This audit was performed by Conrad & Associates, L.L.P., Certified Public Accountants, under contract to the Office of Inspector General, and, by acceptance, it becomes a report of the Office of Inspector General.

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                                                                                                       Page

Acronyms/Glossary                                                                             i

Executive Summary                                                                            ii

Background/Principal Criteria                                                             1

Objectives, Scope and Methodology                                                   3

Auditors' Reports:

Independent Auditors' Report                                                          5

Independent Auditors' Report on the Internal Control Structure
    Based on an Audit Performed in Accordance with
    Government Auditing Standards                                                  6

Independent Auditors' Report on Compliance Based on an Audit
    Performed in Accordance with Government Auditing
    Standards                                                                                  8
 

    1.    Unsupported Salaries/Wages and Fringe Benefits Were Charged  10

    2.    Non-Grant-Related and Unsupported Support Service Payments
           Were Charged                                                                           13

    3.    Ineligible Participants Were Enrolled in the JOBLINKS Project       16

    4.    Non-Allocable Costs Were Charged                                             19

    5.    Overpayment of Pay Point Reimbursements                                 21

    6.    Eligibility Limitation Was Exceeded                                               24

    7.    Grant Administration Funds Were Not Tracked                              26
 

Exhibit:

    Exhibit A        Total Costs Incurred per JOBLINKS PROJECT -
                         EXPENDITURE REPORT                                              28
 

Schedules:

    Schedule A-1    Reconciliation of County of Ventura Costs Claimed       29

    Schedule A-2    Calculation of Questioned Costs for Ineligible
                            Participants                                                               30
 

Appendix:

    Appendix A        Auditee's Response                                                   31

AICPA             American Institute of Certified Public Accountants

CBO               Community Based Organization

CFR               Code of Federal Regulations

CPC               Career Planning Center

CSSLAC         Community and Senior Services of Los Angeles County

CVWDD          County of Ventura Workforce Development Department

DOL                U.S. Department of Labor

ETA                Employment and Training Administration, U.S. Department of Labor

HUD               U.S. Department of Housing and Urban Development

JTPC             Job Training Policy Council of Ventura County

MIS                Management Information System

OIG                Office of Inspector General, U.S. Department of Labor

OMB              Office of Management and Budget

SAS                Statement on Auditing Standards

SDA                Service Delivery Area

WLCAC           Watts Labor Community Action Committee
 
 

Direct Cost            A cost that can be identified specifically with a particular
                               cost objective.
 

Indirect Cost         A cost that cannot be identified with a single, final cost
                               objective but is identified with two or more final cost
                               objectives.  Such costs are combined into groupings for
                               distribution to final cost objectives.
 

Questioned Cost     A cost that is questioned because of: (a) an alleged violation
                               of a law, regulation, contract, grant, cooperative agreement,
                               or other agreement or document governing the expenditure
                               of funds; or (b) at the time of audit, such cost is not
                               supported by adequate documentation; or
                               (c) the expenditure of funds for the intended purpose
                                is unnecessary or unreasonable.
 
 

Conrad & Associates, L.L.P., Certified Public Accountants, under contract to the U.S. Department of Labor (DOL), Office of Inspector General (OIG), performed a financial and compliance audit of expenditures made by the Community and Senior Services of Los Angeles County (CSSLAC) JOBLINKS project, under DOL Grant No. L-5002-5-00-80-60. The audit covered the period January 17, 1995 through June 30, 1997.

RESULTS OF INTERIM FINANCIAL AUDIT

For the audit period, CSSLAC reported and claimed costs of $4,248,824. Of these costs, we question $89,576.
 
 

The primary objectives of our financial and compliance audit were to determine whether the costs claimed were:

• Reasonable;

• Allowable;

• Allocable and chargeable under the applicable cost principles; and

• Properly allocated/charged to the benefiting programs.

• Obtain an understanding of CSSLAC's internal controls relating to accounting records used in claiming costs under Federal grants to ensure that funding limitations were not exceeded; and

 
• Identify and test general and specific compliance requirements that could have a material financial impact on the grant being audited.

Finding 1.  Unsupported Salaries/Wages and Fringe Benefits Were
                  Charged--$69,114 questioned

The County of Ventura Workforce Development Department (CVWDD), a CSSLAC subgrantee, charged unsupported salaries/wages and fringe benefits to the JOBLINKS project. As a result, we question $69,114.
 

CVWDD's pre-apprenticeship training project was funded by three sources: the DOL JOBLINKS project; Title II-A of the Job Training Partnership Act (JTPA); and the U.S. Department of Housing and Urban Development (HUD). JOBLINKS project costs were accumulated in one project account.

Total costs for the JOBLINKS project per CVWDD's spreadsheet were $572,223, of which $414,832 was recovered from the DOL JOBLINKS project, $36,598 from HUD, and $120,793 from the JTPA Title II-A program. Our evaluation of the $572,223 disclosed that CVWDD should have charged JOBLINKS $363,239, or $51,592 less than it actually did. Although CVWDD included these costs ($51,592) in those reported to CSSLAC, on a separate report on JOBLINKS, they were not included as part of the overall costs reported. A handwritten worksheet identified two employees who accounted for the $51,592; however, CVWDD's Supervising Accountant told us that neither time cards nor time studies existed to document the number of hours spent on the grant. Therefore, we have no other option but to question these costs.

In addition, salaries/wages and fringe benefits of $17,522 that were charged to the "Other" line item within the "Direct Training" cost category were unsupported by time and attendance or equivalent records.
 

Finding 2.  Non-Grant-Related and Unsupported support Service Payments
                  Were Charged--$6,332 Questioned

CVWDD charged non-grant related and unsupported support service payments to the JOBLINKS project. As a result, we question $6,332.
 

CVWDD appears to have charged support service payments (child care and work shoes) for non-grant participants to the JOBLINKS project. Because of the multiple funding sources for this project and the lack of specific identification, payments for non-grant participants may have been inadvertently charged to the JOBLINKS project. As a result, the costs are not allowable and we question $1,870.
 

In addition, CVWDD did not provide supporting documentation for certain payments included in our support services sample. As a result, we question $4,462.
 
 

CSSLAC enrolled ineligible participants in the JOBLINKS project. We question $3,979 of participant-related costs for the ineligible participants identified.
 

