Concord-Assabet Family and Adolescent Services, Inc.
JUNE 19, 2000 · Read the full official report (PDF) ↗
Published JUNE 19, 2000 Audit covers July 1, 1996 – December 31, 1999 Under A. Joseph DeNucci · 1987–2011
source
“Our audit identified over $373,450 in questionable and inappropriate costs, questionable management practices, and inadequate internal controls over $1.7 million in inventory, as detailed below.”
Read the plain-English breakdown
This is a Massachusetts State Auditor report reviewing certain finances, controls, and state-funded activities of Concord Assabet Family and Adolescent Services Inc., a nonprofit serving children and adolescents.
“Concord Assabet Family and Adolescent Services Inc., (CAFAS), which was originally organized in 1976 as the Concord Assabet School, Inc., is a nonprofit organization providing comprehensive mental health and human services for children and adolescents.”
Auditors looked at whether CAFAS had proper financial controls and whether it followed laws, rules, and contract requirements for state-funded work.
“Our objectives were to: (1) determine whether CAFAS had established an adequate system of management controls over revenues, expenses, and fixed assets and (2) assess CAFAS’s business practices and its compliance with applicable laws, rules, and regulations, as well as the various fiscal and programmatic requirements of its state contracts.”
CAFAS received public money to serve vulnerable children and families, so weak controls and questionable costs could mean taxpayer funds were not properly protected or used.
“As a result, the Commonwealth cannot be assured that CAFAS’s inventory of furnishing and equipment items, which as of June 30, 1999 totaled $1,709,232, was being properly safeguarded against loss, theft, or misuse.”
If you are a taxpayer, parent, or community member, the report shows why oversight matters: state money should pay for documented services, not unsupported expenses or questionable management decisions.
“According to state regulations, expenses that are inadequately documented or not directly related to the program activities of service providers are nonreimbursable under state contracts.”
The auditor recommended that the state recover questioned money, review additional expenses, and require CAFAS to strengthen controls over billing, credit cards, inventory, and management practices.
“Also, given the highly questionable nature of these expenses, DSS, in conjunction with other appropriate oversight and law enforcement agencies, should conduct its own review of the expenses billed by CAFAS against the contract that funded its BHP during and subsequent to the period covered by our audit and take whatever measures they deem appropriate under the circumstances.”
CAFAS said it had new leadership and was changing direction, including narrowing its focus, ending the Bridge Home contract, selling properties, and improving controls.
“Board and staff are working together to deal with the issues raised in the report in a variety of ways related not only to practice and procedure, but to strategy as well.”
The findings were significant because they involved hundreds of thousands of dollars in questioned costs, more than $1.7 million in poorly controlled inventory, and financial trouble at an agency serving children and families.
“The Organization incurred a negative change in net assets of $1,478,814 for the year ended June 30, 1999.”
A cost reimbursement contract means the state pays a provider back only for budgeted costs the provider actually incurred while delivering the contracted services, up to a maximum amount.
“A payment arrangement under which the purchasing agency reimburses the provider for budgeted costs actually incurred in rendering the services specified in the agreement, up to the stated maximum obligation.”
5 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Determine whether CAFAS had established an adequate system of management controls over revenues, expenses, and fixed assets.
- Did not comply Assess CAFAS’s business practices and its compliance with applicable laws, rules, and regulations, as well as the various fiscal and programmatic requirements of its state contracts.
What the Auditor found
Why it matters: DSS paid at least $83,699 in highly questionable costs that CAFAS could not show were actually incurred for the program.
Standard: 808 CMR 1.05(26) and cost reimbursement contract requirements under OSD guidance. ( 808 CMR 1.05(26) )
1 recommendation
- DSS should recover $83,699 in highly questionable personnel and consultant costs, CAFAS should bill only documented costs actually incurred, and DSS with oversight and law enforcement agencies should review BHP expenses.
Agency response & Auditor reply
Agency: "CAFAS recognizes the importance of accurate and timely recordkeeping on individual contracts and projects."
Auditor: "We believe that the actions taken by CAFAS’s current management staff relative to this matter are appropriate and should serve to ensure that, in the future, the agency bills only for those costs it actually incurs and can document."
Why it matters: State contracts were charged $116,055 for expenses that were undocumented, inadequately documented, or potentially unrelated to state-funded program purposes.
