COLUMBUS — A foster care agency serving southwest Ohio spent hundreds of thousands of dollars intended for the care of children on board members and other unallowable expenses, according to a state audit released Tuesday.

        The audit found the Youth Services Network of Southwest Ohio spent $588,083 on questionable expenses, including $200,000 in payments in 1995 to the agency's former president, Rita Howard. The money was in addition to Ms. Howard's $60,000 salary at the time.

        According to the audit, the board said the money was used to compensate Ms. Howard for past services, but the payments violated federal regulations. The audit also said only $75,000 of that amount was reported to the Internal Revenue Service.

        The Youth Services agency places children in foster homes for Clermont, Butler, Montgomery, Clark, Warren, Darke, Licking, Miami, Preble and Greene counties.

        Officials also questioned consulting fees of $99,801 paid to Ms. Howard, saying the agency was unable to provide documentation to support the fees, and that in some instances Ms. Howard was paid for services apparently performed by other vendors.

        Other questionable costs cited by the audit included undocumented credit card expenses and an athletic club membership for Ms. Howard's son, agency director Michael Dring.

        State Auditor Jim Petro said nonprofit foster care agencies cannot distribute profits to its members. “You can give modest bonuses but $200,000 is not a modest bonus,” he said. “And consulting contracts to insiders are not modest distributions of cash.”

        Mr. Dring said the the audit pointed up some management problems that have since been corrected. He added that board members acted in good faith in paying his mother additional money in 1995 because she had long been underpaid.

        He said Ms. Howard did report the money she received to the IRS, but did so over time.

        Mr. Dring added that the audits have been “agony” for his agency because it has a good reputation and provides good services.

        Most of the problems uncovered by the audit, he said, involved improper documentation. The audit is one of 25 audits of foster-care agencies expected to be released over the next few months. Mr. Petro's reviews come as part of the state's efforts to overhaul the foster-care system.

        Probes of the Montgomery County Children's Services Agency and a Franklin County foster care agency in 1999 and earlier this year also turned up multiple problems. Auditors found that one private foster care agency spent money set aside for foster children that instead went to everything from season hockey tickets to tanning-bed visits.

        So far, the audits have led to $3 million being returned to the federal government.

        “Any time you see government responsibility for our most fragile citizens not being met, it's heartbreaking,” Mr. Petro said. “When you see an abuse of public dollars you begin to think something is wrong. We're either paying people too much or they are cheating the children out of care they should be getting.”

        He said most foster-care agencies do a good job, but state officials must be careful when privatizing services such as foster care.

        “You can pay somebody $40 a day to care for a child and that doesn't mean they won't say, "Hey, I can provide some gruel and a hard cot for $8 a day and keep the rest,'” he said.

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