The grant outlined the JOBLINKS project's eligibility requirements. We found one participant who did not meet the economically disadvantaged requirement and two participants who did not have adequate supporting documentation in their files to substantiate the eligibility determination. In addition, we reviewed participant ages per the management information system (MIS) report. We found eight participants who were over age 40 at the time of enrollment. We reviewed the participant index listing and found payments of $3,979 made to either community-based organizations (CBOs) or training vendors on behalf of the ineligible participants. Since the costs are for ineligible participants, they do not benefit the JOBLINKS project and are not allocable thereto. As a result, the participant costs are not allowable and we question $3,979.
 

Finding 4.  Non-Allocable Costs Were Charged--$5,552 Questioned

Pension bond costs for County of Los Angeles fiscal year 1994-1995 were included in the fiscal year 1995-96 fringe benefit allocation pool, a portion of which was subsequently allocated to the JOBLINKS project. The grant did not begin until January 17, 1995. Therefore, we question $5,552.
 

The fringe benefit allocation pool for August 1996 totaled $796,533, of which, $661,239 was for pension bond costs related to fiscal year 1994-1995. The Budget/Fiscal Services Manager stated that instead of funding the 1994-95 pension costs, the moneys were used to help balance the County of Los Angeles's budget. The pension bond costs were a "catch-up" payment to the pension fund for the 1994-1995 fiscal year. Since the JOBLINKS project started in January 1995, 50 percent of the costs were considered to be costs incurred prior to the grant inception. As a result, the costs are not allowable and we question $5,552.
 

Finding 5.  Overpayment of Pay Point Reimbursements--$4,599 Questioned

CSSLAC overpaid CBOs for the number of participant pay points reached. As a result, we question $4,599.
 

CSSLAC contracted with CBOs to perform intake services and eligibility determinations of potential JOBLINKS participants. CBOs were reimbursed for their services based on a three pay point system: (1) registration in the JOBLINKS project; (2) referral and enrollment in a pre-apprenticeship training program; and (3) completion of training.

We found two CBOs, Career Planning Center (CPC) and Watts Labor Community Action Committee (WLCAC), that were overpaid for the earned pay points. The overpayment occurred because both CBOs
 
 

Finding 6.  Eligibility Limitation Was Exceeded

CSSLAC exceeded the maximum allowable percentage of JOBLINKS participants between the ages of 36 to 40 by 3.18 percent. This finding is tentative since the grant does not end until December 31, 1998, which is outside our audit period.
 

DOL modified the grant on August 1, 1995 to change the age eligibility requirement of the JOBLINKS project. The modification allowed a maximum of 15 percent of participants to be between ages 36 to 40.

Based on CSSLAC's MIS reports, we found that the maximum percentage of participants between the ages of 36 to 40 was exceeded by 3.18 percent. Although CSSLAC was aware of the limitation, procedures were not established to prevent JOBLINKS participants between the ages of 36 and 40 from exceeding the 15 percent limitation. The grant is still ongoing until December 31, 1998. At that time, CSSLAC should determine its final actual percentages of participants by age group to determine compliance with grant terms.
 

Finding 7.  Grant Administration Funds Were Not Tracked

DOL limited CSSLAC, as the administrative entity for the five Service Delivery Areas (SDAs), to $125,000 for overall grant administration. CSSLAC did not separately track the costs related to this activity. Therefore, we were unable to determine CSSLAC's compliance with this requirement.
 

The grant's statement of work included the same budget by SDA as the "Project JOBLINKS - Government's Requirements/Statement of Work." It also specifically identified the $125,000 for grant administration, which was to cover expenditures incurred for overall coordination of the JOBLINKS project among the five SDAs. CSSLAC was unaware of this maximum administration amount. Because of this, they did not separately track those costs in the accounting system. At the exit conference CSSLAC's Director stated that the accounting system was not capable of tracking the costs incurred for this activity without a substantial amount of additional recordkeeping by staff.

We also noted the following language used by DOL in the "Project JOBLINKS - Government's Requirements/Statement of Work"-- "Funds not used for this purpose shall be used for regular JOBLINKS program activities." CSSLAC interpreted this to mean that the funds were earmarked for administrative purposes and, therefore, added the $125,000 to its internally created administrative budget. However, it is our opinion that DOL intended for any remaining funds be spent on program activities, not administrative activities.
 
 

The draft audit report was mailed to CSSLAC on February 6, 1998. CSSLAC provided a written response on behalf of the JOBLINKS project to the draft audit report on March 11, 1998. The written response is incorporated into the applicable sections of this report and can be found in its entirety in Appendix A.

CSSLAC concurred with Finding 1 ("Unsupported Salaries/Wages and Fringe Benefits Were Charged") and stated that they would request repayment from CVWDD and would also process a budget modification to correct the billing error. CSSLAC concurred with Finding 2 ("Non-Grant-Related and Unsupported Support Service Payments Were Charged") and stated that they would request repayment from CVWDD. As to Finding 3 ("Ineligible Participants Were Enrolled in the JOBLINKS Project"), CSSLAC concurred with the finding. CSSLAC replaced five of the ineligible participants originally identified and requested that two participants' costs be allowed since they were presently working. CSSLAC did not agree with Finding 4 ("Non-Allocable Costs Were Charged"). They believe the pension bond costs are allowable based on their allocation process. As to Finding 5 ("Overpayment of Pay Point Reimbursements"), CSSLAC submitted documentation to resolve costs associated with CPC, but stated that they would request repayment from WLCAC. CSSLAC acknowledged the situation identified in Finding 6 ("Eligibility Limitation Was Exceeded"). In addition to receiving a grant extension through December 31, 1998, they also issued guidance to their CBOs that during the second phase of the project only individuals between the ages of 18 and 35 would be enrolled. CSSLAC did not agree with Finding 7 ("Grant Administration Funds Were Not Tracked"). They believe that they were not required to track the $125,000 separately and confirmed this with the DOL Grant Officer.
 

AUDITORS' COMMENTS

We concur with CSSLAC's actions related to Finding 1; however, we believe they may have misinterpreted CVWDD's response. CVWDD acknowledged that there were unsupported labor costs of $22,148 and a tabulation error of $17,522 that remained unresolved and questioned. However, according to the "revised" invoice (Attachment E of CVWDD's response) overall costs remained the same. They have included additional contractual costs of $39,664 to offset the unresolved and questioned costs. Therefore, it is our belief that CVWDD contends that their response resolves the audit issues and no funds are due back to CSSLAC. We reviewed CVWDD's response related to each of the items identified in the draft audit report. Based on our review of the responses, costs of $69,114 remain questioned.

