Federal auditors rarely show emotion in their official reports, but that didn’t prevent a government watchdog from leaving no doubt about what happened to $1.25 million awarded to Childhelp, a troubled Phoenix-based foundation.
“We found that ChildHelp did not comply with essential grant conditions in every area we tested,” said the Department of Justice Inspector General in a report made public Thursday.
That meant more than 83 percent of the funds Childhelp received through six separate federal grants in 2010 were spent without complying with Justice Department guidelines.
The report covered how the agency spent the funds from the time they were awarded through July 31, 2013, according to the IG. The six grants were awarded jointly by the the Office of Justice Programs and by the Office of Juvenile Justice and Delinquency Prevention. The latter “provides innovative leadership to federal, state, local, and tribal justice systems by disseminating state-of-the-art knowledge and practices across America, and by providing grants to assist with the implementation of crime-fighting strategies,” according to the IG report.
It’s not clear why Justice Department officials would view a foundation devoted to helping children at risk of abuse as a source of “crime-fighting strategies,” but what is clear from the report is that Childhelp missed the mark at every regulatory compliance turn.
“We found that Childhelp did not comply with essential grant conditions in the areas of internal controls, drawdowns, grant expenditures, budget management and control, financial and progress reports, program performance, compliance with grant requirements, and post grant-end date activity,” the IG report said.
“Specifically, the system of internal controls is not sufficient to effectively document and safeguard the use of federal funds,” the report said. “Additionally, Childhelp did not maintain required personnel records for all full and part-time employees.”
That’s not all.
“We also identified unsupported and unallowable personnel and fringe expenditures, unallowable and unsupported direct cost expenditures, and unallowable budget transfers.
“We found that federal financial reports and semi-annual progress reports had been submitted inaccurately. We also found that Childhelp could not provide any documentation related to program performance” for three of the six grants it received.
“Finally, we found not all goals and objectives of the awards had been achieved, and a complete and accurate financial reconciliation was not performed during closeout.”
Childhelp is a tax-exempt educational foundation established in 1959. The foundation received more than $34 million in revenues in 2012, according to its 2013 IRS Form 990 tax return.
Childhelp had 950 employees and an estimated 1,000 volunteers, according to the 990. And it had lots of problems, beginning with the fact that it lost $91,050 despite the $34 million in revenues. The year before, losses exceeded $2.5 million.
The foundation was hit particularly hard by the Great Recession of 2008 and has suffered greatly from decreased donations and higher expenses ever since.
John Taylor, Childhelp’s chief financial officer, told the Washington Examiner that he is “looking forward to getting past the auditors in Denver and talking to officials in Washington where I think there will be a different response.”
Taylor, who has been CFO for barely a year, said the foundation’s difficulties in recent years included a high turnover rate, including having several predecessors in his position and in the comptroller’s office.
The workforce is presently 635, he said.
Go here for the complete report.
Mark Tapscott is executive editor of the Washington Examiner.
