Overview
Although the Massachusetts School Building Authority (MSBA) has established a process to evaluate and prioritize the statements of interest (SOIs) that school districts submit to its Core Program and Accelerated Repair Program (ARP) for grant funding, it has not established any written policies and procedures regarding this process. Without written policies and procedures, MSBA lacks the internal controls necessary to adequately ensure that its evaluation and prioritization of SOIs are completed in a consistent manner and that school districts with the most urgent need are given priority.
During our audit, MSBA employees gave us an overview of the process MSBA uses to evaluate SOIs, which is designed to prioritize grant funding to the school districts with the most urgent need. MSBA management also provided copies of the various documents (e.g., Excel spreadsheets that show MSBA’s priority rankings for submitted SOIs, an internal control plan, and a risk assessment) that MSBA employees use in this process. However, MSBA management told us that there were no written policies and procedures that described how to conduct the various aspects of the process (e.g., how to weigh the SOI evaluation criteria and how to prioritize SOI rankings).
Authoritative Guidance
Section 10.01 of the Office of the Comptroller of the Commonwealth’s Internal Control Guide states the importance of establishing policies and procedures as a key component of an entity’s control activities:
Policies and procedures are the strategic link between the mission statement and day-to-day operations. Well-written policies and procedures allow employees to clearly understand their roles and responsibilities within predefined limits.
Policies identify the key activities and provide a general strategy to decision-makers on how to handle issues as they arise by providing the reader with limits and a choice of alternatives that can be used to ‘guide’ their decision making process as they attempt to overcome problems.
Procedures provide the reader with a clear and easily understood plan of action required to carry out or implement a policy. A well-written procedure will also help eliminate common misunderstandings by clearly identifying job responsibilities and establishing boundaries.
The United States Government Accountability Office’s Standards for Internal Control in the Federal Government state,
12.01 Management should implement control activities through policies. . . .
12.02 Management documents in policies the internal control responsibilities of the organization.
12.03 Management documents in policies for each unit its responsibility for an operational process’s objectives and related risks, and control activity design, implementation, and operating effectiveness. . . . Each unit, with guidance from management, determines the policies necessary to operate the process based on the objectives and related risks for the operational process. Each unit also documents policies in the appropriate level of detail to allow management to effectively monitor the control activity.
12.04 Those in key roles for the unit may further define policies through day-to-day procedures, depending on the rate of change in the operating environment and complexity of the operational process. Procedures may include the timing of when a control activity occurs and any follow-up corrective actions to be performed by competent personnel if deficiencies are identified.
These standards represent best practices for all government agencies.
Reasons for Lack of Written Policies and Procedures
MSBA officials did not give a reason that they had not developed written policies and procedures for this process.
Recommendation
MSBA should develop written policies and procedures for staff members to follow when evaluating and prioritizing SOIs submitted by school districts, in an effort to enhance transparency of decision making.
Auditee’s Response
The Massachusetts School Building Authority (“MSBA”) would like to note that it uses various tools and follows set procedures in its Statement of Interest (“SOI”) evaluation process. As referenced below, the MSBA provided numerous documents to the [Office of the State Auditor, or OSA] which detail the robust process that is undertaken during each SOI filing period. While the MSBA understands the concerns noted in the [OSA] report, the MSBA is confident in its SOI evaluation process. The MSBA will take the recommendations made by the [OSA] under advisement and look for additional opportunities to document its evaluation process.
In response to the [OSA]’s request for MSBA’s written policies and procedures regarding the due diligence process, the MSBA provided Process Overview documents for both the Core and Accelerated Repair Programs, which are also available on the MSBA’s website. These documents provide a summary of the scope, schedule, process, and steps of the due diligence process. In addition, over the course of the audit discussions, the MSBA provided several presentations reviewing these process overviews and, in response to inquiries from the auditor, clarifying the steps of the due diligence phase distinguishing it from other phases of the MSBA grant process. As part of the presentations, MSBA staff provided multiple documents to the auditors that represent the tools, the analysis, and define the measurements used to evaluate each SOI received. To further clarify the relationship of these tools, the MSBA prepared and presented a flow chart illustrating the connection between these tools. MSBA staff recognizes the importance of the MSBA’s grant program to Massachusetts school districts and takes seriously its responsibility to provide a fair, transparent, and equitable process. MSBA staff appreciate that the [OSA]’s findings include that the MSBA “prioritize[s] school districts’ Core Program statement of interest (SOIs) as required by Section 8 of Chapter 70B of the General Laws” and uses “a procedure that evaluates school districts’ Accelerated Repair Program (ARP) SOIs based on the priorities in Section 8 of Chapter 70B of the General Laws.” . . .
The MSBA believes that the Core Process Overview documents available on its website and shared with all superintendents during each SOI opening, outline the extensive tools used during the SOI due diligence phase. These documents provide MSBA staff with, as referenced in the [OSA] report, “the internal controls necessary to adequately ensure that its evaluation and prioritization of SOIs are completed in a consistent manner and that school districts with the most urgent need are given priority.”
As noted above, the MSBA will take the recommendations made by [OSA] under advisement and look for additional opportunities to document its evaluation process.
Auditor’s Reply
The Office of the State Auditor (OSA) agrees that MSBA gave us an overview of its process for evaluating SOIs, as well as copies of the various documents its employees use in this process. However, MSBA has not established any written policies and procedures that describe how to conduct the various aspects of the process (e.g., how to weigh the SOI evaluation criteria and how to prioritize SOI rankings). Written policies and procedures are a critical component of an agency’s internal control system that ensure that its activities are conducted consistently, effectively, efficiently, and in compliance with applicable regulations and other requirements. Written policies and procedures also establish accountability and allow management to effectively monitor and manage activities.
In its response, MSBA states that it will look for additional opportunities to document its evaluation process. However, OSA’s issue is with the controls that MSBA has established over the process. Therefore, we again urge MSBA to develop written policies and procedures for staff members to follow when evaluating and prioritizing SOIs submitted by school districts.
| Date published: | September 6, 2022 |
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