We concur with CSSLAC's proposed recovery of questioned costs related to Finding 2.

As to Finding 3, CSSLAC substituted eligible participants for ineligible participants. This resolved questioned costs of $3,250. However, we do not support CSSLAC's request that questioned costs for two participants be allowed because they are presently working. The costs were incurred for ineligible participants, and therefore, did not benefit the JOBLINKS project. If funds were not used in accordance
 
 

We acknowledge CSSLAC's response to Finding 4. We do not dispute or have a problem with the methodology used by the County of Los Angeles to allocate costs. However, we do not agree that the pension bond costs for 1994-95 should be allowed since the costs are for a period prior to the grant award date. The pension bond costs are not properly allocable to the period, therefore, they are not allowable per OMB Circular A-87.

We concur with CSSLAC's response to Finding 5 related to the recovery of costs from WLCAC. In addition, CSSLAC's response resolved $343 of questioned costs related to CPC.

We acknowledge CSSLAC's response to Finding 6 and concur with the actions they have taken to ensure compliance with the age group limitation requirements.

We acknowledge CSSLAC's response to Finding 7. However, we do not agree with their interpretations. Our opinion remains that DOL intended for any funds not spent on administration related to the overall coordination of the JOBLINKS project be spent on program activities, not administrative activities.
 

RECOMMENDATIONS

We recommend that the ETA Grant Officer:
 

1. Disallow costs of $89,576.

2. Ensure that CSSLAC has complied with the grant's age group
    percentage limitations at its termination.

3. Ensure that all compliance requirement language included in grants is
    clear as to DOL's intent.

4. Monitor the grantee to ensure that they are in compliance with grant
    terms.

PROJECT JOBLINKS - EARTHQUAKE RECOVERY

Following the January 1994 Northridge earthquake, Federal, State, and local agencies mounted a large response to aid in the area's recovery from the earthquake. Congress passed a $7.8 billion supplemental appropriation on February 11, 1994, to fund a variety of post-earthquake rehabilitation and related activities and to reimburse agencies that had advanced funds for immediate response to the earthquake.

Included in Public Law 103-211 was funding for a project to provide pre-apprenticeship training to inner city youth and young adults. Once these individuals completed their training, they would be placed in apprentice positions with firms engaged in earthquake recovery and other Federally-funded construction projects.

It was expected that the grant would serve 1,000 eligible participants in the five Service Delivery Areas (SDAs) most impacted by the earthquake. These SDAs were the County of Los Angeles, the City of Los Angeles, South Bay Consortium, Foothill Consortium, and the County of Ventura. The County of Los Angeles SDA was designated as the grant recipient for the project and would subcontract with the four other participating SDAs.
 

COMMUNITY AND SENIOR SERVICES OF LOS ANGELES COUNTY

In 1982, the Job Training Partnership Act (JTPA) replaced the Comprehensive Employment and Training Act as the Federally funded job training program. County of Los Angeles JTPA programs are operated under the direction of the Board of Supervisors and the Private Industry Council, which is appointed by the Board of Supervisors. Community and Senior Services of Los Angeles County (CSSLAC) is the administrating County Department for JTPA funding. The County of Los Angeles SDA is one of eight SDAs servicing the County's geographic area. The County of Los Angeles SDA includes some 60 cities and adjacent unincorporated areas.

On January 17, 1995, DOL awarded CSSLAC a grant (No. L-5002-5-00-80-60) in the amount of $5,000,000 to implement the JOBLINKS project. The grant period is January 17, 1995 through January 16, 1998. On October 23, 1995, DOL modified the grant (Modification No. 1) to change the age eligibility requirement and the Grant Officer's Technical Representative. The age requirements were revised to individuals between the ages of 18 and 40, with at least 85 percent or more of total eligible participants from the 18 to 35 age group and no more that 15 percent of total eligible participants from the 36 to 40 age group. On December 12, 1996, DOL modified the grant (Modification No. 2) to extend the training completion end date to March 31, 1997. This modified training completion end date did not change the grant's end date. The grant's Special Conditions were modified to limit consultant fees to $400 per day. Also, the grant incorporated Executive Order 12876, which strongly encouraged providing subcontracting and subgrant opportunities for Historically Black Colleges and Universities. On September 30, 1997, DOL modified the grant (Modification No. 3) to extend the performance period to

PRINCIPAL CRITERIA

Title 29 of the Code of Federal Regulations (CFR), Part 97 - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, was established to provide uniform administrative rules for Federal grants and cooperative agreements and subawards to State, local and Indian Tribal governments.

29 CFR §97.22, "Allowable costs," references Office of Management and Budget (OMB) Circular A-87, and applies to all DOL grant and agreements.

OMB Circular A-87, "Cost Principles for State, Local and Indian Tribal Governments," establishes principles for determining costs of Federal awards carried out through grant, cost reimbursement contracts and other agreements with State and local governments and Federally-recognized Indian tribal governments. The principles are designed to provide that the Federal government bears its fair share of costs except where restricted or prohibited by law.

The American Institute of Certified Public Accountants' (AICPA) Statement on Auditing Standards (SAS) No. 53, "The Auditor's Responsibility to Detect and Report Errors and Irregularities":

"  . . .provides guidelines on the independent auditor's responsibility for the detection of errors and irregularities in an audit of financial statements in accordance with generally accepted auditing standards. It describes factors that influence the auditor's ability to detect errors and irregularities and explains how the exercise of due care should give appropriate consideration to the possibility of errors or irregularities. It also provides guidance on the auditor's responsibility to communicate detected matters both within and outside the entity whose financial statements are under audit."

SAS No. 54, "Illegal Acts by Clients":

"  . . .prescribes the nature and extent of consideration an independent auditor should give to the possibility of illegal acts by a client in the audit of financial statements in accordance with generally accepted auditing standards. The Statement also provides guidance on the auditor's responsibilities when a possible illegal act is detected."

