Why the Controller’s Office Conducted the Engagement
The Office of the Controller (Controller’s Office) conducted this Agreed- Upon-Procedures engagement at the request of the executive director of the Mayor’s Fund for Philadelphia (Mayor’s Fund) to assist in evaluating the propriety of Marathon Reserves expenses incurred during 2014 and 2015. According to the director, these expenses were funded by fees of the Philadelphia Marathon, and the decision to segregate them from other expenses of the Mayor’s Fund occurred during 2014 under the previous mayoral administration. The executive director had concerns that some of the Marathon Reserves funds may not have been spent appropriately and asked that we (1) gain an understanding of the policies and control activities adopted by the Mayor’s Fund over grant awards and ascertain whether these same policies and control activities were followed for the Marathon Reserves expenses; and (2) observe if the Marathon Reserves expenses were adequately supported, authorized, and in accordance with the Mayor’s Fund goals and objectives.
What the Controller’s Office Found
Based solely on the agreed-upon-procedures performed for 66 percent of the expenses ($393,000 out of $593,000 for 2014 and 2015), the Controller’s Office found that during 2015 the chairperson of the Mayor’s Fund under the prior mayoral administration substantially circumvented all the policies and control activities that had been designed and adopted for the fund. In short, the former board chair operated autonomously and was allowed almost exclusive discretion for awarding grants and incurring expenses charged to the account. Some of the more significant findings
involving Marathon Reserves spending included:
- Only five of the 21 selected expense amounts reviewed appeared to be grant related, as required. Of these five apparent grants, which totaled $147,000, only three were supported by the necessary grant application.
- All but one expense, a non-grant payment of $10,000 to the Office of Sustainability, were approved exclusively by the chairperson, instead of by the Board of Directors.
- Expenses frequently had very little supporting documentation or explanation as to their nature and purpose. One example included: charges totaling nearly $52,000 for an unnamed individual or group of individuals’ stay at the Philadelphia Marriott Courtyard from September 15, 2015 to October 3, 2015.
- It frequently appeared that the former chairperson used the Marathon Reserves to fund celebration events instead of making grant awards. For example, we observed $45,000 paid to various vendors for the Mayor’s annual tree lighting ceremony, and over $19,000 to a dining service vendor in 2015.
What the Controller’s Office Recommends
The Controller’s Office has developed recommendations to address the above findings. These recommendations can be found in the body of the report.Download Full Audit