Press Release  Audit Reveals Unexplained $95,000 Variance at Office of Consumer Affairs and Business Regulation

Boston — Today, an audit of the Office of Consumer Affairs and Business Regulation (OCABR), conducted by State Auditor Suzanne M. Bump, identified significant failures with the organization’s reconciliation of financial records and the collection of fees that may have cost the Commonwealth up to $196,426. Bump’s audit outlined issues with revenue reporting that resulted in a $95,026 variance which has since been referred by OCABR to the Attorney General’s Office for further investigation. The audit examined the period of July 1, 2017 through June 30, 2019.

“One of the core duties of any state agency is to be a good steward of public dollars. This audit makes clear the Office of Consumer Affairs and Business Regulation has fallen short of this benchmark on multiple fronts,” Bump said of the audit. “The agency must get to the bottom of the revenue variance as quickly as possible but, more importantly, put in place controls so these financial mistakes never happen again.”

Bump’s audit showed OCABR did not reconcile revenue information in its financial records to the information in its home improvement contractor (HIC) registration database and to the information in the state’s accounting system, the Massachusetts Management Accounting and Reporting System (MMARS). When reconciling the information between these systems, auditors found the revenue OCABR recorded in MMARS was $95,026 lower than what it recorded in its internal HIC system, which could represent a loss of funds. OCABR was made aware of the discrepancy and performed an internal investigation, but was unable to determine the cause of the variance.

The audit also found OCABR did not collect up to $101,400 in HIC registration and Residential Contractor’s Guaranty Fund (RCGF) fees from contractors. Auditors found 676 instances in which the agency allowed contractors to pay a $100 fee to renew their licenses even though the fee was paid more than 30 days past the expiration date of their current registration. These late contractors should have instead paid a fee of $250, which includes a reapplication fee of $150 and a $100 fee into the Residential Contractor’s Guaranty Fund.

The audit recommends OCABR develop policies that require staff to perform regular reconciliations of its financial records and establish segregation of duties over the receipt, recording, deposit, and reporting of revenue. It also recommends the agency create procedures for the approval process for changes of application fee types. Finally, the audit encourages OCABR to take steps to ensure its website is easy to navigate and contains complete, accurate information.

Additionally, the audit found OCABR has been adequately administering the HIC arbitration process.

OCABR operates within the Executive Office of Housing and Economic Development. The office investigates consumer problems, conducts surveys of consumer needs, establishes programs to help consumers understand their rights and responsibilities, implements consumer protection policies, and monitors the marketplace to promote fair and honest competition. It oversees five regulatory agencies, including the Division of Banks, Division of Insurance, Department of Telecommunications and Cable, Division of Professional Licensure, and Division of Standards. In fiscal year 2019, it received $1,608,890 in state appropriations.

The full audit report is available here.

###