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Audit Audit of the Office of Consumer Affairs and Business Regulation (OCABR)

Audit identified significant failures with the agency’s reconciliation of financial records and the collection of fees that may have cost the Commonwealth up to $196,426. The audit examined the period of July 1, 2017 through June 30, 2019.

Organization: Office of the State Auditor
Date published: March 10, 2021

Executive Summary

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of the Office of Consumer Affairs and Business Regulation (OCABR) for the period July 1, 2017 through June 30, 2019. We conducted this performance audit to determine whether OCABR administered its home improvement contractor (HIC) arbitration process in compliance with Sections 14.05(1), 14.08(4), 14.08(6), 14.08(7), 14.17(1), and 14.17(3) of Title 201 of the Code of Massachusetts Regulations (CMR) and administered its Residential Contractor’s Guaranty Fund (RCGF) in compliance with Section 6 of Chapter 142A of the General Laws and 201 CMR 14.19(2), 14.20(1), 14.20(2), 14.20(3), 14.20(6), and 14.21(1).

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

Finding 1
 

OCABR does not perform reconciliations of its financial records and has not segregated the duties of certain staff members who handle financial transactions.

Recommendations
 

  1. OCABR should develop policies and procedures that require its staff to perform regular reconciliations of its financial records.
  2. OCABR should establish segregation of duties over the receipt, recording, deposit, and reporting of revenue.
  3. OCABR should investigate and resolve the $95,026 variance that we identified.

Finding 2
 

OCABR did not collect up to $101,400 in HIC registration and RCGF fees and allowed employees to change HIC application types without documentation and approval.

Recommendations
 

  1. OCABR should establish controls to ensure that its staff members assess and collect HIC registration fees and RCGF fees in accordance with the correct application types.
  2. OCABR should create policies and procedures regarding the approval process for changes to HIC application types. These policies and procedures should include documentation and approval by a member of management when a staff member changes an HIC application type.

 

Post-Audit Action

On December 11, 2020, OCABR gave us the following update regarding its ongoing investigation of the variance identified during our audit (see Finding 1).

The Office of Consumer Affairs and Business Regulation notified our Secretariat, the Executive Office of Housing and Economic Development (HED) about the variance. HED provided IT resources that examined the Home Improvement Contractor (HIC) IT systems and programs for any IT-related issues that could have been responsible for the variance. Based on HED IT’s review, they determined that the technology appeared to be working properly and that they identified no IT issues that could account for the variance.

OCABR also requested and received assistance from HED finance staff. OCABR staff had previously manually cross referenced copies of checks with the database, but was unable to determine the cause of the variance. HED finance reviewed the methods and processes OCABR used regarding the variance. HED finance was not able to determine the cause of the variance.

OCABR and HED notified the MA Attorney General’s Office (AGO) White Collar / Public Integrity Division regarding the variance and the circumstances around the variance. The communication between OCABR, HED, and the AGO remains ongoing.

 

A PDF copy of the audit of the Office of Consumer Affairs and Business Regulation is available here.

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