We have conducted a special review of the Minnesota Waterfowl Association's financial management of state grants administered through the Department of Natural Resources. The Minnesota Waterfowl Association is a nonprofit organization established in 1967. The association's mission is to preserve, restore, develop, enhance, and protect Minnesota's wetlands and associated uplands through public education, legislative initiatives, and projects to benefit waterfowl, wildlife and the environment. For fiscal years 2000 - 2003, the state awarded the association grant funds totaling $3.4 million, including funding for a project entitled, "Restoring Minnesota's Fish and Wildlife Habitat Corridors," which is referred to as the Corridors project.
Our objective in conducting this special review was to answer the following question:
The Minnesota Waterfowl Association did not have the financial or organizational resources to properly administer the Corridors project grant. To improve its cash flow, the association prepared but did not send checks until it requested and received reimbursement from the Department of Natural Resources. The Minnesota Waterfowl Association used grant funds for some projects to pay expenditures of other projects. The executive director circumvented a significant accounting control by forging the treasurer's signature on some association checks to expedite payments to employees and vendors. Although we do not think there was criminal or fraudulent intent, this action was totally inappropriate and demonstrates that the organization did not have an effective control structure. In addition, the association did not pay vendors in a timely manner. At times, personnel changes made it difficult for the association to continue efficient operations. The association did not anticipate the need for back up or temporary staff to ensure timely vendor payments and timely reimbursement requests.
The Minnesota Waterfowl Association did not expend state grant funds in accordance with certain legal requirements and grant contract provisions. The association claimed reimbursement for ineligible costs for two projects. It allocated payroll, postage, and telephone charges rather than determining actual costs attributable to the grant projects. The association sought reimbursement for $3,000 of work performed by vendors before the effective date of the Corridors project. In addition, the association inappropriately recorded $7,243 of work outside the Corridors geographical area in the project account.