Massachusetts Clean Energy Center

This is a state audit of the Massachusetts Clean Energy Center, a quasi-public agency created to support clean energy jobs, companies, training, and renewable energy projects in Massachusetts.

“The Massachusetts Clean Energy Center (CEC) was established on August 12, 2008 by Chapter 307 of the Acts of 2008 and codified in Chapter 23J of the Massachusetts General Laws as a quasi-public entity to accelerate job growth and economic development in the state’s clean energy industry.”

The audit looked at whether MassCEC had good oversight, reporting, policies, procedures, and internal controls, and whether it was meeting the law that created it.

“Our objective was to evaluate the adequacy of the CEC’s oversight policies, procedures, reporting, and internal controls in order to determine whether the CEC is meeting the requirements of its enabling legislation.”

Good internal controls matter because they help make sure public resources are used properly, assets are protected, and financial and operating information is accurate and fairly reported.

“Without such a document there is inadequate assurance that the CEC’s goals and objectives are met; resources are used efficiently, effectively, and in compliance with applicable laws, rules, and regulations; assets are safeguarded against potential waste, loss, and misuse; and financial/operating data is maintained, reported and fairly disclosed in reports.”

For residents, this agency affects public investment in clean energy jobs, companies, renewable energy projects, and programs like solar rebates for homes and small businesses.

“This program provides rebates to residents and small businesses throughout the Commonwealth through an application process for the installation of solar-powered systems.”

The main finding was not that MassCEC failed overall, but that it needed to improve its internal control plan, investment oversight, and annual reporting.

“The CEC also needs to expand its policies and controls over investment activities and fully comply with the annual reporting requirements established by Chapter 23J, Section 5, of the Massachusetts General Laws.”

The auditor recommended that MassCEC create stronger written controls, update them annually, formalize investment policies, get the required advisory committee appointed, improve annual reporting, and use one consistent job-counting method.

“In order to address the issues in our report, we recommend that CEC:”

The audit is significant because MassCEC was handling large public and clean energy funds, including tens of millions of dollars in assets, investments, grants, loans, and federal stimulus money.

“As of August 31, 2010, the fund included $107,111,000 of total assets and has recognized liabilities and grant commitments of $42,538,000, resulting in total net assets of $64,573,000.”

An internal control plan is basically an organization-wide playbook for spotting risks and explaining what checks are in place to reduce those risks.

“A high-level summarization, on a department-wide basis, of the department’s risks (as the result of a risk assessment) and of the controls used by the department to mitigate those risks.”