Mississippi Prison Industries Corporation is at an increased risk for fraud and theft following a shortage of employees in its accounting office, according to a new report from the State Auditor.
Findings released Monday show that the non-profit faces a number of other problems, including a lack of documentation for accounting transactions such as expenditures, travel and pay raises; the company servers not being maintained in a secure environment; and other issues concerning the corporation’s fixed assets, inventory and pension and retiree insurance liability.
Issues appear to stem from a shortfall in cash, said officials in the auditor’s office, citing the loss of a contract to produce fish tanks for a Texas-based fish farm, as well as short-staffing across the company and a recent management change.
“Without necessary staffing levels, job duties have not been properly separated,” a news release from the auditor’s office states. “When too few employees have too much control over the finances of an office, the risk for fraud and theft increases.”
Jeff Solari, CEO of MPIC, did not immediately respond to requests for comment on Monday.
MPIC was established by the state Legislature in 1990 as a program aimed at reducing recidivism by providing prisoners with work experiences.
This is not the first time MPIC has undergone recent scrutiny from government watchdogs. Last year, the Joint Legislative Committee on Performance Evaluation and Expenditure Review noted the nonprofit’s net worth had dropped $6.7 million from 2012 to 2017.
The PEER committee recommended three options to MPIC: to eliminate the corporation’s least profitable industries, to file bankruptcy, or to dissolve the company.
That spring, the corporation’s 13-member board fired its CEO, Brad Curtis.
A follow-up report by PEER in December indicated that MPIC had chosen the first option and had taken steps including focusing on selling products profitable in the past, such as selling grills and wind chimes at the Canton Flea Market. MPIC operates on sales from inmate-produced goods such as furniture, apparel, metal fabrication, printing and other products, according to its website.
A corrective action plan was submitted by MPIC to the auditor’s office in April.