Bay Cove Human Services, Inc.
January 13, 2014 · Read the full official report (PDF) ↗
Published January 13, 2014 Audit covers July 1, 2009 – December 31, 2011 Under Suzanne M. Bump · 2011–2023
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“Based on our audit, we have concluded that, except for the issues addressed in the Audit Findings section of this report, for the period July 1, 2009 through December 31, 2011, Bay Cove maintained adequate internal controls and complied with applicable laws, rules, and regulations for the areas tested.”
Read the plain-English breakdown
This is a Massachusetts State Auditor performance audit of Bay Cove Human Services, a Boston-based nonprofit that provides human services, covering July 1, 2009 through December 31, 2011.
“I am pleased to provide this performance audit of Bay Cove Human Services, Inc. and Affiliate (Bay Cove).”
The auditor reviewed Bay Cove as part of a broader effort to check human-service contracts funded by the state and make sure public money is used accountably and cost-effectively.
“This audit was conducted as part of OSA’s ongoing efforts to audit human-service contracting activity by state agencies and to promote accountability, transparency, and cost effectiveness in state contracting.”
Bay Cove received public money to provide services, so weak controls or improper charges could mean taxpayer funds were not handled as carefully as required.
“During fiscal years 2011 and 2010, Bay Cove received revenue from a variety of sources, as indicated in the following table:”
If you are a Massachusetts taxpayer or someone who relies on state-funded human services, this report shows whether money meant for services was properly protected and spent.
“These funds should instead have been spent on reimbursable items.”
The auditor said Bay Cove should repay $28,579, tighten timesheet approval, and use documented competitive purchasing and written contracts for consultants.
“Bay Cove should refund the Commonwealth the $28,579 in unallowable vehicle expenses that it charged against its state contracts during our audit period.”
Bay Cove said it would improve documentation and timesheet approval, including moving toward an automated payroll system.
“However, we agree that timesheets should include Supervisory approval and will take steps to further ensure that this occurs in the future, including the implementation of a new automated payroll system next year.”
The report did not say Bay Cove failed overall, but it did identify specific money and control problems that affected state-funded contracts.
“Bay Cove incorrectly charged $28,579 against its state contracts for fringe-benefit expenses associated with automobiles it provided to four members of its staff for their personal use, instead of classifying such costs as nonreimbursable.”
“Nonreimbursable” means the state should not pay for that cost under the contract; here, the auditor applied that to personal use of agency vehicles.
“According to state regulations, non-program expenses such as these are unallowable and nonreimbursable.”
4 figure(s) pending source verification - not shown
What the Auditor checked
- Partially Did Bay Cove's business practices comply with applicable laws, rules, regulations, and fiscal requirements of its state contracts in the areas tested?
- Did not comply Did Bay Cove's procurement and payment of consultant services comply with Operational Services Division regulations and Bay Cove's internal policies and procedures?
What the Auditor found
Why it matters: State contract funds were used for nonreimbursable personal-use vehicle costs instead of reimbursable program items.
Standard: 808 CMR 1.05(12)
2 recommendations
- Bay Cove should refund the Commonwealth the $28,579 in unallowable vehicle expenses that it charged against its state contracts during our audit period.agency: disagreed
- Bay Cove should ensure that all nonreimbursable expenses, including expenses associated with personal use of agency vehicles, are properly identified, reported, and not charged to state contracts.agency: disagreed
Agency response & Auditor reply
Agency: "Following guidance from our CPA firm, we did not classify the personal use for the individuals noted as non-reimbursable on the [Uniform Financial Statement and Independent Auditor’s Report] based on the following logic."
Auditor: "This recognition of the value of personal use indicates benefit to the individual rather than benefit to Bay Cove’s programs or consumers."
Why it matters: There was inadequate assurance that payroll expenses charged to state contracts were accurate and appropriate.
Standard: OSD Terms and Conditions for Human and Social Services and OSD’s Uniform Financial Report Auditor’s Compliance Supplement ( OSD Terms and Conditions for Human and Social Services; OSD’s Uniform Financial Report Auditor’s Compliance Supplement )
1 recommendation
- Bay Cove should ensure that all staff timesheets are properly reviewed and approved before payment.agency: agreed
Agency response & Auditor reply
Agency: "However, we agree that timesheets should include Supervisory approval and will take steps to further ensure that this occurs in the future, including the implementation of a new automated payroll system next year."
Why it matters: Bay Cove could not be certain it received competitive prices and lacked formal standards to measure contractor performance or protect against legal issues.
Standard: 808 CMR 1.03(8) and Bay Cove procurement policies ( 808 CMR 1.03(8); Bay Cove policies requiring procurements exceeding $15,000 to be put out to bid with at least three bids obtained )
2 recommendations
- Bay Cove should ensure that all future procurements, including consultant services, include a competitive procurement process in accordance with OSD regulations and Bay Cove policies.agency: agreed
- Bay Cove should enter into formal written contracts with all consultants, setting forth clearly defined duties and responsibilities for both parties.agency: agreed
Agency response & Auditor reply
Agency: "However, we do agree that there was not sufficient documentation of the process used or the specific conditions of the service purchased."
Auditor: "However, as stated in our report and as acknowledged by the agency in its response, there was inadequate documentation to substantiate this fact or to show that Bay Cove complied with OSD regulations in obtaining these services."