Massachusetts International Trade Council, Inc.
January 2, 2013 · Read the full official report (PDF) ↗
Published January 2, 2013 Audit covers July 1, 2009 – June 30, 2011 Under Suzanne M. Bump · 2011–2023
source
“Our current audit of MITCI found that its administrative staff failed to establish effective internal controls over agency operations, which resulted in the following issues:”
Read the plain-English breakdown
The Auditor looked at MITCI because an earlier audit had already found problems with missing documentation for employee travel reimbursements.
“Our audit of MITCI was initiated to follow up on an issue identified during our prior audit of the agency (No. 2006-4499-3A), which disclosed inadequate documentation relative to reimbursements made to staff for travel expenses.”
The report matters because public money and public-related contracts were involved, and the audit found payments that may need to be recovered.
“During fiscal years 2010 and 2011, MITCI received a total of $225,000 in appropriated funding from the Commonwealth for these purposes.”
For a resident, the main takeaway is accountability: the Auditor recommended that state officials try to get back unsupported, duplicate, unauthorized, or improper payments.
“EOHED, in conjunction with MITO, should recover the $6,346 in severance payments MITCI’s Executive Director improperly received and take measures to ensure that no further severance compensation is provided to this individual.”
The audit found $56,207 in reimbursements that were not properly supported and $12,679 in overpayments, plus an improper severance arrangement for the former executive director.
“During our audit period, MITCI disbursed $56,207 in reimbursements to staff, primarily to its Executive Director and Director of Administration, for expenses that were inadequately documented or not properly approved.”
The Auditor said EOHED and MITO should decide how much unsupported reimbursement money to recover and should recover the overpayments and improper severance payment.
“EOHED, in conjunction with MITO, should continue to seek recoupment from MITCI’s Executive Director for the $6,346 in severance payments he improperly received and should take measures to ensure that no further severance compensation is provided to this individual.”
The report is significant because it says MITCI’s weak oversight allowed questionable reimbursements and overpayments to go unnoticed, including payments to senior staff.
“As a result of these internal control deficiencies, we found that during our audit period, MITCI made $56,207 in reimbursements, primarily to its Executive Director and Director of Administration, for expenses that were inadequately documented or not properly approved.”
“Internal controls” means basic safeguards like approvals, documentation, separated duties, and checks that prevent one person from approving, paying, and recording questionable expenses without review.
“The purpose of segregating job responsibilities is to reduce the opportunities for any person to be in a position to both perpetrate and conceal errors or irregularities in the normal course of his or her duties.”
6 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Follow up on the issue identified during our prior audit of MITCI (No. 2006-4499-3A) relative to inadequate documentation of certain travel expenses.
- Did not comply Review and assess the internal controls MITCI had established over: reimbursements to employees for business expenses, payments to consultants, and salaries and benefits provided to employees.
- Did not comply Review various expenses paid for by MITCI during the audit period in the targeted areas to determine whether all expenses were properly documented, business–related, and properly recorded and reported by the agency.
- Did not comply Assess the oversight activities conducted by MITCI’s Board of Directors.
What the Auditor found
Why it matters: MITCI made inadequately documented reimbursements and duplicate or unauthorized payments that went undetected.
Standard: Generally accepted accounting principles require an adequate internal control system and a documented, comprehensive internal control plan. ( generally accepted accounting principles )
2 recommendations
- EOHED, in conjunction with MITO, should determine what amount of the $56,207 in improperly documented reimbursements to staff should be recovered.agency: agreed
- EOHED, in conjunction with MITO, should recover all $12,679 in overpayments MITCI made to its Executive Director, staff members, and consultants.agency: agreed
Agency response & Auditor reply
Agency: "We accept the troubling findings in this report and are working with MITO to execute the [OSA’s] recommendations."
Why it matters: The Executive Director received unauthorized severance compensation and MITCI attempted to fund additional severance payments without legal authority.
Standard: The Executive Director’s MITCI employment contract provided severance only if he was terminated from MITCI without just cause, and MITO had no Board of Directors or severance provision for him.
2 recommendations
- EOHED, in conjunction with MITO, should continue to seek recoupment from MITCI’s Executive Director for the $6,346 in severance payments he improperly received.agency: agreed
- EOHED and MITO should ensure that no further severance compensation is provided to the Executive Director.agency: agreed
Agency response & Auditor reply
Agency: "We continue to seek recovery of all overpayments and improper payments made to [the former Executive Director]."
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.
Prior findings revisited
"During our current audit, we determined that MITCI had failed to fully implement our prior audit recommendation."