Conrad & Associates, L.L.P., Certified Public Accountants, under contract to the DOL, OIG, performed a financial and compliance audit of JOBLINKS project expenditures reported by CSSLAC for the period January 17, 1995 through June 30, 1997.
 

FINANCIAL AND COMPLIANCE AUDIT

The primary objectives of our financial and compliance audit were to determine whether the costs claimed were:

• Reasonable;

• Allowable;

• Allocable and chargeable under the applicable cost principles; and

• Properly allocated/charged to the benefiting programs.

• Obtain an understanding of CSSLAC's internal controls relating to accounting records used in claiming costs under Federal grants to ensure that funding limitations were not exceeded; and

• Identify and test general and specific compliance requirements that could have a material financial impact on the grant being audited.

As required by Government Auditing Standards (1994 Revision) and the AICPA's SAS Nos. 53 and 54, we designed the audit to provide reasonable assurance of detecting instances of abuse, potential fraud or inefficient practices that could result in increased costs to the Federal government. Instances of noncompliance and internal control weaknesses are included as findings in the Findings and Recommendations section of this report.

Our audit was performed using the criteria we considered relevant. These criteria included those established by the Federal government in 29 CFR Part 97.
 
 

Our entrance conference was held on July 21, 1997. Our fieldwork was performed at CSSLAC's office in Los Angeles, California during the period July 21, 1997 through October 29, 1997. An exit conference was held with CSSLAC representatives in Los Angeles, California, on October 29, 1997, to discuss our findings. Auditee comments related to the findings and recommendations made during the exit conference were incorporated where applicable.

The draft audit report was mailed to CSSLAC on February 6, 1998. CSSLAC provided a written response on behalf of the JOBLINKS project to the draft audit report on March 11, 1998. The written response is incorporated into the applicable sections of this report and can be found in its entirety in Appendix A.

This report is dated October 29, 1997, which represents the last day of fieldwork.
 
 

Mr. John Getek
Assistant Inspector General for Audit
Office of Inspector General
U.S. Department of Labor
Room S-5022
200 Constitution Avenue, N.W.
Washington, D.C. 20210
 
 

We have audited the Total Costs Incurred Per JOBLINKS PROJECT - EXPENDITURE REPORT (Exhibit A) of Community and Senior Services of Los Angeles County (CSSLAC) for the period January 17, 1995 through June 30, 1997. The amounts reported in the Total Costs Incurred Per JOBLINKS PROJECT - EXPENDITURE REPORT are the responsibility of CSSLAC's management. Our responsibility is to express an opinion on the costs claimed based on our audit.

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards (1994 Revision), issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the costs claimed are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the costs claimed. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the costs claimed. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accompanying Total Costs Incurred Per JOBLINKS PROJECT - EXPENDITURE REPORT (Exhibit A), presents fairly in all material respects, the acceptable costs claimed for the period January 17, 1995 through June 30, 1997, in accordance with the aforementioned criteria.

In accordance with Government Auditing Standards issued by the Comptroller General of the United States, we have also issued reports dated October 29, 1997 on our consideration of CSSLAC's internal control over reporting of costs claimed under the JOBLINKS project and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.

This report is intended for the information of DOL and CSSLAC, and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, when issued, is a matter of public record.

This report is dated October 29, 1997, which represents the last day of our field work.

             /s /
Conrad & Associates, L.L.P.

October 29, 1997
 
 

Mr. John Getek
Assistant Inspector General for Audit
Office of Inspector General
U.S. Department of Labor
Room S-5022
200 Constitution Avenue, N.W.
Washington, D.C. 20210
 
 

We have audited the Total Costs Incurred Per JOBLINKS PROJECT - EXPENDITURE REPORT (Exhibit A) of Community and Senior Services of Los Angeles County (CSSLAC) for the period January 17, 1995 through June 30, 1997, and have issued our report thereon dated October 29, 1997.

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards (1994 Revision), issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the costs claimed are free of material misstatement.

In planning and performing our audit of the costs claimed for the JOBLINKS project for the period January 17, 1995 through June 30, 1997, we considered CSSLAC's and the County of Ventura Workforce Development Department's (CVWDD) internal control structures in order to determine our auditing procedures for the purpose of expressing our opinion on the costs claimed and not to provide assurance on the internal control structure.

CSSLAC's and CVWDD's management are responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit CSSLAC's reporting of costs on the JOBLINKS PROJECT - EXPENDITURE REPORT in accordance with generally accepted accounting principles and Federal regulations. Because of inherent limitations in any internal structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures
 
 

We obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk for CSSLAC and CVWDD.

Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of the specific internal control structure elements does not reduce to a relatively low level the risk that errors and irregularities in amounts that would be material to a Federal award program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structures and their operation that we consider to be material weaknesses as defined above.

We noted the following immaterial matters involving the internal control structures and their operation:

COMMUNITY AND SENIOR SERVICES OF LOS ANGELES COUNTY

• Finding 5 Overpayment of Pay Point Reimbursements

COUNTY OF VENTURA WORKFORCE DEVELOPMENT DEPARTMENT

• Finding 1     Unsupported Salaries/Wages and Fringe Benefits Were

                   Charged

• Finding 2     Non-Grant-Related and Unsupported Support Service

                    Payments Were Charged

We also noted other insignificant items that we have reported to management of CSSLAC in a separate letter dated October 29, 1997.

This report is intended for the information of DOL and CSSLAC, and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, when issued, is a matter of public record.

This report is dated October 29, 1997, which represents the last day of our fieldwork.

            / s /
Conrad & Associates, L.L.P.

October 29, 1997
 
 

Mr. John Getek
Assistant Inspector General for Audit
Office of Inspector General
U.S. Department of Labor
Room S-5022
200 Constitution Avenue, N.W.
Washington, D.C.   20210
 
 

We have audited the Total Costs Incurred Per JOBLINKS PROJECT - EXPENDITURE REPORT (Exhibit A) of Community and Senior Services of Los Angeles County (CSSLAC) for the period January 17, 1995 through June 30, 1997, and have issued our report thereon dated October 29, 1997.

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards (1994 Revision), issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the costs claimed are free of material misstatement.

Compliance with laws, regulations, contracts, and grants applicable to the JOBLINKS project is the responsibility of CSSLAC's management. As part of obtaining reasonable assurance about whether the costs claimed are free of material misstatement, we performed tests of CSSLAC's compliance with certain provisions of laws, regulations, contracts and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion.

