WVPA Sharing

WV Legislative Interim Committee hears report on Alcohol Beverage Control Administration and website functionality

By Autumn Shelton, WV Press News Sharing

CHARLESTON, W.Va. – Members of the legislative Post Audits Subcommittee met in the Capitol on Sunday where they heard Post Audit Division Reports on both the West Virginia Alcohol Beverage Control Administration (ABCA) and Chapter 30 boards’ website functionality. 

First, Stan Lynch, Post Audit Division manager, presented the ABCA audit report to those in attendance. 

“The ABCA is active as the sole wholesaler of liquor in West Virginia since 1990, when the sale of liquor in state-owned stores was discontinued,” Lynch said. “Currently, the ABCA warehouses liquor products on a bailment basis–selling them directly to licensed retailers in the state with a 32% markup on all products sold.” 

According to Lynch, the first issue the audit found is that “available documentation does not fully support the equitable distribution of allocated liquors in accordance with the ABCA’s Spirits 102 Policy.” 

He noted the policy requires retailer orders to be “filled in the order requested until there is no more product available.” 

“These products often include high demand bourbon or whiskey products, such as ‘Pappy Van Winkle’, among other brands, which are highly sought after by the public, and often command a substantially high resale value compared to the cost to retailers,” Lynch noted. 

The second issue found is the current “statute governing the ABCA administrative fund does not reflect current ABCA operations,” Lynch continued. 

WV Code §60-3-15 “is not wholly applicable to the current operation of the ABCA,” he said. 

A Post Audit Report conducted in 2017 “cited the outdated code” and “questioned” whether the amount of operating fund and value of inventory stock, set at $20 million, was excessive, Lynch explained. At that time, the state made a one-time transfer of $7 million to the general revenue fund. 

“Since that transfer, the fund balance has grown,” Lynch said. “It is unclear, based on the current status, if the ABCA is in non-compliance with the established limit, or if there are excess monies in the fund.” 

Audit recommendations include the maintenance of proper documentation, and the establishment of a “Net Fund Balance.” 

Additionally, auditors suggested that the ABCA make improvements to their website by offering an option to accept online payments from retailers and reinstating the option for online licensing/renewals. 

Next, Nick Hamilton, Post Audit Division senior auditor, discussed Chapter 30 of the West Virginia Code, which authorizes state governmental boards to provide “safe and fair services” to both consumers and licensees. 

“It is becoming increasingly common today for people to obtain services, gather information and conduct business through the internet,” Hamilton said. “Website functionality has become an increasingly integral part of conducting business for organizations of all types and sizes.” 

For these reasons, the audit examined how board websites provide information to citizens, including those who wish to file an electronic complaint, as well as the website’s ability for licensees to apply for, and renew their licenses. It also examined the costs associated with website creation and maintenance. 

The audit found that of the state’s 34 licensing boards, 20 allow consumers to easily file electronic complaints against licensees, Hamilton stated. Fourteen boards require consumers to mail physical complaint forms. 

Two boards, the Board of Professional Engineers and the Board of Veterinary Medicine require complaint forms to be notarized, which could “have an unintended chilling effect on members of the public who wish to file complaints,” he continued. 

West Virginia State Code also requires boards to maintain a roster of all licensees and provide a record of all disciplinary actions taken against those licensees, Hamilton noted. The audit found that only 21 board websites feature a comprehensive list of current license holders. Twelve board websites include an electronic name/license search function, and the Nursing Home Administrators Licensing Board places their licensee list within their annual report. Twenty-seven board websites contain a link “dedicated to disciplinary actions taken against licensees, while seven boards lack this feature,” Hamilton said. 

The audit also found that the Board of Registration for Foresters, the Board of Examiners for Licensed Practical Nursing, the Massage Therapy Licensure Board, the Nursing Home Administrators Licensing Board, the Board of Physical Therapy and the Board of Sanitarians do not have data encrypted websites–recommended for a secure connection, Hamilton added. Also, only 12 licensing board websites end with .gov–which helps identify the site as a government agency. 

Hamilton stated that eight boards still require license renewal applicants to file paper applications, including the Board of Chiropractic, the Board of Examiners in Counseling, the Board of Landscape Architects, the Board of Hearing Aid Dealers, the Nursing Home Administrators Licensing Board, the Board of Physical Therapy, Board of Examiners of Psychologists and the Board of Sanitarians. 

“Incorporating online license renewal mitigates the amount of revenue handled by board staff and allows for improved segregation of duties,” Hamilton said. 

Lastly, Hamilton discussed the cost of board website development and upkeep from 2019-2022, the three fiscal years reviewed by auditors. 

Twelve boards use the state Treasurer’s office or the Office of Technology for site upkeep, at the cost of $38,341. Nineteen boards use external vendors, amounting to over $412,000 for the same three year period, Hamilton said. Three boards use on-site staff. 

“Of those external vendors [North Dakota based] Albertson Consulting was responsible for the three highest totals,” Hamilton noted. “During this period Albertson charged the Board of Pharmacy $172,881, the Board of Medicine $137,205 and the Board of Osteopathic Medicine $32,100.” 

“This is not meant to imply these costs are unreasonable, however, it does exemplify the needs of some boards may be greater than others in terms of services provided to their website and the size of the market they serve,” he said. 

The Legislative Auditor made the following recommendations:

  • Boards should consider facilitating complaints via their public website. 
  • Boards should cease the requirement of notarized complaints.
  • Boards should maintain an online roster of licensees, and disciplinary actions. 
  • Websites should be encrypted. 
  • Boards should register their website for a .gov domain. 
  • Smaller boards should consider centralized web services.