Southeastern Massachusetts Convention and Visitors Bureau
October 30, 2012 · Read the full official report (PDF) ↗
Published October 30, 2012 Audit covers July 1, 2010 – June 30, 2011 Under Suzanne M. Bump · 2011–2023
source
“The SMCVB did not comply with two requirements of the fiscal year 2011 grant it received from MOTT.”
Read the plain-English breakdown
This is a Massachusetts State Auditor performance audit of the Southeastern Massachusetts Convention and Visitors Bureau, covering July 1, 2010 through June 30, 2011.
“In accordance with Chapter 11, Section 12, of the Massachusetts General Laws and Chapter 647 of the Acts of 1989, we have conducted a performance audit of the Southeastern Massachusetts Convention and Visitors Bureau (SMCVB) for the period July 1, 2010 through June 30, 2011.”
The audit started after the state tourism office reported concerns that the bureau had not properly accounted for grant money and that a contractor may have stolen funds.
“The Chapter 647 report filed by MOTT indicated that SMCVB did not provide an adequate accounting of grant funds with MOTT and alleged that a contractor may have embezzled SMCVB funds.”
If you are a Massachusetts taxpayer, this matters because state tourism funds were supposed to be matched, tracked, audited, and used properly.
“During fiscal year 2011, the Southeastern Massachusetts Convention and Visitors Bureau (SMCVB) received a $62,431 grant from the Massachusetts Office of Travel and Tourism (MOTT) for the purpose of promoting its tourism activities.”
The bureau did not meet grant conditions, did not return $50,503 in unmatched public funds, and weak controls contributed to an $11,500 theft.
“However, we found that the SMCVB raised only $11,928 of the $62,431 in matching funds that it was required to raise under this grant and did not return to the Commonwealth all of the unmatched funds which totaled $50,503, contrary to the grant agreement.”
The auditor recommended that the bureau return the money, get an independent audit of the grant spending, strengthen internal controls, and adopt a board conflict-of-interest policy.
“The SMCVB should remit to the Commonwealth the $50,503 in funds that it did not match under its fiscal year 2011 grant agreement with MOTT.”
The report points to three governance problems: failure to follow grant rules, weak financial oversight, and a board situation that could undermine public confidence in a property sale.
“Because the realtor for this transaction was also a member of the SMCVB’s board, an “arms-length” relationship does not exist to ensure the integrity of the sale of SMCVB property.”
“Internal controls” means basic financial safeguards, such as written procedures, locked-up checks, clear contracts, and timely bank reconciliations, that help prevent theft or misuse.
“The specific internal control deficiencies we identified that contributed to this theft included the following:”
8 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Assess the adequacy of the internal controls the SMCVB had established over certain aspects its operations.
- Did not comply Review the circumstances regarding the alleged theft of funds at the SMCVB and determine the internal control weaknesses that contributed to the theft.
- Did not comply Determine whether the SMCVB adequately administered the fiscal year 2011 grant funds it received from MOTT.
What the Auditor found
Why it matters: MOTT could not be assured that the grant funds were spent for their intended purposes, and the Commonwealth was owed unmatched funds.
Standard: The MOTT grant agreement required dollar-for-dollar non-governmental matching funds, return of unmatched funds, and an independent audit of state funds. ( Chapter 23A, Section 14 )
3 recommendations
- The SMCVB should remit to the Commonwealth the $50,503 in funds that it did not match under its fiscal year 2011 grant agreement with MOTT.agency: agreed
- The SMCVB should have an independent audit conducted of the state funds it received under this grant and provide a copy of the results of this audit to MOTT.agency: agreed
- In the future, the SMCVB should take measures to ensure that it fully complies with all of the terms and conditions of any grants it receives from the Commonwealth.agency: agreed
Agency response & Auditor reply
Agency: "These agencies chose not to provide written comments to our draft report; however, SMCVB officials told us that they concurred with our audit findings and recommendations."
Why it matters: SMCVB funds were vulnerable to theft because policies, contracts, check controls, and bank reconciliations were inadequate.
Standard: Generally Accepted Accounting Principles and 815 Code of Massachusetts Regulations 2.00 require adequate internal controls to safeguard assets and grant funds. ( 815 Code of Massachusetts Regulations 2.00 )
3 recommendations
- The SMCVB should establish an effective system of internal controls, including formal written policies and procedures, over all aspects of its operations.agency: agreed
- The policies and procedures should address developing written contracts, safeguarding and limiting access to unused bank checks, and performing timely bank reconciliations.agency: agreed
- The SMCVB should consider reporting the theft of funds to the appropriate law enforcement agencies.agency: agreed
Agency response & Auditor reply
Agency: "These agencies chose not to provide written comments to our draft report; however, SMCVB officials told us that they concurred with our audit findings and recommendations."
Why it matters: The transaction lacked an arms-length relationship, creating risk to the integrity of the sale of SMCVB property.
Standard: The Attorney General’s Guide for Board Members of Charitable Organizations advises board members and boards to be cautious about business relationships involving organizations they oversee.
1 recommendation
- The Board of Directors should use the Attorney General’s Guide for Board Members of Charitable Organizations as a guide and develop a comprehensive conflict-of-interest policy for its board.agency: agreed
Agency response & Auditor reply
Agency: "These agencies chose not to provide written comments to our draft report; however, SMCVB officials told us that they concurred with our audit findings and recommendations."