Audit of the Office of Consumer Affairs and Business Regulation (OCABR)
March 10, 2021 · Office of Consumer Affairs and Business Regulation · Read the full official report on mass.gov ↗
Published March 10, 2021 Audit covers July 1, 2017 – June 30, 2019 Under Suzanne M. Bump · 2011–2023
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“The revenue that OCABR recorded in MMARS was $95,026 lower than what was recorded in OCABR’s HIC registration database and the overall financial records.”
Read the plain-English breakdown
This is a Massachusetts State Auditor performance audit of the Office of Consumer Affairs and Business Regulation, covering July 1, 2017 through June 30, 2019.
“This report details the audit objectives, scope, methodology, findings, and recommendations for the audit period, July 1, 2017 through June 30, 2019.”
Auditors reviewed whether OCABR properly ran its home improvement contractor arbitration process and the fund that can compensate homeowners for certain contractor problems.
“We conducted this performance audit to determine whether OCABR administered its home improvement contractor (HIC) arbitration process in compliance with Sections 14.05(1), 14.08(4), 14.08(6), 14.08(7), 14.17(1), and 14.17(3) of Title 201 of the Code of Massachusetts Regulations (CMR) and administered its Residential Contractor’s Guaranty Fund (RCGF) in compliance with Section 6 of Chapter 142A of the General Laws and 201 CMR 14.19(2), 14.20(1), 14.20(2), 14.20(3), 14.20(6), and 14.21(1).”
These programs affect homeowners who hire contractors and may need help resolving disputes or recovering money after bad work.
“Section 7 of Chapter 142A of the General Laws established the RCGF within OCABR to compensate homeowners up to $10,000 for actual losses they may have incurred from work done by an HIC, or an HIC’s employee or subcontractor, that is found by a court to be substandard or done in a manner that violates any consumer protection law or regulation.”
If you hire a registered home improvement contractor, OCABR’s systems and website may help you check registrations, review certain contractor issues, and seek compensation in eligible cases.
“The Office of Consumer Affairs and Business Regulation (OCABR) has structured its website to allow consumers to perform a variety of tasks, such as checking whether a home improvement contractor (HIC) is registered with OCABR, seeing whether an HIC has delinquent fee payments, and filing a complaint against an HIC.”
The auditor found that OCABR needed stronger controls over money, fee collection, approvals, and website information.
“Because OCABR does not perform reconciliations of all of its financial records, there is a higher-than-acceptable risk of variances (such as the $95,026 we identified, which could represent losses of funds), occurring and going undetected.”
OCABR said it had started regular reconciliations, separated duties, limited editing access, and referred the unexplained variance to the Attorney General’s Office.
“In November, OCABR notified the Office of the Attorney General’s (AGO) White Collar / Public Integrity Division of the variance and the relevant circumstances pertaining to it.”
The audit is significant because the agency handled millions of dollars in contractor fees, and weak controls could mean errors or missing money go unnoticed.
“The difference between the fees OCABR collected and those it should have collected was $101,400 ($33,800 from HIC registration fees and $67,600 from RCGF fees).”
HIC means home improvement contractor. RCGF means the Residential Contractor’s Guaranty Fund, which is money used to compensate eligible homeowners for certain poor contractor work.
“This fee is deposited in the RCGF, which is used to compensate homeowners for substandard work performed by registered HICs.”
3 figure(s) pending source verification - not shown
What the Auditor checked
- Complied Does OCABR administer the home improvement contractor (HIC) arbitration process in compliance with Sections 14.05(1), 14.08(4), 14.08(6), 14.08(7), 14.17(1), and 14.17(3) of Title 201 of the Code of Massachusetts Regulations (CMR)?
- Did not comply Does OCABR administer the Residential Contractor’s Guaranty Fund (RCGF) in compliance with Section 6 of Chapter 142A of the General Laws and 201 CMR 14.19(2), 14.20(1), 14.20(2), 14.20(3), 14.20(6), and 14.21(1)?
What the Auditor found
Why it matters: There was a higher-than-acceptable risk that variances, losses, or misappropriation of funds could occur and go undetected.
Standard: Office of the Comptroller of the Commonwealth cash recognition, reconciliation, and internal control requirements. ( Office of the Comptroller of the Commonwealth’s “Cash Recognition and Reconciliation Policy,” issued July 1, 2004; Section 10.04 of CTR’s Internal Control Guide from June 2015 )
3 recommendations
- OCABR should develop policies and procedures that require its staff to perform regular reconciliations of its financial records.agency: already implemented
- OCABR should establish segregation of duties over the receipt, recording, deposit, and reporting of revenue.agency: already implemented
- OCABR should investigate and resolve the $95,026 variance.
Agency response & Auditor reply
Agency: "OCABR acknowledges that during the audit period it did not require its staff to perform regular reconciliations of HIC financial records."
Auditor: "Based on its response, OCABR is taking measures to address these issues."
Why it matters: OCABR lost fee revenue and could not be certain that fees were assessed in compliance with regulations.
Standard: 201 CMR 18.02(8)(b) and Section 10.04 of CTR’s Internal Control Guide from June 2015. ( Section 18.02(8)(b) of Title 201 of the Code of Massachusetts Regulations; Section 10.04 of CTR’s Internal Control Guide from June 2015 )
2 recommendations
- OCABR should establish controls to ensure that its staff members assess and collect HIC registration fees and RCGF fees in accordance with the correct application types.agency: already implemented
- OCABR should create policies and procedures regarding the approval process for changes to HIC application types.agency: already implemented
Agency response & Auditor reply
Agency: "OCABR agrees that there are opportunities for improvement in the administration of the HIC registration process and handling of the RCGF."
Auditor: "Based on its response, OCABR is taking measures to address our recommendations on these issues."
More audits of this entity
Other Office of the State Auditor reports on Office of Consumer Affairs and Business Regulation .
- Audit of the Office of Consumer Affairs and Business Regulation (May 5, 2025)State Agency / Office · May 5, 2025