Standard: 808 CMR 1.05(12) and 808 CMR 1.05(26). ( 808 CMR 1.05(12); 808 CMR 1.05(26) )
1 recommendation
- CAFAS should establish effective internal controls over credit cards, DSS should recover $116,055, and DSS should review credit card expenses before and after the audit period.
Agency response & Auditor reply
Agency: "The agency has taken steps to curtail credit card use."
Auditor: "The actions taken by CAFAS’s current management staff relative to this matter should help reduce any further occurrences of undocumented or non-program-related credit card expenses being charged to state contracts."
Why it matters: DSS reimbursed $135,942 in costs that were improperly expensed, unsupported, duplicated, or not shown to have been used in the Bridge Homes Program.
Standard: 808 CMR 1.02, 808 CMR 1.05(4), and 808 CMR 1.05(26). ( 808 CMR 1.02; 808 CMR 1.05(4) )
1 recommendation
- CAFAS should properly record, report, and document capital expenditures, and DSS should recover $135,942.
Agency response & Auditor reply
Agency: "The agency believes it was in good faith by making arrangements to secure the necessary vehicle leases, by making building improvements, by training staff, and by making other preparations and related purchases."
Auditor: "As stated in our report, we identified $135,942 in improperly expensed and undocumented capital item purchases and program supply costs."
Why it matters: State contracts may have been overbilled by as much as $37,762 for the former CEO’s salary.
Standard: 808 CMR 1.05(24) and OSD Policy Guidance/Regulatory Interpretation of 808 CMR 1.05(24). ( 808 CMR 1.05(24); Massachusetts General Laws Chapter 30, Section 46C )
1 recommendation
- DSS should recover $3,649, review CEO attendance and related records to determine whether additional reimbursement is due, and CAFAS should ensure salary billings comply with state guidelines.agency: disagreed
Agency response & Auditor reply
Agency: "The agency believes that it was in compliance with prevailing regulations in billing time of the former Chief Executive Officer’s salary to the Bridge Home program."
Auditor: "As stated in our report, based on our analysis, CAFAS overbilled the Commonwealth $3,649 for the salary of its Chief Executive Officer during the period of our review."
Why it matters: The practices contributed to weak controls, program sanctions, financial stress, and potentially imprudent spending during operating losses.
Standard: Sound business practices requiring economical, efficient operations, safeguarding of assets, and properly authorized, reported, and recorded transactions.
1 recommendation
- The Board should require the President/CEO to minimize staff turnover, fully research future acquisitions, and reduce nonessential spending before cutting staff compensation during financial difficulty.
Agency response & Auditor reply
Agency: "The Board of Directors of the agency believes that it acted in the best interests of the agency, and used all information available to it with regard to decision making and board oversight of strategic and financial decisions."
Auditor: "Based on its response, CAFAS has taken positive steps to implement more effective management and sound oversight within the agency."
Why it matters: The Commonwealth could not be assured that $1,709,232 in equipment and furnishings was safeguarded against loss, theft, or misuse.
Standard: 808 CMR 1.04(5) and 808 CMR 1.04(11)(c). ( 808 CMR 1.04(5); 808 CMR 1.04(11)(c) )
1 recommendation
- CAFAS should immediately develop and implement procedures to collect and maintain inventory records in accordance with OSD regulations.agency: agreed
Agency response & Auditor reply
Agency: "It does recognize the need to improve its formal inventory system."
Auditor: "As stated in our report, during the period covered by our audit, CAFAS was not maintaining an inventory of its equipment and furnishings in the manner prescribed by OSD regulations."
Why it matters: There was inadequate assurance that executive-session business complied with bylaws, and unreasonable compensation could be charged to state contracts.
Standard: CAFAS corporate bylaws and 808 CMR 1.05 on unreasonable costs. ( 808 CMR 1.05 )
1 recommendation
- CAFAS should keep minutes for all board and committee meetings, DSS should review the CEO compensation agreement for reasonableness, and OSD should ensure unreasonable costs are not allocated to state contracts.
Agency response & Auditor reply
Agency: "The Board of the organization believes that it acted in the best interest of the agency and of the clients it serves in its deliberations related to the review and compensation of its former CEO."
Auditor: "Based on its response, CAFAS’s current management and its board have taken measures to address some of our concerns relative to these matters."
Verified dollar findings
Money paid out that the audit found should not have been - overpayments, unallowable and nonreimbursable charges, improper claims.
Identified dollar findings that do not fall in a named band.