North Shore Community Action Programs, Inc.

This is a Massachusetts State Auditor performance audit of North Shore Community Action Programs, Inc., a nonprofit human services agency on the North Shore, covering July 1, 2007 through December 31, 2009.

“The scope of our audit was to examine the various administrative and operational activities of NSCAP during the period of July 1, 2007 through December 31, 2009.”

Auditors reviewed whether NSCAP had good management controls and whether it followed laws, regulations, contract rules, and fiscal requirements tied to state funding.

“The objectives of our audit were to (1) determine whether NSCAP had implemented effective management controls and (2) assess NSCAP’s business practices and its compliance with applicable laws, rules, and regulations and the various fiscal and programmatic requirements of its state contracts.”

NSCAP received most of its money from state contracts, so weak controls could affect whether public funds were spent properly and documented correctly.

“NSCAP receives the majority of its funding from contracts with state agencies, as indicated in the table below:”

If you are a taxpayer or a person who relies on community services, this audit is about whether money meant for housing, homelessness, education, energy, and other support programs was managed carefully.

“During our audit period, NSCAP operated a variety of programs offering services in housing/homelessness, energy, income maintenance, education and training, and homecare under contracts with the Department of Transitional Assistance (DTA), the Department of Elementary and Secondary Education (DESE), the Massachusetts Rehabilitation Commission (MRC), and the Executive Office of Housing and Economic Development (EOHED).”

The report says NSCAP needed stronger written policies, better documentation, proper cost allocation, better board governance, and controls to prevent unallowable or unsupported charges to state contracts.

“During our audit, we found that NSCAP had not developed and implemented an adequate system of internal control over certain aspects of its operations.”

The auditor recommended that NSCAP fix its policies and controls, document costs properly, use approved cost allocation methods, reimburse certain unallowable costs, and bring its board practices into compliance.

“NSCAP should take measures to ensure that it establishes effective internal controls over all aspects of its operations, including the maintenance of its records; the proper documentation, classification, and recording of its expenses; and performing CORI checks on all staff.”

The findings were significant because the auditor questioned at least hundreds of thousands of dollars in cost allocation, tens of thousands in purchasing and payroll documentation, and whether oversight systems were strong enough to protect public funds.

“During fiscal years 2007 and 2008, we determined that NSCAP used a MAB method to allocate $627,092 of indirect costs to its programs.”

“Indirect costs” means shared expenses that support more than one program, such as general administration, and must be fairly divided across programs instead of charged casually to one place.

“Other expenses are related to more than one program or supporting activity, or to a combination of programs and supporting services.”