Remember in September when we questioned Dismas Charities’ promotion of Bellarmine University’s basketball program?
Am I wrong, or doesn’t this smell like the big dogs at Dismas just wanna use their profits to watch some sports from a fancy box?
Sure, Dismas does some great work. All of the Dismas employees I’ve ever met have been terrific examples of upstanding citizenry. But none of them will ever get to enjoy a luxury box at Yum! Diabetes Center. None of them – the ones busting their rear ends – will get to put their butts in seats in those boxes… like the CEO and the board. So I’m just trying to figure out why on earth anyone can justify this.
An organization would have to have a history of spending large amounts of money on items like this, otherwise the entire board would be freaking out about wasteful spending.
Well… about that. State Auditor of Public Accounts Crit Luallen is today releasing a 77-page audit of the charity. The report examines policies, procedures, controls and the financial activity of Dismas Charities, Inc.
It makes ten findings and offers multiple recommendations for strengthening Dismas’ controls and management oversight.
Let’s dig in to the findings:
- Dismas Charities Board of Directors’ lack of review and approval weakens control and oversight necessary for accountability. During examination, no evidence was found that any review or approval by the board took place for policy manual adoptions or changes, contract agreements for goods and services, executive staff travel or actual budget expenditures.
- Several of Dismas Charities’ policies need strengthening to achieve greater accountability. Dismas has a comprehensive set of policies in place but in order to provide accountability required of a nonprofit that receives a majority of its funds from public sources, it’s gotta strengthen nearly everything.
- Dismas Charities spent funds on sporting and entertainment events with questionable benefit to its mission. Leased a suite at KFC Yum! Center and Papa John’s Cardinal Stadium, rented a hospitality “caboose” for University of Louisville football games, financially sponsored Bellarmine University’s basketball team, hosted various social events including an annual Derby Gala, an annual Holiday Open House and golf outings. The report suggests these were all extravagant social events with little value.
- Dismas Charities’ Executive Staff received significant compensation through salaries, bonuses, and other provided benefits. The top two executives ranked above the 90th percentile for transition care industry salaries. The personnel committee approved the President/CEO’s incentive bonus but Dismas didn’t have policies requiring the board to review and approve it on an annual basis.
- Dismas Charities ethical policies for Board members, officers, and employees do not cover all areas of standards. Policies don’t address solicitation of vendors or employee use of Dismas property and equipment. Policies for investigating unethical activity and criteria for discipline are not detailed.
- Dismas Charities’ whistleblower policy does not provide an avenue for employee concerns to be brought directly to the Board. And there’s no internal audit function that investigates and examines issues assigned by the Board of Directors and that reports directly to the Board.
- Dismas Charities’ Board members received no formal orientation regarding their legal and fiduciary responsibilities. By-Laws and meeting meetings do not reference a required orientation process when new members are sworn in. Executive STaff says there’s an annual orientation program but no documentation of such a program or manual was ever produced.
- The Department of Corrections’ Master Agreement with Dismas Charities does not contain standard contract language authorizing the APA access to the contractor’s records. That’s not exactly good news when the majority of funds paid by the DOC to Dismas were paid through the master agreement. There was no language providing access to accounting records, documents or other evidence.
- Certain contract requirements were not reviewed for compliance. The two minimum halfway house inspections per year didn’t appear to be broad enough to ensure that all of the requirements specified in the contract were reviewed for compliance.
- A cost analysis was not performed by the Department of Corrections to determine the cost effectiveness of Dismas Charities. Without a cost analysis of what the Commonwealth would incur to operate halfway house facilities in lieu of using Dismas, the DOC can’t determine fair per diem rates that should be paid for housing offenders.
None of this is good news for Dismas and it seems the Commonwealth of Kentucky has a bit to be worried about, as well.
Something tells me you’re going to want to read the rest of this to get the juicy, juicy and review the audit by CLICKING HERE…