The results of our tests disclosed the following instances of noncompliance that are required to be reported under Government Auditing Standards for which the ultimate resolution cannot presently be determined. Accordingly, no provision for any liability that may result has been recognized in the Total Costs Incurred Per JOBLINKS PROJECT - EXPENDITURE REPORT (Exhibit A).

• Finding 3     Ineligible Participants Were Registered in the JOBLINKS

                   Project

• Finding 4     Non-Allocable Costs Were Charged

• Finding 6     Eligibility Limitation Was Exceeded

• Finding 7     Grant Administration Funds Were Not Tracked

This report is dated October 29, 1997, which represents the last day of our fieldwork.

            / s /
Conrad & Associates, L.L.P.

October 29, 1997
 
 

Finding 1.  Unsupported Salaries/Wages and Fringe Benefits Were Charged

The County of Ventura Workforce Development Department (CVWDD), a CSSLAC subgrantee, charged unsupported salaries/wages and fringe benefits to the JOBLINKS project. As a result, we question $69,114.
 

The original administering entity for the County of Ventura's JOBLINKS project with CSSLAC was the Job Training Policy Council of Ventura County (JTPC). CVWDD took over as the administering entity after JTPC was dissolved in December 1995. CVWDD's pre-apprenticeship training project was funded by three sources: the DOL JOBLINKS project; Title II-A of the Job Training Partnership Act (JTPA); and the U.S. Department of Housing and Urban Development (HUD). JTPC, and subsequently CVWDD, accumulated costs of the JOBLINKS project in one project account.

We requested the transaction detail for the costs claimed by CVWDD. CVWDD provided us with a summary spreadsheet of total costs. Amounts included on the spreadsheet were taken from project financial statements and administrative allocations. Total costs for the JOBLINKS project per the spreadsheet were $572,223, of which $414,832 was recovered from the DOL JOBLINKS project, $36,598 from HUD, and $120,793 from the JTPA Title II-A program.

We then asked for documentation supporting the $572,223 and used this information to allocate the costs between DOL and the other two funding sources. We compared the allocated costs to the JOBLINKS expenditure report and discovered that CVWDD had charged DOL $51,592 more than it could support. CVWDD was unable to explain the overall difference; however, they did provide us with a worksheet supporting the additional $51,592 charged to JOBLINKS. They claimed it consisted of 2 employees who worked 100 percent of their time on the grant for 5 months and one of the same employees who worked 50 percent of the time on the grant for an additional 10 months. Although these items were included in the costs reported to CSSLAC, these items were not included in the total JOBLINKS project costs of $572,223 which is CVWDD's basis for the $414,832 charged (see Schedule A-1).

Because we were unsure what CVWDD's total costs should have been, we requested documentation (i.e., time cards or similar items) to see if the $51,592 should have been charged to JOBLINKS and the total costs increased to $623,815. CVWDD's Supervising Accountant stated that there were neither time cards nor time studies to document the number of hours worked on the grant. Because of the lack of supporting documentation, we requested additional information, such as a list of the participants served by the case managers, to help us in making a professional decision on the reasonableness of the amounts charged. CVWDD was unable to document any basis for the costs charged to the grant.

OMB Circular A-87, Attachment B, paragraph B.10.b., "Compensation for personal services," states in part:

"Payroll and distribution of time.  Amounts charged to grant programs for personal services, regardless of whether treated as direct or indirect costs, will be based on payrolls documented

and provided in accordance with generally accepted practice of the State, local, or Indian tribal government. Payrolls must be supported by time and attendance or equivalent records for individual employees. Salaries and wages of employees chargeable to more than one grant program or other cost objective will be supported by appropriate time distribution records. The method used should produce an equitable distribution of time and effort." [Underline added]

We also identified salaries/wages and fringe benefits charged to the "Other" line item within the "Direct Training" cost category. CVWDD's Supervising Accountant stated that these charges were allocated by JTPC to the JOBLINKS project and they were inadvertently included as "Other" on the reported costs line item. Although the costs may be misclassified by line item, they were also unsupported by time and attendance or equivalent records.

Since the costs were unsupported, we could not determine if they benefited the JOBLINKS project. As a result, we question $17,522 for salaries/wages and fringe benefits.
 

Auditee's Response/Auditors' Comments

Auditee's Response¹

"Of the $69,114 questioned, Ventura states that $51,592 are JTPA Title IIA program costs. Ventura further states that the remaining $17,522 in questioned costs was due to a billing error. We, therefore, request that [the] Office of Inspector General (OIG) allow a budget modification to resolve the $17,522 billing error.

Because the $51,592 should not have been charged to the Joblinks Project, we will be requesting repayment of the $51,592 from Ventura.

We have attached Ventura's response for your information (Attachments A ­ E.)."
 

Auditors' Comments

We concur with CSSLAC's actions; however, we believe they may have misinterpreted CVWDD's response. CVWDD acknowledged that there were unsupported labor costs of $22,148 and a tabulation error of $17,522 that remained unresolved and questioned. However, according to the "revised" invoice (Attachment E of CVWDD's response) overall costs remained the same. They have included additional contractual costs of $39,664 to offset the unresolved and questioned costs. Therefore, it is our belief that CVWDD contends that their response resolves the audit issues and no funds are due back to CSSLAC.

" . . .The $51,592 was incorrectly supported based on programmatic assumptions and activities within a co-enrolled program. . . .

. . . The $51,592 then would remain as part of Title IIA activity that indirectly benefited the overall program but would not be classified as a direct identifiable costs to the Joblinks project. . . .

The following table abandons the extrapolation of co-mingled costs and represents direct costs identified to Joblinks with supporting accounting records: . .

The audit identified labor costs of $17,522 as being inappropriately reported in the 'other' line item cost category. The labor costs of $17,522 are supported and included in the above table for the purposes of supporting direct labor activity. . . ."

CVWDD also included additional contractual costs of $39,664 to offset the unresolved and questioned costs. Based on allocating costs among the various funding sources, increasing contractual costs would not be considered inequitable. However, the additional costs to the CSSLAC JOBLINKS project would have already been reimbursed by one of the other two funding sources, JTPA Title II-A or HUD. Therefore, this would represent duplicate costs and would not be allowable.

