Hildebrand Family Self-Help Center, Inc.
July 14, 2015 · Read the full official report (PDF) ↗
Published July 14, 2015 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 Hildebrand Family Self-Help Center, Inc. covering 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 whether Hildebrand followed laws, rules, policies, procedures, and its state contract requirements in the areas examined.
“We reviewed Hildebrand’s activities to determine its compliance with applicable laws, regulations, policies, and procedures, as well as the terms and conditions of its state contract, in the areas reviewed.”
Most of Hildebrand’s funding came from a state housing contract, so weak controls or unsupported spending could mean taxpayer money was used improperly.
“Hildebrand is primarily funded by a contract with DHCD.”
For an ordinary Massachusetts resident, this report shows whether public money meant to help homeless families was properly protected and spent.
“Hildebrand Family Self-Help Center, Inc. is a not-for-profit human-service organization dedicated to providing short-term housing for homeless families and long-term solutions for homelessness.”
The auditor said Hildebrand should repay the Commonwealth for questioned state-funded costs and improve how it documents, approves, and reports spending.
“Hildebrand should reimburse the Commonwealth for this $17,459 in non-reimbursable expenses that was paid for with state funds.”
After the audit period, Hildebrand hired a full-time CFO, moved accounting in house, updated purchasing controls, and replaced a board member who missed required meetings.
“In June 2014, Hildebrand hired a full-time chief financial officer and moved its accounting function in house.”
The audit found problems in multiple areas: fraud reporting, related-party payments, documentation of expenses, and board attendance.
“Hildebrand had inadequate documentation for $31,251 of expenses and did not identify these unallowable expenses as such in its UFRs.”
A UFR is a yearly financial report that organizations like Hildebrand must file with the state when they run social programs under state contracts.
“Each year, agencies such as Hildebrand that operate social programs and contract with various Commonwealth departments must prepare financial statements called Uniform Financial Statements and Independent Auditor’s Reports and file them electronically with OSD.”
7 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply When we initiated our audit, Hildebrand disclosed instances of fraud occurring during our audit period. With regard to the circumstances that allowed fraud to occur, did Hildebrand comply with applicable Operational Services Division (OSD) regulations and state contract terms?
- Did not comply Were related-party transactions appropriate and disclosed in compliance with applicable OSD regulations and state contract terms?
- Complied Did compensation paid to officers and managers comply with applicable OSD policies?
- Complied Did payments related to leases comply with applicable OSD regulations and state contract terms?
- Did not comply Did payments for contracted services and consultants comply with OSD regulations and state contract terms?
- Did not comply Did Hildebrand’s operating and administrative expenses, as reported in its Uniform Financial Statements and Independent Auditor’s Reports (UFRs),3 comply with 808 Code of Massachusetts Regulations (CMR) 1.00?
- Did not comply Did Hildebrand’s board of directors fulfill its oversight duties in accordance with its bylaws and the Massachusetts Attorney General’s Guide for Board Members of Charitable Organizations?
What the Auditor found
Why it matters: The Commonwealth reimbursed non-reimbursable costs and lacked information needed for proper oversight.
Standard: Commonwealth Standard Contracts Form requirements and 808 CMR 1.05 on non-reimbursable costs. ( Chapter 11, Section 12, of the Massachusetts General Laws; 808 Code of Massachusetts Regulations (CMR) 1.05 )
3 recommendations
- Hildebrand should improve its controls over the processing of expenses to reduce the likelihood that improper expenses will be incurred and will go undetected.agency: already implemented
- Hildebrand should disclose all non-reimbursable costs as such in its UFRs in accordance with OSD requirements.
- Hildebrand should reimburse the Commonwealth for this $17,459 in non-reimbursable expenses that was paid for with state funds.
Agency response & Auditor reply
Agency: "Controls were in place prior to the audit and at the time the finance assistant processed fraudulent invoices, and they have been further tightened since the occurrence."
Auditor: "While Hildebrand notified legal authorities and its board of directors of the fraud, the organization is also required under its contract with the state to notify DHCD."
Why it matters: The related-party payments were treated as reimbursable even though Hildebrand could not support compliance with OSD requirements.
Standard: 808 CMR 1.05 related-party transaction cost requirements and 808 CMR 1.04 disclosure requirements. ( 808 CMR 1.05; 808 CMR 1.04; Financial Accounting Standards Board’s Accounting Standards Codification 850-10-05-3 )
4 recommendations
- Hildebrand should disclose all related-party transactions to OSD before executing them, as required by 808 CMR 1.04.
- Hildebrand should reimburse the Commonwealth for this $209,855 in non-reimbursable expenses that was paid for with state funds.agency: disagreed
- Hildebrand should ensure that it does not use state funds to pay costs that are considered non-reimbursable under OSD regulations.
- Hildebrand should disclose all non-reimbursable costs as such in its UFRs in accordance with OSD requirements.
Agency response & Auditor reply
Agency: "Therefore, it is unreasonable to conclude that the entire amount of the compensation paid to this individual during this time is non-reimbursable and subject to recoupment."
Auditor: "We do not dispute that the interim finance director performed necessary services for the organization during the audit period; the issue is that Hildebrand could not substantiate that the amount of her compensation met OSD requirements for reimbursable costs under its state contract."
Why it matters: The Commonwealth may have reimbursed costs that were inadequately documented, fundraising-related, or not competitively procured.
Standard: 808 CMR 1.05 on non-reimbursable costs and 808 CMR 1.03(8) on open and free competition. ( 808 CMR 1.05; 808 CMR 1.05(10); 808 CMR 1.03(8) )
4 recommendations
- Hildebrand should reimburse the Commonwealth for this $31,251 in non-reimbursable expenses that was paid for with state funds.
- Hildebrand should ensure that it does not use state funds to pay costs that are considered non-reimbursable under OSD regulations.
- Hildebrand should disclose all non-reimbursable costs as such in its UFRs in accordance with OSD requirements.
- Hildebrand’s board of directors should improve its oversight of operational activities such as consultant costs.agency: already implemented
Agency response & Auditor reply
Agency: "We will cooperate with OSD as it determines what portion, if any, of the $31,251 must be returned."
Auditor: "We agree that Hildebrand should work with OSD to resolve the issues discussed in this finding."
Why it matters: The board may have made decisions without the diverse and informed input of all board members.
Standard: Section 4.9 of Hildebrand’s bylaws. ( Section 4.9 of Hildebrand’s bylaws )
1 recommendation
- If board members do not attend the required percentage of meetings, the board should consider them to have resigned.agency: agreed
Agency response & Auditor reply
Agency: "The Board will hold itself more accountable to the literal requirements of its bylaws."
Verified dollar findings
Money paid out that the audit found should not have been - overpayments, unallowable and nonreimbursable charges, improper claims.