Audit Finds Amistad America’s Endowment In Deficit
As of 2012, the state-subsidized Amistad America had liquidated its endowment assets to fund its operating expenses, leaving the fund more than $49,000 in deficit, according to an audit released Friday.
The four-year audit was conducted by a third-party firm, CohnReznick, and released Friday by the state Office of Policy and Management. It reviews the 2008-2012 finances of the troubled organization which operates the replica of the Amistad, a schooner taken over by African captives in 1839. The organization lost its tax-exempt status last year because it did not file tax returns with the federal government.
The state has invested millions in the ship and, until recently allocated $379,000 for it annually in the state budget.
But according to the audit, the organization has had to burn through its endowment funds to cover its operating expenses.
“In prior years, investments amounting to approximately $49,153 have been liquidated to fund the organization’s operating needs. It is management’s intention to restore the investment account to an amount equal to permanently restricted net assets. As of March 31, 2012, the endowment fund was deficient by $49,153,” the audit read.
Rep. Diana Urban, a North Stonington Democrat who has been critical of the organization’s management, said she wants to see auditors look at the organization’s financial records at least as far back as 2006. She said things “started to fall apart” in 2006 and the group began drawing down on its endowment in 2008.
“You don’t draw off the endowment unless its desperation,” Urban said. “You don’t go after it ever. That’s where you’re building equity.”
Auditors also found that Amistad America has not complied with legislative reporting requirements and hasn’t had the money to hire enough staff members to balance the books.
“The organization does not have sufficient resources to attract and retain a sufficient
complement of accounting staff,” the audit reads. “We recommend that the organization continue to work with the recently engaged fee accountant not only on the review of years 2010 – 2013 but also on an on-going current basis.”
Hanifa Washington, executive director of Amistad America, did not immediately return a request for comment.
Gian-Carl Casa, the Office of Policy and Management’s under secretary for legislative affairs, said the agency would review the audit with other state entities.
“That is the first step in crafting a plan, in collaboration with stakeholders and the New Haven community, that will protect the state’s investments, the educational mission of the ship, and help ensure that vendors get paid,” he said.
Jaclyn Falkowski, a spokesperson for Attorney General George Jepsen, said the attorney general’s office is also assessing the audit.
“Following a full evaluation of the available information, and with cooperation and input from relevant stakeholders, we will determine next steps to strengthen the Amistad’s ability to continue its important historical mission,” she said.
Urban and other state lawmakers asked Friday that Jepsen review how the closure of Ocean Classroom Foundation will affect the ship. The foundation is run by Amistad America’s former director, Greg Belanger. Amistad America has been paying the foundation $5,000 a month to maintain the ship, according to the audit.
Lawmakers are concerned the ship could be seized by a bank when the foundation closes later this year.
“The demise of Ocean Classroom Foundation prompted us to request that the attorney general look into irregularities surrounding the Amistad. We are focused on protecting the taxpayer and retaining the Amistad as the flagship of the state of Connecticut,” Urban said in a press release.