Gandara Mental Health Center Inc.
March 3, 2016 · Read the full official report (PDF) ↗
Published March 3, 2016 Audit covers July 1, 2012 – June 30, 2014 Under Suzanne M. Bump · 2011–2023
source
“Below is a summary of our findings and recommendations, with links to each page listed.”
Read the plain-English breakdown
This is a Massachusetts State Auditor performance audit of Gandara Mental Health Center Inc. for July 1, 2012 through June 30, 2014.
“This report details the audit objectives, scope, methodology, findings, and recommendations for the audit period, July 1, 2012 through June 30, 2014.”
The auditor reviewed parts of Gandara’s operations to see whether it had proper controls and followed rules tied to state-funded services.
“The purpose of our audit was to review certain aspects of GMHC’s operations to determine whether it had established adequate internal controls and complied with applicable laws, regulations, and contractual requirements in the areas reviewed.”
Client money was not protected well enough, and more than $45,000 was stolen by an employee.
“Inadequate controls resulted in a theft of more than $45,000 of client funds by a GMHC employee.”
If you are a taxpayer or rely on human-service programs, this audit is about making sure public contract money and vulnerable clients’ funds are handled properly.
“This audit was conducted as part of OSA’s ongoing efforts to audit human-service contract activity by state agencies and to promote accountability, transparency, and cost-effectiveness in state contracting.”
The auditor found multiple areas where Gandara’s controls, approvals, and documentation were not strong enough.
“We identified deficiencies with internal controls regarding the above, which are described in the Detailed Audit Findings with Auditee’s Response section of this report.”
The report recommends that Gandara tighten controls, repay any improper costs where required, document decisions, and keep proper leases and approvals going forward.
“GMHC’s board should ensure that it annually evaluates the performance of its executive director, establishes his or her compensation by a formal vote, and documents this activity in agency records.”
Gandara was heavily funded by state contracts, so weak controls affected an organization using mostly public money during the audit period.
“During our audit period, GMHC received the majority of its funding from contracts with state agencies.”
A “representative payee” is someone chosen to receive and manage money for a person who cannot manage it alone.
“The Social Security Administration’s “Guide for Organizational Representative Payees” defines a representative payee or fiduciary as “an individual or organization we appoint to receive and manage the Social Security or SSI benefits of another person.””
10 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Did GMHC properly administer its client fund accounts?
- Did not comply Did GMHC properly administer its house fund cash accounts?
- Did not comply DID GMHC comply with state regulations regarding the processing and payment of expenses?
- Did not comply Did GMHC’s board of directors annually evaluate its chief executive officer and formally approve any pay increases?
- Did not comply Did GMHC comply with requirements regarding related-party transactions?
- Did not comply Did GMHC obtain its board of directors’ approval before loaning agency funds?
What the Auditor found
Why it matters: Client funds were exposed to theft or misuse, and more than $45,000 was misappropriated.
Standard: GMHC Accounting and Financial Policies and Procedures Manual requirements for monthly reconciliations, senior manager review, and periodic financial department reviews. ( GMHC Accounting and Financial Policies and Procedures Manual )
2 recommendations
- GMHC should take the measures necessary to ensure that the controls it has established under its new policy for the administration of client funds are adhered to.agency: already implemented
- GMHC should ensure that when it receives restitution for these funds, it uses the money to properly refund all the client accounts that were affected by the theft.agency: already implemented
Agency response & Auditor reply
Agency: "GMHC is adhering to the established policy with signature and oversight by a senior manager."
Auditor: "We believe the actions that GMHC says it has taken in terms of reporting and resolving the issue with the theft of funds were appropriate and consistent with our recommendations."
Why it matters: Clients may not have received appropriate guidance and supervision on managing their money, putting their money at risk of mismanagement.
Standard: Section 30.01 of Title 104 of the Code of Massachusetts Regulations and GMHC policy requiring Money Management Assessment Forms and Money Management Plans. ( Section 30.01 of Title 104 of the Code of Massachusetts Regulations )
1 recommendation
- GMHC management should establish controls to ensure that Money Management Assessments are performed and Money Management Plans for each client are established.agency: already implemented
Agency response & Auditor reply
Agency: "Effective July of 2014 all of the DMH’s residential and outreach [consumers] for which Gandara was [representative payee] have money management Assessment Forms and Money Management Plans completed on [an] annual basis."
Auditor: "GMHC states in its response that it is now completing Money Management Assessment Forms and Money Management Plans annually as required."
Why it matters: Cash was exposed to theft or misappropriation that GMHC might not identify in a timely manner.
Standard: Part 3.1.26 of GMHC’s Accounting and Financial Policies and Procedures Manual. ( Part 3.1.26 of GMHC’s Accounting and Financial Policies and Procedures Manual )
1 recommendation
- GMHC should establish the internal controls necessary to ensure that the house fund reconciliation process is performed correctly.agency: already implemented
Agency response & Auditor reply
Agency: "New Controls were defined and implemented in 2015 and are currently being followed."
Why it matters: State funds were used for expenses not related to GMHC’s state-funded program purposes.
Standard: 808 CMR 1.05(12) and GMHC bylaws requiring board authorization for loans. ( 808 CMR 1.05(12); GMHC’s bylaws )
3 recommendations
- GMHC should remit to the Commonwealth the $700 in state funds that it used to pay for this nonreimbursable expense.agency: disagreed
- In the future, GMHC should not use any state funds for purposes that are not related to program purposes for which the funds were provided.
- GMHC management should obtain prior board approval for all loans that it makes.agency: disagreed
Agency response & Auditor reply
Agency: "Board approval was not required to make the loan, no merger occurred."
Auditor: "As noted in this report, GMHC’s bylaws require board approval for all loans."
Why it matters: There was inadequate assurance that the board properly oversaw the executive director’s performance and compensation.
Standard: Commonwealth Terms and Conditions for Human and Social Services requiring annual chief executive performance review and formal salary approval. ( Commonwealth Terms and Conditions for Human and Social Services )
1 recommendation
- GMHC’s board should ensure that it annually evaluates the performance of its executive director, establishes his or her compensation by a formal vote, and documents this activity in agency records.agency: disagreed
Agency response & Auditor reply
Agency: "The Board did conduct formal evaluations of the executive director’s performance on an annual basis and all decisions with respect to the executive director’s pay occurred only after the annual review process was complete."
Auditor: "We were not provided with any documentation that an evaluation took place or that the board formally voted to approve the executive director’s salary as required."