Audit Finds Millions In Questionable Spending At Low-Income Nonprofit
Publisher's note: The author of this post is Barry Smith, who is an associte editor for the Carolina Journal, John Hood Publisher.
Four-County Community Services operates Head Start and other programs
RALEIGH - A new audit report calls into question nearly $4.9 million in spending by Four-County Community Services, a nonprofit organization that runs Head Start programs and provides other assistance to low-income families in seven southeastern North Carolina counties.
The report, from state Auditor Beth Wood's office, found that the former executive director of Four-County received more than $215,000 in questionable payments, while employees received nearly $641,000 in improper bonuses.
It also found that Four-County improperly spent $670,000 intended for Head Start and More at Four programs for expenses unrelated to the programs.
Four-County Community Services Inc. is a nonprofit organization operating in Scotland, Hoke, Robeson, Bladen, Columbus, Pender, and Brunswick counties. It operates 16 Head Start facilities and provides other assistance from the Community Services Block Grant, weatherization assistance, heating appliance repair and replacement, housing programs through the federal government's Section 8 program, and U.S. Department of Agriculture commodities projects.
"Since 2009, the budget for Four-County has ranged from $15 million to $21 million a year," Wood said in a video released by her office regarding the audit.
Wood said that the audit was started at the request of the N.C. Department of Health and Human Services after it discovered several instances of mismanagement or misuse of state or federal funds.
After the office began its investigation, it received 60 more allegations of wrongdoing from people in the community and others familiar with the agency's work, Wood said.
"The agency improperly paid for gym memberships and tuition reimbursements for its employees using federal money," Wood said. "It also paid a contractor for weatherization work that was not performed and did not inspect the work as required."
"Our work found nepotism, conflicts of interest, and violations and bidding procedures among other problems," Wood continued.
The office made a number of recommendations.
"Our report recommends that the state and federal agencies that fund Four-County reassess whether Four-County should continue providing services on their behalf," Wood said.
It also recommended that Four-County work with its funding agencies to determine whether any of the $4.9 million in questionable expenses should be refunded.
If the agency continues to receive taxpayer money, Wood said that it should revise its policies to make sure it spends those public funds in the most prudent way.
Four-County, in its response, said it generally agreed with the findings and recommendations. However, there were some notable exceptions.
"The agency disagrees with this finding to the extent that it suggests fraud, misrepresentation of obtaining property by false pretenses on the part of the agency," wrote Jason King, the board chairman, and Ericka Whitaker, the agency's new executive director. The agency also said that incentive pay was allowable for effective and efficient operation of agency programs.
Wood's office questioned whether fraud should be ruled out when the agency could not account for the accumulation of excess funds for More at Four or pre-kindergarten programs.
"Until the precise cause is known, nothing can be ruled out," the report says.
The auditor's office also said that agency officials were unable to provide any established plan or pre-existing agreement regarding employee incentives or bonuses.
Health and Human Services Secretary Aldona Wos responded, saying that she had directed the division overseeing pre-kindergarten programs to investigate whether funds were unearned. She also said that the pre-kindergarten contractor would be directed to refund any improper expenses.
Environment and Natural Resources Secretary John Skvarla also said that he had directed a study related to questionable spending of weatherization funds.