Massachusetts Technology Park Corporation

This is an official State Auditor review of certain activities of the Massachusetts Technology Park Corporation, covering July 1, 1998 through May 31, 2000.

“Our review covered the period July 1, 1998 to May 31, 2000.”

The auditor examined whether MTPC was running efficiently, had proper controls over money coming in and going out, properly handled Renewable Energy Trust Fund money, and followed relevant state laws.

“Our objectives were to determine the efficiency and effectiveness of MTPC’s operations, including its internal controls over revenues and expenditures; analyze the internal controls over receipts and expenditures from the Massachusetts Renewable Energy Trust Fund; and assess MTPC’s compliance with its enabling legislation of Chapter 40J and Chapter 25, Section 20, of the General Laws.”

MTPC handled large amounts of public or public-related money, including renewable energy charges paid by electricity consumers, so weak controls could mean money was not properly documented, justified, or invested.

“Total revenues of MTPC for the fiscal year ended June 30, 1999 and the 11 months ended May 31, 2000 were $40,238,703 and $50,161,132, respectively.”

If you were an electricity consumer in Massachusetts, this matters because MTPC administered a fund supported by mandatory charges on electricity bills to promote renewable energy projects.

“Pursuant to Chapter 25, Section 20(a), of the General Laws, the Department of Public Utilities was authorized and directed, beginning on March 1, 1998, to require a mandatory charge per kilowatt-hour (kwh) for all electricity consumers of the Commonwealth, except those consumers served by a municipal lighting plant that does not supply generation service outside its own service territory or does not open its service territory to competition at the retail level, to support the development and promotion of renewable energy initiative (REI) projects in accordance with the provisions of Chapter 40J, Section 4E, of the General Laws.”

The biggest problems were weak paperwork and approval controls: consultant payments lacked adequate support, employee bonus policies were outdated or missing, travel charges were poorly documented, and cash was not invested under a clear policy to earn more interest.

“As of our audit completion date, MTPC had not established an investment policy to ensure that all funds were adequately invested to maximize their total return.”

The report recommends that MTPC tighten its controls: use written signed consultant contracts, update employee benefit policies, require receipts and travel rules, and create an investment policy.

“MTPC should develop an investment policy to ensure that all cash is adequately invested to maximize its interest income and explore alternative high-yield investment vehicles.”

The audit is significant because the auditor identified millions of dollars in consultant payments with inadequate controls, hundreds of thousands in questionable employee payments, questionable travel charges, and missed interest income opportunities.

“We found that MTPC had not established adequate controls over payments made to 32 consultants totaling over $2,668,514.”

“Internal controls” means the basic rules, paperwork, approvals, and checks that help make sure spending is legitimate and properly documented.

“According to standards published by the American Institute of Certified Public Accountants (AICPA), it is management’s responsibility to establish and maintain an effective internal control structure over an entity’s operations, which would include ensuring that consultant arrangements are evidenced by a written document (i.e., contract) between management and the consultant.”