the auditors’ broadband related recommendations.

It is unclear when the commission will address Frontier’s response, or the audit’s findings and recommendations. Other parties involved in the audit — including the Communications Workers of America, AFL-CIO, which requested the audit back in 2018 — have until May 20 to respond to Frontier’s response.

Much of the information included in this article, including Frontier’s number of West Virginia customers and details about its infrastructure, originally had been redacted from the audit. In April, science and technology magazine Ars Technica found Frontier had improperly redacted a public version of the audit.

The commission is still in the process of responding to a Freedom of Information Act request West Virginia Public Broadcasting submitted before the Ars Technica report, requesting access to the full Frontier audit. Although the redacted information has been made available by news outlets, Frontier was allowed to upload a newly redacted version of the report to the commission’s website.

Emily Allen is a Report for America corps member.