Audit of the Massachusetts Department of Agricultural Resources Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Massachusetts Department of Agricultural Resources.

Overview

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 certain activities of the Massachusetts Department of Agricultural Resources (MDAR) for the period July 1, 2015 through June 30, 2017.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is our audit objective, indicating the question we intended our audit to answer, the conclusion we reached regarding the audit objective, and where the objective is discussed in the audit findings.

Objective	Conclusion
Does MDAR administer the Agricultural Preservation Restriction (APR) Program in accordance with applicable laws, rules, regulations, and best practices in addition to its own internal policies and procedures?	No; see Finding 1, Finding 2, and Other Matters

 

To achieve our audit objectives, we gained an understanding of MDAR’s internal control environment related to the administration of the APR Program. We also reviewed applicable laws, regulations, and agency policies and procedures, as well as MDAR’s 2016 internal control plan, the most recent one available. We tested a sample of baseline monitoring reports (BMRs)³ and verified that they were signed by property owners and monitoring agents (independent contractors hired by MDAR to produce BMRs). We also reviewed the frequency of MDAR inspections of APR Program farmland after initial BMRs were produced.

To assess the reliability of the data we received from MDAR related to the 909 farmland parcels in the APR Program, we obtained from MDAR a Microsoft Excel spreadsheet that contained the relevant parcel information from emails and source documents. We tested the spreadsheet for  duplicates and for missing and hidden data fields. We believe this list was substantially complete, based on the control test as well as the visits to farms, but could not validate that the spreadsheet contained all APR farms. We believe the data to be sufficiently reliable for the purpose of this audit.

We reviewed APR Program contracts to identify the procedures farmers must follow to obtain approval from MDAR before constructing buildings or other structures or holding non-agricultural events on APR Program farmland. We met with legislative leaders, Board of Agriculture members, former MDAR senior managers, Massachusetts Farm Bureau Federation officers, farmers, representatives from land conservation organizations, and an attorney who represents many farmers on APR Program issues, in order to gain an understanding of their experiences with the APR Program. Our intent was to determine whether MDAR administered the APR Program in accordance with established laws, regulations, and agency policies and procedures. We conducted further audit testing as described below.

To gain an understanding of MDAR’s process of evaluating applications to participate in the APR Program, perform construction, obtain special permits for non-agricultural events, or sell existing APR Program parcels, we interviewed MDAR management about the agency’s process for approving or denying the applications. We also met with officials from the United States Department of Agriculture’s Natural Resources Conservation Service (NRCS) and representatives from other states’ agricultural departments, including the Connecticut Department of Agriculture and the Vermont Agency of Agriculture, to understand their perspectives on the processing of applications to bring farmland into the Agricultural Land Easements (ALE) Program. We reviewed an MDAR website for farmers that contains guidelines on bringing farmland into the APR Program and applying for approval to build structures or conduct non-farming activities on APR Program farmland.

APR Program Farmland Monitoring

We interviewed MDAR management to determine whether routine monitoring was performed on APR Program farmland. To test whether MDAR monitored the ongoing use of APR Program farmland, we visited farms to observe the upkeep of APR Program farmland and to determine whether the farmers had been visited by MDAR representatives in the past two years to assess their compliance with the APR Program contract. We randomly selected a statistical sample of 60 farmland parcels (see Appendix B) from a population of 409 farms that were not part of the ALE program and had more than 30 acres.

Education

We met with legislators, management at the Massachusetts Farm Bureau Federation, land trust representatives,⁴ and individual farmers and gathered evidence through interviews to assess whether farmers understood how approvals were granted for special permits and certificates of approval, as well as the subsequent sale of APR parcels using “Right of First Refusal” (ROFR) clauses or “Option to Purchase at Agricultural Value” (OPAV) clauses, to assess whether MDAR’s education of farmers was adequate.

We interviewed MDAR management to gain an understanding of APR farmer training and how MDAR educates non–APR Program farmers who have expressed an interest in participating in the program.

Selection Process for Multiple Bids

We reviewed the two versions of the APR Program contracts—those that contain an ROFR clause and those that include an OPAV clause—to determine what documentation was needed from owners of APR Program farmland in order for the Commonwealth to exercise, assign, or waive its right or option in the sale of APR Program farmland. Additionally, we reviewed published sale and bidding guidelines for farmland owners and bidders, including information about MDAR’s options regarding the sale of APR Program farmland and its procedures for assessing multiple bids.

We interviewed MDAR personnel and reviewed documents related to the sale of farmland to determine whether the documents supported each MDAR decision to assign the option to a different bidder.

We used a binomial statistical sample of 60 farmland parcels to test whether farms were monitored by MDAR annually, and we were able to project the results to the population of 409 farms that were not part of the ALE program and had more than 30 acres with a 95% confidence level and a sampling error of +/- 10.8%.

3.    A BMR includes photographs, maps, and narratives meant to explain the state of a restricted property and establish a baseline from which alterations can be assessed.

4.    These are residents who help preserve and protect open space in their cities or towns.

Date published:	August 22, 2018