Holiday parties that cost $2,958 for a handful of employees.
Phone and Internet costs of up to $8,926 a year for a three-person office.
And $1,200 a year to get four office plants professionally watered.
These are just some of the questionable expenses reported Wednesday by an accountant looking through the finances of the Cambridge Redevelopment Authority in the roughly two and a half years leading up to the activation of a new board of directors in May 2012 and subsequent resignation of its staff, including longtime executive director, Joseph F. Tulimieri.
The authority is mainly concerned with the development of Kendall Square, and Tulimieri had been on the job since November 1981 – running the CRA alone for a 32-month period late in his run when there were no meetings or quorum of the board, the result of members resigning, retiring, moving away or going without notice they should be at meetings.
The new five-member board accepted the seven bound audit reports from Chad Clark, of the Woburn accounting firm Roselli, Clark & Associates, with an introduction by Chris Bator, a federal prosecutor who serves as co-chairman of the board’s finance committee.
“It became clear that what we anticipated we needed them to do expanded as the issues concerning Mr. Tulimieri became more evident,” Bator said, explaining why the board voted to add $6,250 to the firm’s $36,700 contract with a potential for $5,000 more. “The auditors have uncovered items that may be relevant to [a legal] inquiry and we have referred those matters to special counsel for their investigation.”
Between the auditors and two law firms’ reports, the quasi-governmental authority has spent about $169,920 looking into the 32-month period. When it was discovered Tulimieri had been setting employee pay, including his own 2010 retirement package – he gave himself more than $431,000 for vacation and sick days he failed to use over the years, although city policy caps sick pay and doesn’t allow for vacation days to add up year to year – and a subsequent part-timer’s wage of $113 per hour, he resigned. His two co-workers resigned abruptly as well, which left the authority without office staff or a chief fiscal officer.
Tulimieri has been asked to pay about $80,000 back to the authority, and “outside organizations” have been looking deeper into his pay since last spring, the Cambridge Chronicle has reported.
“A number of [audit findings] are being looked at by special counsel and also by CRA’s regular counsel. What we would point out, because there has been some confusion, is that around October 2012 basically the accountant left with little or no warning,” Clark said.
“None,” confirmed board chairwoman Kathy Born. “Not even an hour.”
The city’s Community Development Department stepped in to keep office finances flowing on an emergency basis, but that didn’t result in an actual operating budget. The authority has been without one for some three years, and has lacked required annual audits for the same period. Clark suggested the records kept in the CRA’s copy of the off-the-shelf small-business accounting software QuickBooks dating back to 2001 were less than helpful.
As a final component of the chaos leading to the expanded contract for Roselli, Clark & Associates, the firm was left on its own by outside accountants that had done a 2010 audit of the CRA they “were unable or unwilling to complete” and pulled out.
Clark suggested to the board that it was time to hire a senior finance officer, starting on a part-time basis. The authority has reformed many of the practices Clark cites as improper or even illegal in his audits; notes about what the board has done in the past year to bring the CRA in line with generally accepted accounting practices appear in italics throughout his list.
“Relative even to 2012, we can only comment on what had happened at the time of our field work, which we concluded in June – so not that long ago, but I know there’s been a lot of things happening real fast,” Clark said.
In terms of hiring a senior finance officer, Clark advised the board that “you may want to find someone who knows QuickBooks and will say, ‘You know what? Start from scratch. Don’t even try to make this file work with what we want. Let’s set a new chart of accounts, it’s a new day dawning and keep the old set of QuickBooks in archives for historical reference.’”
Despite the number of sloppy or questionable accounting practices found, Clark stressed that his firm had not engaged in a full forensic audit of CRA finances back to 2010. A forensic or fraud audit looks at every transaction, while the financial statement audit done in this case tests just a sampling of entries.
Numerous and wide-ranging
Still, the examples of below-standard accounting practices Clark found are numerous and wide-ranging, with many resulting from failure to follow the state’s rules on procurement of good and services found in Massachusetts General Law’s Chapter 30B.
“When we inquired why this occurred, the [former] chief fiscal officer communicated to us that it was a general consensus at the authority that redevelopment authorities are exempt” from the rule, Clark wrote in one of the seven reports.
Some of the questionable practices cited by Roselli, Clark & Associates for the authority in the past few years include:
Failure to get bids or file requests for proposals for services such information technology help that cost up to $19,136 in 2011 or landscaping that cost as much as $31,562 in 2010. Consultants and lobbyists cost the CRA as much as $169,318 in 2010.
Purchase of travel for Tulimieri’s wife when he went to conferences, with no indication the cost had been reimbursed, “the extent of which is still being looked into,” Clark said, as well as the including of her cellphone on the authority’s plan – apparently to get a lower rate for all. While the wife’s phone bills were reimbursed quarterly by the Tulimieris, the final six months of reimbursements never came, with the total unpaid balance hitting $738 as of Dec. 31.
Use of the authority’s credit card during travel, with “no original receipts supporting any of the charges,” making it impossible to see what was necessary or ineligible, such as the purchase of alcohol. For one engineering firm, invoices piled up for eight years and caused a lump payment of $46,000 without confirmation of what was done for the all but the final year, while elsewhere a firm was paid Feb. 18, 2011, for work done the next March 3 and dated even later, March 22.
No receipts provided to show what petty cash was used for; confusingly, time sheets were turned in every two weeks, although paychecks came weekly; and in one year there were 13 skipped numbers in the authority’s checkbook. Six checks were recorded as voided, but seven of the skipped check numbers remain a mystery – although cash reconciled at the end of the year.
Making of charitable gifts from the authority, which is not allowed by state law.
Of all the eyebrow-raising financial practices toward the end of the Tulimieri years, it was the watering of the office plants – and the cancellation of that $1,200 annual service – that drew the most vocal reaction Wednesday.
“Those plants aren’t doing very well,” said the authority’s development officer, Tom Evans, now its only employee.
“I’d like the record to reflect that the plants have all died,” Bator said, to laughter from the rest of the board.
“But we’re saving money,” board member Margaret Drury said.