Based on our review of the responses, costs of $69,114 remain questioned.

Recommendation

1.    We recommend that the ETA Grant Officer disallow $69,114.
 
 

CVWDD charged non-grant related and unsupported support service payments to the JOBLINKS project. As a result, we question $6,332.
 

CVWDD's pre-apprenticeship training project was funded by three sources: the DOL JOBLINKS project; JTPA Title II-A; and HUD. CVWDD accumulated costs of the JOBLINKS project in one project account. According to project financial statements, support services and needs based payments totaled $78,684. Of this amount, $64,986 (or 82.59 percent) was reported to CSSLAC as expenditures of the DOL JOBLINKS project. However, specific transactions could not be identified to account for the $64,986. Therefore, our sample selection was based on all transactions ($78,684).

Non-Grant-Related Payments. CVWDD appears to have charged support service payments for non-grant participants to the JOBLINKS project. Because of the multiple funding sources for this project and the lack of specific identification, payments for non-grant participants may have been inadvertently charged to the JOBLINKS project.

OMB Circular A-87, Attachment A, paragraph C.1.a., "Factors affecting allowability of costs," states:

"To be allowable under a grant program, costs must meet the following general criteria:

a.     Be necessary and reasonable for proper and efficient administration of the grant programs, be allocable thereto under these principles, and except as specifically provided herein, not be a general expense required to carry out the overall responsibilities of State, local, or federally-recognized Indian tribal governments."

"A cost is allocable to a particular cost objective to the extent of benefits received by such objective."

                                                                    Document
Participant                Payee                  Date   Number Batch No. Amount

[Information deleted] [Information deleted] 0711/95 CC01-2 AP0730     $ 300

[Information deleted] [Information deleted] 08/04/95 CC001-3 AP0806     300

[Information deleted] [Information deleted] 08/18/95 CC01-4 AP0906       600

[Information deleted] [Information deleted] 09/01/95 CC01-5 AP0923       300

[Information deleted] [Information deleted] 09/15/95 CC01-06 AP0924     300

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003      58

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003      58

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003      58

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003      58

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003      58

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003      58

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003      58

[Information deleted] [Information deleted] 09/30/95 SEPT-95 AP1003    58

    Subtotal                                                                                        2,264

Allocated percentage                                                                    x 82.59%

Questioned costs                                                                       $ 1,870

Unsupported Costs. CVWDD did not provide supporting documentation for certain payments included in our support services sample. CVWDD's Supervising Accountant stated that during the middle of the grant, CVWDD took over as the administering agency for the project from JTPC. He stated that all supporting documents for the JOBLINKS project were in storage. Although some documents were found, they were not adequate to determine whether the payments were for participants of the JOBLINKS project.

Title 29 of the Code of Federal Regulations (CFR), §97.20, "Standards for financial management systems," paragraph (6), "Source documentation," states:

"Accounting records must be supported by such source documentation as cancelled checks, paid bills, payrolls, time and attendance records, contract and subgrant award documents, etc."

Auditee's Response/Auditors' Comments

Auditee's Response

"Based on our comparison of the participants listed in the audit report and our Joblinks Participant Roster, it appears as though the unsupported supportive services in question were provided to non-Joblinks participants. Therefore, we will be requesting that Ventura repay the $6,332."
 

Auditors' Comments

We concur with CSSLAC's proposed recovery of the non-grant-related payments.
 

Recommendation

We recommend that the ETA Grant Officer:

2.    Disallow $6,332 for non-grant-related payments.
 
 

CSSLAC enrolled ineligible participants in the JOBLINKS project. We question $3,979 of participant-related costs for the ineligible participants identified.
 

The grant outlined the JOBLINKS project's eligibility requirements. We selected a sample of participants from the participant listing and tested for the following eligibility requirements identified in the grant agreement.

"Individuals selected to participate in PROJECT JOBLINKS shall:

* Be economically disadvantaged.
* Have no or limited work experience in the occupation(s) for which training is to be provided.
* Be age 18 - 30 years at the time of enrollment in pre-apprenticeship training.[amended to age 40 years in Modification No. 1 dated October 23, 1995]

* Be legally of age at the time of completion of pre-apprenticeship training for employment in the occupation and the industry for which such training is provided.

* Be a citizen or national of the United States, lawfully admitted permanent resident alien, lawfully admitted refugee or parolee or other individual authorized by the Attorney General to work in the United States; and

* Not have violated section 3 of the Military Selective Service Act by not presenting and submitting to registration as required by such section."

We reviewed the participant index listing and found payments of $3,979 made to either community based organizations (CBOs) or training vendors on behalf of the ineligible participants.

OMB Circular A-87, Attachment A, paragraph C.1.a., "Factors affecting allowability of costs," states:

"To be allowable under a grant program, costs must meet the following general criteria:

a.     Be necessary and reasonable for proper and efficient administration of the grant programs, be allocable thereto under these principles, and except as specifically provided herein, not be a general expense required to carry out the overall responsibilities of State, local, or federally-recognized Indian tribal governments."

"A cost is allocable to a particular cost objective to the extent of benefits received by such objective."

Auditee's Response/Auditors' Comments

Auditee's Response

"This finding identified eleven participants who did not meet the JOBLINK's Project eligibility requirements. Eight participants were over the age of 40; one did not meet the economically disadvantaged criteria; and two had insufficient documentation in their files to determine eligibility. However, we noted costs were not questioned for two of the ineligible participants because the auditor replaced the ineligible participant with an eligible one, and two were not questioned because the CBO was not reimbursed.

In those cases where the auditor did not resolve the questioned cost, we were able to review the trainer's participant index and replace ineligible participants with eligible participants. This resulted in the reduction of questioned costs from $7,329 to $3,055.

The $3,055 represents four participants who exceeded the age requirement and one participant with insufficient documentation. Please refer to Attachment F for more detailed information.

We are requesting that the questioned costs associated with [two participants] be allowed in view of the fact that they are presently working.

Approval of the allowed costs would reduce the questioned costs from $3,055 to $2,050 based upon the information provided on Attachment F. Once a final determination is made, the appropriate SDA will be contacted in order to recover the questioned costs and an adjustment will be made in our next Financial Status Report (Form SF 269)."
 

