Leadership at the Center for the Performing Arts says the nonprofit organization has taken the necessary steps to rein in its expenses.
The Center today released two long-awaited documents: an internal review and regular audit. The former was conducted after the Center’s former president and CEO Steven Libman abruptly resigned in July, and the review was critical of some of the spending practices that existed under his watch.
Interim President and CEO Frank Basile said an agreement between Libman and the Center prohibits him from discussing or commenting on Libman’s tenure but detailed a number of internal changes that relate to issues addressed in the review.
Unexplained travel
The three-page review, signed by board chairman Rollin Dick, details how an unnamed female employee traveled with the former CEO, yet “documentation to support the validity and/or appropriateness of that employee’s travel expenses” is not available. This information was typically provided for other employees who traveled with the CEO, the report says.
The review says the employee accompanied Libman on four trips to New York from October 2010 to March 2011 for which her air fare totaled nearly $1,200. Expense reports for those trips show meal charges of $411, $76, $184 and $66, respectively, “for groups which included the accompanying employee,” the review says.
“We have cut out all but necessary travel,” Basile said. “I haven’t gone anywhere.”
Unapproved expenses
The review also says a process requiring employees to support expenses charged to the Center was “inefficient and not always supported.” New policies require the CEO to approve every expense, Basile said, with the chair of the Center’s finance committee overseeing the CEO’s spending. Single expenditures of more than $50,000 now require the board’s approval, he said.
A contract committing to spend about $700,000 for a nationally televised PBS program was finalized without the board’s approval, the review said, adding “It now appears this project will result in a net loss to the Center of about $400,000.”
Overpaying performers
Under Libman, the scheduling of performances and contract negotiations was done by one individual and were not subject to review, the report says.
“Our review did not find evidence of appropriate consideration of the economic viability of performances,” the review says. “Our review of contracts with several performers indicated that losses were inevitable on their performances…There was also indication that the Center paid more for some performers than was necessary.”
Though the current season is fully booked and those contracts must be honored, Basile said the Center will conduct a profit-loss analysis before booking each performance and conducting a second review after it occurs. Additionally, a group approach will be used in negotiating the Center’s contracts with performers.
“That’s going to save us a bundle of money,” Basile said.
Libman released a statement today saying, in part, that he believes “any organization needs to increase the sophistication of its financial controls as it grows and matures.”
Mayor Jim Brainard could not be reached for comment and the city’s director of communications said he will not release a statement on the audit and the findings of the internal review.