Auditing and Financial Management:
Improved Grant Auditing and Resolution of Findings Could Save the Law Enforcement Assistance Administration Millions
FGMSD-80-21, Feb 19, 1980
A review was made of the audit practices of the Law Enforcement Assistance Administration (LEAA), including audits conducted by, and of, its grantees and subgrantees and the use and disposition of such audits. Top management at LEAA has known for years that its recipients are not being regularly audited and that many audits are not made to find out if recipients comply with Federal grant terms. Nonetheless, little decisive action has been taken to correct the problem, and as a result, the Government loses money that would otherwise be collected or saved.
The lack of adequate auditing guidelines and procedures at LEAA is costly in three ways: (1) grantees and subgrantees are keeping funds which they are not entitled to under applicable laws and regulations; (2) LEAA and some State planning agencies miss the opportunity to improve grant programs by delaying or foregoing needed corrective actions recommended by auditors; and (3) LEAA does not get full return on its expenses of the audit. Auditors repeatedly report the same deficiencies, indicating that recipients have not taken corrective action. Not only do delays occur in forwarding audit reports to program managers responsible for resolving the findings, but program managers procrastinate in acting on the findings. Furthermore, the LEAA resolution of some findings appears questionable. Instead of making collections, many findings were cleared based on promises of corrective actions or on certifications that questionable expenditures were proper. In one case, auditors identified over $5 million in improper or undocumented costs, and in relying on the grant recipient's promise to correct the deficiencies, LEAA program managers allowed the recipient to keep all but $12,867 of the questioned expenditures. A subsequent LEAA audit disclosed that the grant recipient had not corrected may of the previously identified weaknesses. Inadequate audit resolution procedures and practices were found at some State planning agencies as well, with LEAA auditors determining that 31 of the 47 agencies reviewed need to followup on audit findings.
- Review Pending
- Closed - implemented
- Closed - not implemented
Recommendation for Executive Action
Recommendation: The Attorney General should direct the LEAA Administrator to: develop a coherent and comprehensive policy for achieving adequate audit coverage of all its grant recipients; launch an all-out effort to have all major grant recipients audited within the next 2 years in accordance with this policy; issue guidelines for program managers to use in resolving audit findings; hold a person or persons in program management responsible for timely and proper resolution of findings; designate an official independent of program management and auditing to monitor the substance of audit findings and the propriety of resolutions; require the official to provide top management with quarterly reports showing the disposition of audit findings, including the age and amounts of unresolved findings and results of the findings closed during the period; require auditors to track open findings until all recommended improvements are made, the funds are recovered, the debt forgiven, or the findings are determined to be in error; require written decisions justifying why amounts shown to be due by the auditors' reports were not collected, with the decisions being reviewed for legality and endorsed by the legal official who performs the review; direct LEAA's Comptroller to provide positive accounting controls over collection of audit-related funds; and require program managers and auditors to systematically review the adequacy of State planning agency procedures and practices for issuing audit reports and resolving audit findings.
Comments: Please call 202/512-6100 for additional information.