NEW: Audit Find Questionable Practices at Sport Institute
Thursday, February 16, 2012
The State of Rhode Island awarded a $575,000 grant to the Institute for International Sport (Institute) in 2007 for the purpose of constructing a building for its use. Five-years later, a building has been partially constructed but remains incomplete. The Institute concedes that remaining grant amounts have been expended purportedly for general operations, which is noncompliant with the directives of the legislative grant.
The grant review was requested by Speaker of the House of Representatives Gordon D. Fox (D-Dist. 4, Providence), Chairman of the General Assembly’s Joint Committee on Legislative Services and the report was prepared by Acting Auditor General Dennis E. Hoyle.
The Institute estimates that it spent approximately $200,000 to construct the building. Auditors were provided with cancelled checks totaling $163,400, but little other documentation such as vendor invoices and contracts related to the building construction. As a result, the auditors could not fully substantiate that these disbursements were related to the construction of the building.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe Institute was created in 1986 and is incorporated as a private nonprofit 501(c)(3) corporation for the purpose of promoting world peace through activities involving sports and the arts. The Institute has consistently received grants from the State of Rhode Island and such grants totaled more than $5 million for the period 1999 through fiscal 2012 to date.
The Institute contends that the original grant agreement, which required use of the grant proceeds be used exclusively for the construction of the building, was amended to allow use of the grant funds for general operating purposes as well. The auditors could not substantiate that the legislative leaders at that time approved any amendment to the original contract.
As of January 2012, the Institute owed the University of Rhode Island approximately $380,000 for unreimbursed payroll costs and other services provided to the Institute. Most of this was incurred during fiscal years 2007 to 2009 and represents (1) salary and benefits paid to the Executive Director through the State’s payroll system and (2) dining, lodging and other services provided by the University to the Institute during the World Scholar-Athlete games.
Use of the State’s payroll system by the Institute was formalized in an agreement; however, the auditors believe the practice is questionable and should not be continued or repeated. It affords access to State benefit programs that would otherwise be unavailable to Institute employees. Further, it puts the University in an unintended business relationship with a private organization by advancing funds thereby creating a vested interest in their viability in order to collect amounts owed.
The University has taken measures in an attempt to collect the amounts owed and has formalized repayment terms; however, the amounts remain payable to the University - some of which have been outstanding for more than four years.
Normal financial accountability measures appropriate for an entity of the Institute’s size were not evident during the course of the Auditor General’s review. The auditors noted various situations which they believe are indicative of a general lack of financial accountability within the organization. The review report concludes that the Institute needs to significantly improve its financial accountability, particularly since it is largely dependent upon grants and other support from governmental and private organizations.
