Audit Calls for Enhanced Oversight of State Human Service Contract Spending

Audit examined July 1, 2011 to December 31, 2017
State Auditor Suzanne M. Bump (Courtesy photo)

BOSTON, MA — State Auditor Suzanne M. Bump is calling on the Commonwealth’s Operational Services Division (OSD) to improve oversight of financial reports submitted by state human services vendors. The call comes after an audit conducted by her office determined reduced oversight may have resulted in significant lost revenue for the state. The audit examined the period of July 1, 2011 through December 31, 2017.

The audit raises questions about OSD’s practices related to reviews of financial documents (known as Uniform Financial Statements and Independent Auditor’s Reports or UFRs) submitted by human and social service organizations that have contracts with the state. UFRs detail spending and other financial information related to a state contract or contractor. OSD indicated that during the audit period it eliminated “Desk Reviews,” which are a more comprehensive review of the information contained in UFRs, and instead increasingly relies on “Prescreenings,” which are a preliminary review of a three-page checklist to ensure all required documents have been submitted. The audit notes that the elimination of desk reviews, along with a reduction in the number of completed prescreenings, has potentially resulted in significant lost revenue for the state.

“Accountability must be a proactive priority for every government entity, but particularly for the Operational Services Division, which plays a critical oversight role for hundreds of millions of dollars in state contracts,” Bump said of the audit. “It is not good enough for OSD to simply confirm a contractor has submitted all the required documents. They must take the next step to confirm that public dollars are accounted for and being spent properly.”

In addition, the audit raises concerns about OSD’s practices related to unallowable spending charged to state contracts, which Bump initially called into question in a 2012 audit.  Bump found human-service contractors billed nearly $87 million in unallowable expenses to their state contracts during the audit period—funds that may have been eligible for recoupment by the state. However, OSD could not provide any evidence it examined this spending to determine if it could, in fact, be recouped. 

The Operational Services Division is an agency within the Executive Office for Administration and Finance. In addition to reviewing UFRs, OSD manages the state fleet of vehicles, provides certification of companies looking to do business with the Commonwealth, develops tuition pricing for special education programs, and oversees the procurement of goods and services. It is principally financed by a fee imposed on entities awarded statewide contracts and by billing state departments for services. During the audit period, it had approximately 90 employees.

The audit of the Operational Services Division is available here.


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