Nominee to Head National Service Agency Faces Scrutiny Over Role in Fla.

Wendy Spencer, the woman President Obama has nominated to run the Corporation for National and Community Service, has been hailed for her dedication to volunteerism, her expertise in responding to natural disasters, and her Republican connections at a time when conservative lawmakers are trying to end government support for national service.

But her record as chief executive since 2003 of Volunteer Florida, a state body that distributes AmeriCorps money to local groups, has come under scrutiny in several federal and state audits that have faulted her group for loose financial controls and inadequate monitoring of how grantees spend their money.

Opinion is divided about whether the audits turned up any extraordinary lapses, and federal officials give the group a clean bill of health. But the concerns offer a snapshot of the kinds of financial challenges an organization can face when distributing millions of dollars of federal money to dozens of nonprofits and other groups.

Financial Audits

Most recently, the chief inspector general of the Florida governor’s office said Volunteer Florida had not been ready to take over its own finances after ending its ties to an outside financial overseer.

“Volunteer Florida did not complete a comprehensive transition plan and did not implement adequate procedures, controls, and processes to ensure that they were ready to assume fiscal-agent responsibilities,” said a report the office issued last month.

Previously, Volunteer Florida was audited by the Florida Auditor General in 2009 and the Corporation for National and Community Service’s inspector general’s office in 2005 and 2006. The federal audit was especially critical, citing “numerous and pervasive instances of noncompliance” with federal laws, regulations, and grant-award rules.

A former employee of the inspector general’s office who asked to speak anonymously said that because of those findings, some of his colleagues were surprised to learn that Ms. Spencer had been selected to run the federal agency.

Because the White House advises nominees not to speak to the press before they are confirmed, Ms. Spencer declined to comment for this article.

However, people who have worked with her say she has diligently tried to correct the problems uncovered in the inquiries, some of which were flagged early in her tenure at Volunteer Florida.

The corporation, which reviewed the federal audit’s findings and worked with Volunteer Florida to respond to those the agency considered valid, closed the case in 2008, saying the group had made all necessary adjustments.

“Volunteer Florida is a strong, well-managed state commission with a strong portfolio of AmeriCorps programs, diversified funding sources, and innovative leadership in volunteer mobilization, literacy, emergency management, and other Florida priorities,” said Sandy Scott, an agency spokesman.

President Obama nominated Ms. Spencer, a former United Way campaign director and director of the Florida Park Service, to be chief executive of the national-service agency in November, looking to fill a vacancy created when Patrick Corvington left abruptly last May.

Volunteer Florida—officially, the Governor’s Commission on Volunteerism and Community Service—is one of 54 commissions that have been set up in every state and U.S. territory to administer federal money allocated to AmeriCorps, the flagship national-service program created during the Clinton administration.

Republican Links

Ms. Spencer has worked under three successive Republican governors as head of the Florida group, which has a budget of about $17-million and also coordinates volunteers and donations to respond to natural disasters or other state emergencies.

As chief executive of the Corporation for National and Community Service, Ms. Spencer would be in charge of a $1-billion budget that pays for AmeriCorps, Senior Corps, and other programs to encourage volunteerism and help nonprofits.

The federal audit of Volunteer Florida was conducted by the corporation’s inspector general’s office as part of a plan adopted in the late 1990s to audit all state commissions on a rotating basis.

The inquiry reviewed some spending that took place before Ms. Spencer joined the organization, but much of it covered practices that were in place when the auditors arrived.

Rene Jorgeson, head of the audit group that examined Volunteer Florida on a contract basis, said he was surprised at the breadth of problems he found—especially since the corporation had told him the group was “well run” and a “benchmark” for other state commissions.

Out of about $12-million in federal money that the group awarded between 2002 and 2005, the audit questioned $441,639 in spending by AmeriCorps grantees, administrative costs, training, and other items, saying they violated legal provisions or were not adequately documented or were “unnecessary or unreasonable.”

It questioned additional spending of $65,929 on education awards—money provided by the corporation for scholarships to AmeriCorps members who have completed their service.