Auditors' Comments

We reviewed the additional information provided by CSSLAC. Based on this information, we have accepted $1,250 related to questioned CBO pay points and $2,100 related to questioned training agency pay points. We did not accept the second and third pay points related to one of the replacement participants identified by CSSLAC. Although CSSLAC's Joblinks Project Participant Index identified this participant as having completed training, CSSLAC's Joblinks Participant Activity Report did not identify the dates of attaining the second and third pay points. The Participant Activity Report identified
 
 

We do not support CSSLAC's request that questioned costs for two participants be allowed because they are presently working. The costs were incurred for ineligible participants, and therefore, did not benefit the JOBLINKS project. If funds were not used in accordance with grant objectives and requirements, the outcome from using those funds, although positive, does not make the costs allowable. Therefore, these costs remain questioned.

Based on CSSLAC's response, questioned costs have been revised to $3,979.

Recommendation

3.    We recommend that the ETA Grant Officer disallow $3,979 for costs related to ineligible JOBLINKS participants.
 
 

Pension bond costs for County of Los Angeles fiscal year 1994-1995 were included in the fiscal year 1995-96 fringe benefit allocation pool, a portion of which was subsequently allocated to the JOBLINKS project. The grant did not begin until January 17, 1995. Therefore, we question $5,552.
 

We analytically reviewed fringe benefits charged to the grant. CSSLAC accumulates fringe benefits in an allocation pool. The pool consists of fringe benefits paid on the behalf of CSSLAC employees. Each month CSSLAC allocates fringe benefits to grants based on the ratio of actual direct hours charged to each grant.

During our review of fringe benefits, we found that the fringe benefit allocation pool for August 1996 totaled $796,533, of which, $661,239 was for pension bond costs related to fiscal year 1994-1995. The Budget/Fiscal Services Manager stated that instead of funding the 1994-95 pension costs, the moneys were used to help balance the County of Los Angeles's budget. The pension bond costs were a "catch-up" payment to the pension fund for the 1994-1995 fiscal year.

CSSLAC's fiscal year ends on June 30. The total pension bond costs for fiscal year 1994-1995 were charged to the 1995-96 fringe benefits allocation pool. Since the JOBLINKS project started in January 1995, 50 percent of the costs were considered to be costs incurred prior to grant inception.

OMB Circular A-87, Attachment A, paragraph C.1.a., "Factors affecting allowability of costs," states:

"To be allowable under a grant program, costs must meet the following general criteria:

a.     Be necessary and reasonable for proper and efficient administration of the grant programs, be allocable thereto under these principles, and except as specifically provided herein, not be a general expense required to carry out the overall responsibilities of State, local, or federally-recognized Indian tribal governments."

"A cost is allocable to a particular cost objective to the extent of benefits received by such objective."

Since the costs are for a period prior to the grant award date, they do not benefit the JOBLINKS project and are not allocable thereto. As a result, the costs are not allowable and we question $5,552 as calculated in Table 3 on the following page.
 
 

Auditee's Response/Auditors' Comments

Auditee's Response

"The Auditor-Controller charges each County Department for pension bond costs for their respective employees in arrears. As stated in the audit report, we accumulate fringe benefits in an allocation pool and then charge each grant on a pro-rated, direct salary basis. This process has been reviewed and accepted previously by other funding sources without question and our fringe charges have never been denied.

We recommend that the pension bond costs be allowed based upon the above."
 

Auditors' Comments

We do not dispute or have a problem with the methodology used by the County of Los Angeles to allocate costs. However, we do not agree that the pension bond costs for 1994-95 should be allowed.

As stated in the finding, instead of funding the 1994-95 pension costs, the moneys were used to help balance the County of Los Angeles's budget. The pension bond costs were a "catch-up" payment to the pension fund for the 1994-1995 fiscal year. Since the costs are for a period prior to the grant award date, they do not benefit the JOBLINKS project and are not allocable thereto. Since the pension bond costs are not properly allocable to the period, they are not allowable per OMB Circular A-87.
 

Recommendation

4.    We recommend that the ETA Grant Officer disallow $5,552 for fringe benefits
       related to a period prior to the effective date of the grant.
 
 

CSSLAC overpaid CBOs for the number of participant pay points reached. As a result, we question $4,599.
 

CSSLAC contracted with CBOs to perform intake services and eligibility determinations of potential JOBLINKS participants. If the potential participant met the eligibility requirements of the JOBLINKS project, the CBO registered the participant and enrolled them in pre-apprenticeship training. CBOs were reimbursed for their services based on a three pay point system. The three pay points consisted of (1) registration in the JOBLINKS project; (2) referral and enrollment in a pre-apprenticeship training program; and (3) completion of training.

We initially reviewed reimbursement requests submitted to CSSLAC by the CBOs. The reimbursement requests were cumulative and CSSLAC personnel made numerous adjustments. Therefore, we were unable to determine the pay points by participant that the CBO was paid for when reconciling the total amount paid to a CBO. We requested that CSSLAC provide us with a list by CBO that identified the pay points reimbursed for each participant. In reviewing the listings provided, we found two CBOs, Career Planning Center (CPC) and Watts Labor Community Action Committee (WLCAC), which were overpaid for the earned pay points. The overpayment occurred because both CBOs received a cash advance from CSSLAC that had not been fully offset against the pay points earned. The cash advances were recorded in the accounting records and reported to DOL as expenditures.

Contract Nos. CA20145 (CPC) and CA20148 (WLCAC), Attachment C, Part II, Section B-1, "Method of Compensation," states in part:

". . . A CONTRACTOR shall be reimbursed at three (3) Pay Points upon the completion of the specified benchmarks established in SECTION B-2 and the receipt by the COUNTY of the 'Request for Cash' report and the Participant Activity Report, . . . "

"Upon completion or termination of this CONTRACT, the CONTRACTOR shall return any advanced funds which exceed payments due CONTRACTOR, if any, within thirty (30) days of completion or termination of the CONTRACT."

Auditee's Response/Auditors' Comments

Auditee's Response

"A review of all participant records was conducted by the two CBOs in question, Career Planning Center (CPC) and Watts Labor Community Action Committee (WLCAC).

In CPC's case, this review disclosed errors on the MIS Registration Forms submitted by CPC to register eligible participants in the JOBLINKS Project. Two participants were incorrectly reported to another SDA. Both participants successfully completed their training through the County's JOBLINKS Project and CPC's reimbursement payments are considered allowable. Copies of the corrected MIS Registration Forms are attached (Attachment G). Therefore, the $550 for CPC should no longer be questioned.

