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Audit

Audit  Audit of the Fall River Line Pier, Inc.

Our office performed an audit of the Fall River Line Pier, Inc. (FRLP) for the period July 1, 2020 through June 30, 2023.

Organization: Office of the State Auditor
Date published: April 16, 2025

Executive Summary

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has performed an audit of the Fall River Line Pier, Inc. (FRLP) for the period July 1, 2020 through June 30, 2023.

The purpose of this audit was to follow up on the issues identified in our prior audit report (Audit No. 2019-0504-3A) and to determine (1) what measures, if any, FRLP took to address these issues and (2) the adequacy of those measures. We assessed whether FRLP’s board of directors established policies and procedures related to FRLP’s financial activities, including conflicts of interest, travel, donations, and accounts receivable. We also determined the following:

  • whether FRLP made appropriate nonpayroll expenditures during the audit period that were in line with its mission;
  • whether FRLP attempted collection for delinquent accounts during the audit period; and
  • whether FRLP board members disclosed and reviewed transactions that might result in any conflicts of interest during the audit period.

Below is a summary of our findings, the effects of those findings, and our recommendations, with links to each page listed.

  
Finding 1
 		FRLP paid $187,921 to five companies, even though board members did not disclose their or their family members’ financial interests in those companies.
Effect

It is unclear whether the board considered whether these transactions presented conflicts of interest, or whether it determined whether the transactions were in the best interests of FRLP. This could create the appearance of conflicts of interest, if not outright conflicts of interest, which undermines the public’s faith in the government(s) that contract with FRLP and of FRLP’s work as a government contractor. Given the nature of FRLP’s mission and business, this can have a negative impact on its current and future revenue, as potential customers may perceive that they would not receive fair treatment from the agency and may seek to do business with other entities.

We note that our most recent audit of FRLP, issued on June 11, 2020, found similar conflict of interest concerns, which were at that time related to three board members and $121,874 in payments.

Recommendations
 
  1. FRLP should formally establish and implement policies and procedures related to its financial activities, including conflicts of interest, travel, donations, accounts payable, and accounts receivable.
  2. Board members should declare in writing their potential conflicts of interest, should notify the board of transactions that pose a potential conflict of interest, and should recuse themselves from any participation in these transactions. The board should vote on whether said transactions are in the best interests of FRLP before engaging in these transactions. Given the extensive nature of the problems we found, we recommend that each board vote includes a certification from each board member that they are free from any conflict of interest for each vote.
Finding 2
 		FRLP did not retain meeting minutes for all board meetings.
EffectIf FRLP does not retain all records of its board meetings, then it undermines the integrity of the organization’s governance process, making it difficult to track decisions and actions taken by the board, ultimately affecting accountability and transparency to stakeholders.
Recommendations
 
  1. FRLP should ensure that meeting minutes are completed and retained.
  2. FRLP should establish and implement policies and procedures defining record retention periods.
Finding 3
 		FRLP did not accurately record check numbers for 33 transactions.
EffectMissing and incorrect check numbers increase the risk of financial misstatements, inadequate reconciliation processes, and difficulties in detecting unauthorized or potentially fraudulent transactions.
Recommendations
 
  1. FRLP should design and implement internal controls over expenditures, receivables, and the account reconciliation process. Specifically, the following should be considered in this design:
  2. Including segregation of duties for financial processes would reduce the potential risk of fraud and error.
  3. Including monitoring controls would allow FRLP to ensure that all checks are accurately recorded and reconciled.
  4. Given that FRLP has outsourced its financial administration to its consulting firm, FRLP should require in any of its contracts with outsourced financial managers that sufficient segregation of duties be provided.
  5. FRLP should review its QuickBooks data to ensure that there are no additional instances of inaccurate or missing information related to its financial transactions.

In addition to the conclusions we reached regarding our audit objectives, we identified issues not specifically addressed by our objectives regarding the absence of a formal agreement with the Commonwealth for managing the Fall River Line Pier. For more information, see Other Matters.


 

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