Press Release

Press Release Audit Finds Over $500K in Questionable and Unallowable Costs at Freetown Nonprofit

Report cites questionable related-party transactions and unnecessary employee compensation at Crystal Springs.
For immediate release:
  • Office of State Auditor Suzanne M. Bump

Media Contact

Mike Wessler, Communications Director

Boston — State Auditor Suzanne Bump issued an audit today which found over a half-million dollars in questionable and unallowable costs at a state-funded human service provider.

Known until May 5, 2011 as the Institute for Developmental Disabilities, Crystal Springs is located in the Freetown village of Assonet and provides special education, therapeutic and residential services to approximately 110 disabled children and adults. The audit reviewed compliance with applicable laws, regulations, and contracts and identifies operational and administrative areas for improvement. It did not assess the quality or appropriateness of services.

“The mission of Crystal Springs and other agencies of this type is vital to the welfare of some of our most vulnerable citizens,” Bump said. “The services provided have a significant impact on people throughout the state. State resources that fund these programs must be maximized and well-spent in accordance with laws and regulations. This audit highlights some areas that are in need of improvement.”

Questionable related-party transactions accounted for $359,573 of the $538,050 the audit cited for questionable and unallowable costs. In 94 instances, Crystal Springs procured equipment and services from Thermo Mechanical Systems Corporation without using a competitive procurement process. Thermo Mechanical’s chief executive officer and a member of its board of directors were also members of Crystal Springs’ board. While this relationship was disclosed, not using a competitive bidding process is contrary to state regulations and leaves unknown whether Crystal Springs obtained the best service at the best price. Additionally, Crystal Springs did not enter into formal written agreements for any of the services leaving the agency without a mechanism to monitor contractor performance or to protect itself legally.

Crystal Springs has indicated it will implement a new policy to competitively bid any purchase in excess of $2,500.

The audit also cited Crystal Springs for questionable employee compensation totaling $38,792. Within the span of a year, a long-time employee was promoted twice to two previously non-existent positions, Special Projects Director and Operations Director, raising the employee’s salary from $26,208 to $65,000. It did not appear these positions carried any functionality, the job descriptions were tailored to fit the individual’s background, the normal hiring process was not followed, and the positions were eliminated when the employee retired.

Other findings included:

  • Use of $90,922 in state funding intended for providing services to instead purchase two agency vans, air-conditioning equipment, and flooring supplies.
  • Granting unallowable fringe benefits to certain employees totaling $23,839, including $11,739 in personal use of agency vehicles and $12,100 in loans to employees.
  • Failure to identify and use rental income totaling $13,200 that it received from its former Executive Director to offset the state’s cost of operating the program.

The Office of the State Auditor Suzanne Bump conducts financial, performance, and technical 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.

The Institute for Developmental Disabilities (Crystal Springs) audit is available here.


Media Contact

Office of State Auditor Suzanne M. Bump 

The Office of State Auditor Suzanne M. Bump (OSA) conducts audits, investigations, and studies to promote accountability and transparency, improve performance, and make government work better.


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