Audit Finds Life Focus Center Failed to Document Expenses
March 9, 2012 State Auditor Suzanne M. Bump has recommended that Massachusetts recover $129,982 from Life Focus Center, a Charlestown nonprofit that provides services for disabled persons, for failing to provide sufficient documentation for $2.3 million in expenses charged to the state.
According to Bump, a recently completed audit also called into question services provided by Life Focus Center
(LFC), credit card use, contract billings, payroll, staff bonuses, and travel expenses.
We are trying to enforce a simple rule if you want to do business with the state you follow the states rules when you spend the money, said Bump. Each year the LFC spends about $2 million in taxpayer dollars but we cant tell if it was all properly spent because they didnt keep the records to account for much of it.
LFC, located at One City Square, had $3 million in revenue in the year ending June 30, 2010, according to its most recent federal tax filing.
From July 2008 through December 2010, the audit found LFC claimed to provide $791,307 worth of client services but did not retain adequate documentation to validate the amount of services that were actually provided.
According to documents that were retained, Bump said, billings totaling $536,673 for client services billed did not reconcile to the number of consumers recorded to be in attendance. Documents also reportedly showed the LFC charged the state $14,665 to provide services to clients on days they were recorded as absent.
According to Bump, the audit questions as much as $123,173 in credit card expenses charged by the LFC against its state contracts with its executive director using the credit cards to make numerous purchases at various out-of-state restaurants and shops, including the New Hampshire Liquor Store and a souvenir shop at the Walt Disney World Resort in Florida.
LFC reportedly charged the expenses to state contracts as program supplies without any documentation identifying the business nature of the expenses.
In addition, the audit reportedly disclosed that the LFC charged the state $200,644 in contracted services to relatives of the LFCs administrators without use of written contracts or a competitive procurement process to hire these individuals.
Furthermore, for three years of part-time work, the LFC paid its Staff Directors husband, whose invoices indicated that he often worked from his home, $183,008 as a consultant to function primarily as a grants writer, according to the auditors office. In that time the LFC only received $9,284 in grants and the staff Directors husband failed to adequately document what services were provided and the hours he actually worked.
Additionally, the brother-in-law of the executive director and the brother-in-law of the deputy director were paid $6,600 and $11,036 respectively to provide maintenance services without LFC reporting their compensation to the Internal Revenue Service or the Department of Revenue or producing documentation of work performed."
Bump also cited LFC for noncompliance in other areas including:
- Failure to adequately document the attendance of its administrative staff and to substantiate $1,150,801 in payroll expenses.
- Use of $48,809 in emergency funds for nonemergency uses, specifically to fund the purchase an agency van and two SMART Tables.
- Issuing $35,100 in bonuses to staff without the establishing required written policies on bonuses.
- Charging $38,072 for personal use of agency vehicles without establishing the required written policies for vehicle use or filing the proper tax information relative to the use.
- Failure of the LFCs board of directors to maintain adequate oversight of the LFCs operations. Specifically the board did not maintain full membership or proper composition, perform annual reviews of the Executive Directors salary, participate in the selection of the LFCs audit firm, or other required duties.
In addition to recommending that the state recover funds from LFC, Bump called on LFC to update its policies and procedures to comply with the terms of its state contracts.