Of the total, the auditors challenged more than $19,000 in travel costs by Ms. Spencer and other employees, including multiple trips to Washington to visit Florida’s Congressional delegation. In some cases, the corporation backed Volunteer Florida.

For example, the auditors were wrong to contest spending on travel that did not directly benefit AmeriCorps grantees, it said in a 2006 letter, since “commissions have broad responsibilities to promote national service and to coordinate with other volunteer-service programs.”

In the end, it agreed that Volunteer Florida should pay back only $972 of the contested travel costs.

Working to Improve

In other cases, both Volunteer Florida and the corporation agreed that the group needed to step up its financial oversight.

The organization, for example, strengthened its tools for monitoring AmeriCorps grantees to ensure they submitted proper documentation, tightened procedures for approving Ms. Spencer’s travel, stopped negotiating fees for meals that exceeded per-diem allowances, and improved its procedures for comparing expenses to budgeted amounts.

“This was the first full-scope federal audit Volunteer Florida had undergone since its 1994 inception, and proved to be valuable in providing an opportunity to clarify the federal policies regarding the expenditure of grant dollars,” Volunteer Florida says on its Web site.

It notes that in the end, the corporation had asked the group or its grantees to pay back $78,506, or less than 1 percent of the $12-million in spending that the auditors had examined.

But the 2009 Florida auditor general’s report, which noted that Volunteer Florida had received $1.2-million in state money in the 2008 fiscal year, flagged several continuing problems, saying the group needed to step up its fiscal monitoring of its grantees, for example by routinely comparing the amounts claimed for expenses to supporting documentation such as invoices.

The auditors also said about $10,000 out of $700,680 in payments to grantees from 2006 to 2008 should not have been allowed or was improperly documented.

In an official response to the audit, Ms. Spencer replied that Volunteer Florida was strengthening controls in all of the areas cited in the report and had “reduced significantly” questionable spending by grantees since the federal audit had been done.

Cash Management

The latest audit, by the governor’s office, focused mostly on how Volunteer Florida managed its own finances after breaking ties with Tallahassee Community College, which had been handling the job, in 2010.

It cited eight “deficiencies,” including lack of adequate cash-management procedures, poor documentation for some expenses, and failure in some cases to follow state laws and procedures governing travel.

Volunteer Florida denied that it wasn’t ready to assume control of its budget. Michael W. Andrew Jr., senior vice president for Marriott Vacations Worldwide and chairman of the Florida service commission, said the auditors, who examined the group’s activities from July 2010 to September 2011, arrived in the middle of a well-planned transition period that was completed at the end of 2011.

Mr. Andrew said Ms. Spencer and her colleagues handled it well. “I think they did a wonderful job in planning for a complex separation,” he said.

Another Florida commission member, Bob Milligan—a retired Marine Corps lieutenant general and a two-term former Florida comptroller—said Ms. Spencer and other managers have been “extremely responsive in trying to put into place the proper policies, the proper procedures” since he joined the body in 2005 and focused on ensuring the group had proper financial oversight. “Frankly, audits are a big help, ”he said.

Differing Views

Two outside experts who examined the three Volunteer Florida audits disagreed somewhat on their significance.

William Epstein, an audit senior manager who specializes in audits of nonprofits in the New York area that get government money, said the findings were not unusual for an organization dealing with a lot of money and multiple outside groups and that the problems associated with the break from the community college were “typical of what you would see in a new organization.”

David A. Reingold, a professor of public policy at Indiana University who once chaired Indiana’s national-service commission, said many state commissions experience the kind of problems identified in the Volunteer Florida audits because “AmeriCorps is a very clumsy federal-state initiative. ”However, he added, “The continued presence of these findings over time suggests to me that the management of the Florida state commission isn’t detail-oriented and has some sloppy tendencies. Whether or not this says much about [Ms. Spencer] and her management capability is an open question.”

Shin Inouye, a White House spokesman, declined to comment on the Volunteer Florida audits but expressed support of Ms. Spencer. He said, “Wendy Spencer is exceptionally well qualified for this important position, and we hope the Senate moves on her confirmation quickly.”