WLCAC, however, has not reported any changes or corrections in their performance reports. Amounts for WLCAC remain questionable costs.

We recommend the questioned costs be reduced from $4,942 to $4,392 based upon the above-mentioned facts. We will, therefore, request repayment of the $4,392 in questioned costs from WLCAC."
 
 

We concur with CSSLAC's response as it relates to WLCAC. As a result, costs of $4,392 remain questioned. However, we do not agree with CSSLAC's response as it relates to CPC.

CPC's contract (No. CA20145) with CSSLAC identified a maximum number of participants that would be reimbursed for each pay point. For the first and second pay points the maximum number was 157; the maximum number of participants for the third pay point was 110. CPC had already been reimbursed for the maximum number of participants under the first and second pay points. Therefore, any additional amounts paid would have to be based upon completion, the third pay point.

We accepted the third pay point for one additional participant (Registration No. 0194). However, CPC had already been reimbursed for the third pay point for the other participant (Registration No. 0223) based on the schedule prepared for us during the audit by CSSLAC's CSA II. Therefore, this is a duplicate and cannot be accepted. As a result, questioned costs have been revised to $207.

Recommendation

5.    We recommend that the ETA Grant Officer disallow $4,599 for CBO
       reimbursements in excess of actual costs.
 
 

CSSLAC exceeded the maximum allowable percentage of JOBLINKS participants between the ages of 36 to 40 by 3.18 percent. This finding is tentative since the grant does not end until December 31, 1998.

DOL modified the grant on August 1, 1995 to change the age eligibility requirement of the JOBLINKS project. The modification allowed a maximum of 15 percent of participants to be between ages 36 to 40.

Grant Agreement No. L-5002-5-00-80-60, Modification No. 1, states:

"The purpose of this modification is to change the age eligibility requirement . . .
1.     Age 18 to 35--At least 85 percent or more of total participants will fall in this age group; and, age 36 to 40--No more than 15 percent of total participants will fall into this age group." [Underline added]

Although CSSLAC exceeded the percentage limitation for the 36 to 40 age group as of June 30, 1997, we recognize that the grant is still ongoing until December 31, 1998. At that time, CSSLAC should determine its final actual percentages of participants by age group to determine compliance with grant terms.
 
 

Auditee's Response

"Since the exit conference, DOL has approved our request for an extension of the JOBLINKS Project through December 31, 1998 (Modification No. 3). This extension has allowed us to resume pre-apprenticeship training for up to 75 more individuals which should reduce the percentage of enrollees between the ages of 36 to 40 by the end of the program period.

To ensure that the age limits are not exceeded, we have revised the Statement of Work (Attachment H) for the community based organizations involved in this second phase of the Joblinks Project. The revised Statement of Work limits the age eligibility to only individuals 18 through 35. In addition, we have issued Joblinks Bulletin No. JL #34 (Attachment I) which also provides the revised age limitations for both the community-based organizations and the trainers."
 

Auditors' Comments

We acknowledge CSSLAC's response and concur with the actions they have taken to ensure compliance with the age group limitation requirements. However, we want to point out that 283 additional eligible participants must be enrolled between July 1, 1997 and December 31, 1998, (bringing the total participants to 1,620) for CSSLAC to comply with the established age group limitations. All of these participants must be between the ages of 18 and 35.
 

Recommendation

6.    We recommend that the ETA Grant Officer ensure that CSSLAC has
       complied with the grant's age group percentage limitations at its
       termination.
 
 

DOL limited CSSLAC, as the administrative entity for the five Service Delivery Areas (SDAs), to $125,000 for overall grant administration. CSSLAC did not separately track the costs related to this activity. Therefore, we were unable to determine CSSLAC's compliance with this requirement.
 

DOL requested CSSLAC to submit a proposal for the JOBLINKS project. In its request for proposal DOL allocated a $5 million budget to five SDAs: County of Los Angeles; City of Los Angeles; South Bay Consortium; Foothill Consortium; and Ventura County. The budget allotted CSSLAC $1,633,750 to service 335 participants and $125,000 for grant administration. The additional $125,000 was to cover expenditures incurred for overall coordination of the JOBLINKS project among the five SDAs.

The "Project JOBLINKS - Government's Requirements/Statement of Work," "Grant," states in part:

" . . . In recognition of the extra costs incurred by the County of Los Angeles SDA, in administering the overall grant for the five SDAs involved, up to $125,000 may be used for such administration. Funds not used for this purpose shall be used for regular JOBLINKS program activities."

We also noted that the language used by DOL in the "Project JOBLINKS - Government's Requirements/Statement of Work" is unclear as to the intent of the phrase "Funds not used for this purpose shall be used for regular JOBLINKS program activities." CSSLAC interpreted this to mean that the funds were earmarked for administrative purposes and, therefore, added the $125,000 to its internally created administrative budget.²   However, it is our opinion that DOL intended for any remaining funds be spent on program activities, not administrative activities.

Since CSSLAC did not separately track the costs related to this activity, we were unable to determine CSSLAC's compliance with this requirement.
 
 

Auditee's Response

"It is our understanding that the $125,000 for grants administration was included in our total administrative budget of $808,846 and that we were not required to track the $125,000 separately. This has been confirmed by our DOL Grant Officer."
 

Auditors' Comments

We acknowledge CSSLAC's response and their reference to the DOL Grant Officer's confirmation of CSSLAC's understanding of the $125,000 for overall coordination of the JOBLINKS project. However, we do not agree with these interpretations.
 

As stated in the finding, the "Project JOBLINKS - Government's Requirements/Statement of Work," "Grant," allowed the County of Los Angeles to use up to $125,000 for the additional costs related to administering the overall grant. It goes on to state, "Funds not used for this purpose shall be used for regular JOBLINKS program activities." Our opinion remains that DOL intended for any funds not spent on administration related to the overall coordination of the JOBLINKS project be spent on program activities, not administrative activities.

Recommendations

We recommend that the ETA Grant Officer:

7.    Ensure that all compliance requirement language included in grants is clear as
       to DOL's intent.

8.    Monitor the grantee to ensure that they are in compliance with grant terms.
 
 

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