Massachusetts International Trade Council Audit Reveals Issues With Over $150K in Personnel-Related Costs
Bump calls for recovery of state funds
BOSTON, MA — State Auditor Suzanne Bump today announced an audit of the Massachusetts International Trade Council, Inc. (MITCI) which revealed $152,026 in inadequately documented, duplicate, or improperly authorized personnel payments. Included in these payments were an inappropriately authorized $83,140 severance payment, inadequate documentation for $56,207 in staff reimbursements, and $12,679 in duplicate or unauthorized payments for credit card expenses and staff compensation.
MITCI was a state-formed not-for-profit corporation which held contracts with state agencies to promote the Commonwealth as a location for foreign investment and international trade. In 2010, reorganizing legislation created a new agency, the Massachusetts International Trade Office (MITO), to replace MITCI. MITO assumed all of MITCI’s marketing activities the following year. While operating under the management of both MITCI and MITO, the office is known publicly as the Massachusetts Office of International Trade and Investment (MOITI). Today’s audit reviewed the last two years of MITCI’s operations.
The audit found that MITCI’s Board of Directors inappropriately authorized $83,140 in severance payments to its former Executive Director, who was being terminated from the same position by MITO.
In January 2011 MITCI’s Executive Director voluntarily left the agency to work for the newly formed MITO. The Executive Director was terminated from MITO by the Executive Office of Housing Economic Development (EOHED) later that year. Before the termination was complete, four of MITCI’s six board members, representing themselves as current members of MITO’s Board of Directors, authorized MITO to assume the severance responsibilities of the Executive Director’s former contract with MITCI to which he was no longer entitled. However, under its enabling legislation, MITO does not have a Board of Directors and the MITCI board members have no authority to act on behalf of MITO.
Ultimately, the MITCI board actions resulted in an unallowable payment of $6,346 to the former Executive Director from a MITCI checking account with the remainder of the approved severance to be paid by MITO. MITO’s current Executive Director told state auditors that the trade office did not plan on providing any additional severance compensation to its former Executive Director.
Auditors also found problems with $56,207 in reimbursements to staff. These inadequately documented expenses accounted for 47% of the total $118,581 MITCI expended on reimbursements.
In addition, MITCI overpaid its staff and consultants $12,679. This amount includes $5,470 in duplicate compensation to four staff members, $3,009 in duplicate reimbursements to the Executive Director, and $4,200 in overpayments made to consultants.
In response to the audit findings Auditor Bump has called on EOHED, in conjunction with MITO, to recover both the $6,346 in unallowable severance payments to its former Executive Director and the $12,679 in overpayments made to staff and consultants. In addition, Auditor Bump recommended that EOHED review the $56,207 in improperly documented staff reimbursements to determine what additional amount should be recovered. EOHED has responded positively to all findings and recommendations.
The Office of the State Auditor conducts technical and performance assessments of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.