Rehabilitation and Health, Inc.

This is a Massachusetts State Auditor performance audit of Rehabilitation and Health, Inc., a nonprofit in East Boston that provides inpatient mental-health and substance-abuse services.

“Rehabilitation and Health, Inc. (RHI) is a not-for-profit human-service organization providing inpatient mental-health and substance-abuse services in East Boston.”

The auditor reviewed whether RHI followed laws, rules, contract terms, its own bylaws, and other requirements during the audit period.

“The purpose of our audit was to review certain aspects of RHI’s operations to determine its compliance with applicable laws, regulations, policies, and procedures; the terms and conditions of its state contracts; and its corporate bylaws and other guidance in the areas reviewed.”

Most of RHI’s revenue came from the state Department of Public Health, so taxpayers have a stake in whether state money was properly documented and controlled.

“In 2013, RHI’s total revenue was $1,318,741, of which $1,077,673 was received from DPH.”

If you are a Massachusetts resident, this audit is about whether public funds supporting mental-health and substance-abuse services were properly tracked and overseen.

“RHI provides various services, including group and individual therapy, substance-abuse treatment, psychopharmacology and medication management, outreach services, and family therapy.”

The auditor found documentation and oversight problems, but the report says RHI’s state billings, cost allocation, leases, related-party transactions, and account monitoring were acceptable in the areas reviewed.

“Were the amounts that RHI billed to the state consistent with RHI’s contracts with the Commonwealth?”

RHI was told to improve documentation, work with the state on any costs that may need repayment, follow or update its board-meeting rules, and keep payroll records for seven years.

“After our audit, RHI created a purchase-authorization procedure to provide documentation of direct program expenses and began scanning employee time cards for record-retention purposes.”

The most serious public-risk issue was not only the $3,450 in unsupported expenses, but also that weak board-meeting records and missing payroll records could reduce oversight and accountability.

“Infrequent board meetings could result in a lack of proper oversight of the organization’s operations and in board members not being knowledgeable about the entity’s activities and therefore not being sufficiently informed to act in the best interest of the organization.”

“Inadequately documented expenses” means costs that RHI charged to state programs but could not back up with enough records, such as receipts or other proof.

“RHI could not provide documentation for a total of $3,450 paid to five vendors during our audit period.”