Department of Conservation and Recreation (DCR) - Long-Term Permit and Lease and Employee Housing Programs
July 17, 2013 · Read the full official report (PDF) ↗
Published July 17, 2013 Audit covers July 1, 2010 – June 30, 2011 Under Suzanne M. Bump · 2011–2023
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“As a result of these problems, our audit identified at least $366,863 in current and past unpaid fees that DCR had not collected as of June 30, 2011.”
Read the plain-English breakdown
This is a Massachusetts State Auditor review of DCR programs that manage long-term permits, leases, and employee housing on state property.
“In response to DCR’s request, OSA initiated an audit of DCR that included a review of both DCR’s P&L Unit programs and a separately managed Employee Housing program for which we also identified similar issues.”
DCR itself asked for the audit after realizing it had problems managing agreements, collecting fees, and tracking expiration dates.
“During fiscal year 2012, DCR requested that the Office of the State Auditor (OSA) conduct an audit of its Long-Term Permit and Lease (P&L) Unit programs after becoming aware of flaws in the unit’s ability to effectively administer and oversee certain leases, permits, and other agreements.”
These public properties can bring money into the state, but weak controls meant the Commonwealth may have lost revenue and allowed private users to benefit without proper oversight.
“These flaws included fees going uncollected and agreement expiration dates being ignored, both resulting in lost revenue to the Commonwealth.”
If you are a Massachusetts resident, this matters because DCR manages public parks, forests, rinks, beaches, and other public resources that should be fairly managed and paid for when private or outside users benefit from them.
“For fiscal year 2011, DCR reported that it collected approximately $13.5 million in general fund revenues for the Commonwealth through fees and other charges for use of these public resources.”
The auditor found unpaid fees, expired or missing agreements, weak penalty practices, questionable fee levels, missing insurance paperwork, and incomplete inspections.
“Twenty of 127 (16%) DCR properties/facilities tested were occupied and used for one to five years even though no use agreement had been executed.”
The problems were not just paperwork mistakes: the audit says missing records and unreliable data made it impossible to know the full amount of unpaid fees.
“As a result, our audit was not able to fully identify the extent of unpaid fees in instances where documentation was missing.”
4 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Determine whether DCR established adequate internal controls to ensure that all potential fees for the P&L Unit and Employee Housing program agreements are accurately billed, collected, and recorded and that unpaid fees are identified and properly resolved on a timely basis, in compliance with the agreements and applicable state laws, regulations, and policies.
- Did not comply Determine whether DCR established adequate internal controls to ensure that all agreements for the P&L Unit and Employee Housing programs for the use of DCR property by third parties and DCR employees are properly executed on a timely basis in compliance with applicable laws, regulations, and policies.
- Did not comply Determine whether DCR established adequate internal controls to ensure compliance with liability insurance and property maintenance provisions established in its use agreements.
What the Auditor found
Why it matters: The Commonwealth lost revenue because fees went unpaid, late penalties were not imposed, and some rates appeared too low or were not based on required fair-market methods.
Standard: Office of the State Comptroller regulations and policies, Chapter 647 of the Acts of 1989, Executive Office for Administration and Finance regulation 801 CMR 4.03(1)(d), Chapter 65 of the Acts of 2010, and state finance law requirements. ( Chapter 647 of the Acts of 1989; 801 CMR 4.03(1)(d); Chapter 65 of the Acts of 2010, Section 2 )
4 recommendations
- Follow up on and resolve all past unpaid fees identified during the audit.agency: already implemented
- Develop written policies and procedures and internal controls to ensure that all user fees due the Commonwealth are properly billed and paid and delinquent fees are promptly identified and resolved.agency: already implemented
- Adopt late-fee and interest-charge regulatory provisions consistent with OSC policies and include appropriate language in all P&L Unit agreements.
- Request independent appraisals and adjust employee housing rental fees based on CPI requirements.agency: agreed
Agency response & Auditor reply
Agency: "As a result of this audit, DCR decided to eliminate the Employee Housing Program in April 2013."
Auditor: "Based on its response, DCR is taking measures to address our concerns on this matter."
Why it matters: Liability protections and enforceable rights may not have been in effect, and DCR could not ensure property use was authorized or in the Commonwealth’s interest.
Standard: 801 CMR 4.03(1), OSC guidance on retroactive effective dates, and DCR’s agreement execution policy. ( 801 CMR 4.03(1); Articles 18, 46 and 103 of the State Constitution )
3 recommendations
- In consultation with OSC, follow up on and resolve all instances in which use agreements expired or were not properly executed.
- Develop written policies, procedures, internal controls, and a comprehensive register tracking pending and completed agreements and expiration dates.
- Ensure that all housing agreements are current and signed by the Secretary of EEA.agency: already implemented
Agency response & Auditor reply
Agency: "A new Program Coordinator II will be starting in June 2013, and that person will be responsible for implementing many of these recommendations."
Auditor: "Based on its response, DCR is taking measures to address our concerns on this matter."
Why it matters: The Commonwealth and public faced increased risk from uninsured liabilities, poorly maintained property, and undetected unauthorized or noncompliant use of DCR property.
Standard: Use agreement requirements for liability insurance, Certificates of Insurance, property maintenance, and inspections. ( DCR use agreement liability insurance provisions; State building codes and septic and wetland laws and regulations )
3 recommendations
- Establish written policies, procedures, and internal controls to ensure all required Certificates of Insurance are on file and meet agreement requirements.
- Ensure adequate staff complete all required property inspections.
- Conduct a risk assessment and implement appropriate inspection arrangements for program categories with health and safety risks.
Agency response & Auditor reply
Agency: "Beyond the risk assessment, DCR recognizes the need for internal controls as well as increased monitoring."
Auditor: "We believe that DCR’s planned use of a risk assessment process for designing and prioritizing control improvements is appropriate and important for addressing concerns we identified and for reducing risk exposure and improving governance, compliance, and greater efficiency of operations."
Prior findings revisited
"The absence of a formal written DCR-wide inspection policy for the Cottage Program represents a significant control deficiency, and DCR’s failure to perform inspections heightens the risk that problems identified by our 2005 audit may remain unaddressed."