For immediate release: Wednesday, January 9, 2019
Contact: Jolene Nieves Byzon, 215-300-1071
Philadelphia, PA – The Office of the City Controller released a review of Animal Care Control Team Philly (ACCT)’s management of a $1 million Petco Foundation grant, specifically the restricted fund portion of the grant ($750,000). The report is a result of an investigation launched after the Controller’s Office received a tip alleging that ACCT used restricted funds, which were to be used for the building of an adoption center, to pay for operating expenses. The review found that not only did ACCT misuse the grant funds, but also identified several other problematic practices in ACCT’s financial management.
“The waste and mismanagement of funds in this case is troubling,” said City Controller Rebecca Rhynhart. “As City Controller, my goal is to make government run effectively and efficiently, and it’s clear that ACCT is not meeting the standards of its contract with MDO or its requirements for the Petco Foundation grant. My investigators were able to identify areas in which ACCT can improve its operations to better serve Philadelphians and the animals that depend on ACCT for care. It’s my hope that this review serves as a wakeup call and that moving forward, ACCT will be better stewards of tax payer and external funds.”
After reviewing the tip, the Controller’s Office’s Investigations unit interviewed ACCT employees, staff who support the work of ACCT from the Managing Director’s Office (MDO), and members of the Board of Directors, as well as reviewed bank records, tested a broad range of samples, and more, to conduct the review. Through this, it was determined that ACCT violated the terms of the Petco grant by depositing the full $1 million of grant funds into its operating account. This resulted in ACCT comingling grant dollars with its general operating monies and then spending of the funds on operating expenses, including payroll.
In addition to violating the terms of the Petco grant and misusing those funds, the Controller’s Office’s review found that ACCT lacks formal policies governing its operations, often engaged in wasteful spending and had weak internal controls over financial management, including:
- The Controller’s Office noted several serious issues with ACCT’s cash donations and transactions: there is no policy governing deposits for cash; the policy and procedures for tracking cash donations is not followed; and ACCT staff indicated that money from cash deposits would be removed from the safe and used to pay expenses in a few instances. Because of these issues, the true amount of donations received or used cannot be known.
- ACCT does not have a petty cash account or procedures, however, staff still wrote checks to “petty cash” out of its operating account. In total, the Controller’s Office identified more than $9,300 in petty cash checks from March 2014 to August 2017.
- ACCT engages in wasteful spending practices and lacks appropriate internal controls and policies and procedures. Despite regular financial shortfalls and limited resources: ACCT staff stated that it was “commonplace” for employees to request and receive pay advances; spent nearly $20,000 to pay for moving expenses for new hires, including $4,000 for a new employee who never relocated and never worked for ACCT; ACCT inappropriately reimburses employee expenses, including meals and mileage and expenses submitted without proper supporting documentation, ACCT paid employee tickets (parking, traffic, etc.) incurred while working, allowing those employees to repay them over time on installments. In two instances, employees never repaid the ticket cost.
- The Managing Director’s Office (MDO), which provides oversight of ACCT, fails in its responsibilities to ACCT. The MDO stated it was aware that ACCT misused the Petco Foundation grant. The MDO also stated it did not properly review ACCT’s financial documents.
As part of the investigation, the Controller’s Office offered several recommendations for improving ACCT’s management and oversight, including an overhaul to ACCT’s grant management processes and procedures and the establishment of comprehensive policies regarding hiring, petty cash, cash donations and more. The Controller’s Office also recommends a reassessment of ACCT’s organizational structure, including adding a Chief Financial Officer, Development Director and grant management position in addition to redefining the roles and responsibilities of current staff. Additionally, the Controller’s Office recommends the roles and responsibilities of the Board of Directors and the MDO in relation to ACCT be reassessed.
Read the full report here. Members of the public can report fraud, waste or abuse in City government to the Controller’s Office here.