Serious Lapse Regular audits a must in Charleston

Most fringe benefits provided by employers have at least some value, and that means the Internal Revenue Service wants to know about them. Often, taxes must be paid because such “perks” amount to compensation worth money.

But former West Virginia Attorney General Darrell McGraw’s office did not handle more than $50,000 in benefits to employees that way, according to a new legislative audit. State lawmakers heard about it this week while in Charleston for a special session.

About 10 employees of McGraw’s office were reimbursed for education expenses, according to the audit. One collected $20,946 as reimbursement for graduate classes taken at an out-of-state university. Another received $26,524 in tuition reimbursements during a two-year period.

Legislative Auditor Aaron Allred reported McGraw, who was in office from 1993-2012, did not have a policy detailing the reimbursement program. Apparently it was open only to certain employees.

And McGraw’s office did not report the value of education reimbursements on employees’ W-2 forms. That means the IRS was unaware of them and no taxes were paid on the benefits.

Allred told legislators his office found no evidence the failures were intentional.

Even if not, they represent a serious lapse by McGraw, who formerly served as the state’s chief law enforcement officer. Many taxpayers would question failure to report such a benefit and to pay taxes on it.

Attorney General Patrick Morrisey, who succeeded McGraw, is working to clean up mismanagement such as that identified in the report, Allred said. In addition to the education reimbursement issue, the audit also raised questions about controls on use of purchasing cards while McGraw ran the office.

Results of the audit reinforce a point Morrisey made months ago. He suggested state agencies should undergo regular audits to reveal problems such as those under McGraw – and under former Agriculture Commissioner Gus Douglass. An audit of his department after he retired indicated serious mismanagement.

Morrisey is right. How many more revelations of mismanagement and/or outright misbehavior have to be uncovered before lawmakers agree to a plan of regular audits?