Audit of local nonprofit shows shaky finances

COLUMBIA — An audit of a local nonprofit that received $1.16 million in government funding in the 2007-08 fiscal year* reveals an agency that spent money in order to justify future funding requests.

The audit, released in April 2009, is the latest problem for the Boone County Community Partnership, an agency plagued by financial mismanagement and questionable decision-making throughout its almost 15-year existence.

Columbia accounting firm Casey and Company conducted the audit and concluded that the state-sponsored agency had “significant deficiencies in internal control” of its finances for fiscal year 2008. 

Findings included heavy spending the last 15 days of each quarter, a breakdown in orderly conduct and misallocation of funds.

The state started the Community Partnership in 1995 as a pilot project for the Caring Communities program to link public and private funding to improve execution of local social services. In fiscal 2008, the partnership received $44,335 in direct public support along with government funding.

A letter attached to the audit raised red flags for Steve Hollis, manager of the city of Columbia’s office of community service.

“There are things in there — like the breakdown in orderly conduct — that in all the years I’ve reviewed audits, I’ve never seen before,” Hollis said.

The partnership spent 41.4 percent of  its budget in three quarter-end, 15-day periods. The spending pattern indicated an organization trying "to justify future funding requests for future quarters and years," the audit read.

The audit found that the agency misspent money budgeted for supplies on expenses such as rent and utility deposits, a new refrigerator and employee recognition.

“This appears to have happened because the budget for supplies had available balances,” the audit stated.

In a section on breakdown in orderly conduct, auditors found that dissension among board members and the organization’s management resulted in significant turmoil and resignations that disrupted normal functioning.

In making a recommendation on the finding, the audit stated that the board of directors needed to recognize the seriousness of the situations during the period prior to and following the resignation of the executive director and obtain training on proper conduct.

The agency hired a number of new staff members in early 2009 including its executive director, Lolita Lucas.

Lucas said the organization now follows all procedures and monitors expenditures carefully, but she would not provide any specific changes.

“We are in the process of changing the way business is being done,” Lucas said.

The partnership’s fiscal mismanagement has cost the agency in the past. In 2000 and 2001, the group forfeited $339,000 meant for mental health services because it couldn’t figure out how to spend the money, according to the Columbia Daily Tribune. An audit conducted in 2003 found overdrafts totaling $55,439 on the organization’s checking accounts and $24,600 in bad debt.

In spite of the problems, the state's Department of Social Services continues to fund the agency. Scott Rowson of Social Services said on Monday that his department started a review of the agency in September and recently sent auditors to the Partnership. He said that items requested from the Partnership include:

• Documents reviewed by Casey and Co. during its audit;
• Bank statements, credit card statements and a check register;
• Employee job descriptions and resumes;
• Board minutes;
• Operating agreements with local organizations; and
  
• Budgets and scope of work with sub-contractors.
  

"I think we just have to take a look at the findings in total and make an appropriate decision," Rowson said. "Certainly technical assistance and coaching are an option and everything up to termination of contracts and relations are an option as well.

Lucas supplied a copy of the audit but declined to send the management letter that contained these findings, citing Missouri Sunshine Law. A copy of the letter was obtained through the city's Office of Community Services.

Other findings include:

• Lack of receipts to document assistance given to individuals;

• Lack of prior approval on credit and debit card use by employees;

• Hotel rooms for travel always being single occupancy; and
  

• Lack of proper documentation for purchase request forms, mileage logs and reimbursement forms.

Some financial problems involved the partnership’s relationship with a nonprofit it helped start earlier this year.

Lorenzo Lawson, executive director of Youth Empowerment Zone in Columbia, described the Community Partnership as his organization’s incubator. In March, however, he raised concerns over the partnership’s handling of his agency’s financial reports. Lawson said the reports were often not delivered on time, and he questioned their accuracy. He said he held meetings with Lucas and the Community Partnership’s fiscal manager, Jerod Ellis, but things didn’t improve.

But it was the partnership that cut ties with Youth Empowerment. Lawson received a letter from Lucas in September, informing him the partnership would no longer serve as his organization's fiscal agent.

Lawson worried how supporters of his organization would view the shaky finances, and he said he took the letter as a relief.

“I didn’t want to abandon the partnership when they’ve been there for us,” Lawson said.

Fellow nonprofit First Chance for Children briefly cut ties with the partnership in 2007 after it decided to move the Lend and Learn Toy Library near an adult video store on Wilkes Boulevard. The two went through a mediation process with the Missouri Department of Social Services and reached an agreement to build a second library in the J.W. “Blind” Boone Community Center.

Amalie Duvall, assistant director of First Chance for Children, said the organization had problems with funding from the agency in the past but that things have gotten better since Lucas came on.

“She’s had some significant challenges to face,” Duvall said, “I really do see her reaching out to the community and doing everything she can."