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State audit reveals faulty accounting by Peabody-based NSCAP

Posted by Justin Rice  August 11, 2011 10:36 AM

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By Justin A. Rice, Town Correspondent

A state audit of North Shore Community Action Programs, Inc. revealed it improperly used thousands of dollars in state funds to provide management services for a Beverly nonprofit.

The human services provider serving 26 cities and towns on the North Shore improperly used thousands of dollars in state funds to provide management services to River House — an emergency shelter for homeless men in Beverly. State Auditor Suzanne M. Bump’s office said NSCAP violated state law by making up for a difference in funds with money from other state contracts.

The audit also found that the publicly funded agency could not account for $627,000 from July 2007 to the winter of 2009.

NSCAP Executive Director Beth Hogan said some of the recommendations in the audit are already being implemented.

“This kind of an audit is certainly an opportunity for us to improve our operations and governance,” she said. “We respect the authority and the power of the state auditor’s office. We see this audit as a management tool.

“This audit covers things three years old and sometimes older, I think whatever practices the state wanted us to look at we have looked at and changed.”

Auditors also found that NSCAP didn’t have written procedures for calculating certain costs and didn’t receive state approval for some of their accounting methods. Auditors found $86,765 in improperly documented expenses and $5,200 in benefits for an employee that was not reported to state and federal tax agencies as taxable earnings.

“This partnership provides important services to low income and homeless residents on the North Shore,” Bump said in a statement. "In the case of River House, NSCAP says it was trying to meet a legitimate community need, but they did so without authorization and failed to properly account for state funds. Additionally the audit found other finance and governance issues which must be addressed."

NSCAP Board President Stephen Mott said the audits findings that NSCAP awarded tens of thousands of dollars in contracts, many of which were not put out to bid properly, is misleading.

“Most of those are landlords and it’s a matter of making people wait a couple months when they need housing right away or do you go ahead and work with the landlords you’re working with,” he said.

The Beverly resident also said the magnitude of the response to the audit is being blow out of proportion.

“I don’t think it’s a matter of ethics, it’s a matter of very complicated procedures and so many different funds we have to deal with and different requirements,” said the former pastor and Gordon College professor. “We appreciate [the audit] because we are constantly trying to improve our fiscal records.

“It’s not a matter at any point of fraud. I’ve been working with NSCAP off and on since the early 70s and I’ve always been impressed by the dedication of their staff.”

Hogan said they are committed to helping River House, which in April cut overnight and dinner service for six months. Those cuts were not related to the state audit.

“We’ve really tried to make River House work,” Hogan said. “We will continue to support that effort. We are in a time when financial supports are dwindling.  It’s important to impress upon people that we’ve tried to stretch limited dollars. There’s no misuse of funds here. We are going to use this, and have in the past, as a way to improve our accounting procedures.”

Justin A. Rice can be reached at jrice.globe@gmail.com



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