More--And Better--Audits Needed of CETA Grant Recipients

FGMSD-81-1: Published: Nov 6, 1980. Publicly Released: Nov 6, 1980.

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The Department of Labor relies on the audit as a basic tool for preventing unauthorized expenditures and seeing that Comprehensive Employment and Training Act (CETA) programs are carried out as Congress intended.

Labor has fallen far short of its goal of auditing all organizations receiving CETA funds every 2 years; some sponsors have not yet been audited even once. Fewer than half the required audits of CETA funds have been performed, and the quality of completed audits is uneven. The audit function could accomplish more if it had additional resources. Labor did not have adequate information on the extent to which subsponsor's funds are being audited. For audits of prime sponsors, Labor has not required an analysis of the grantee's controls over funds subgranted or contracted. Although Labor has subsponsor audit requirements, such audits are performed separately and are the grantee's responsibility. If controls are weak at the subsponsor level, the fragmented audit process makes it difficult for Labor to identify and correct such weaknesses. Labor's difficulty in controlling the audit process stems largely from a shortage of staff in the Inspector General's Office and a historic lack of commitment to the audit process on the part of Labor. Audits performed did not always conform to required audit standards. The audit function has nevertheless benefited the CETA program and Labor. Auditors have recommended that grantees establish better internal controls and better management of cash transactions.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The cognizant congressional committees should ask Labor to provide information on the status of efforts to eliminate the audit backlog when further CETA authorization and funding are considered.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Labor should increase the surveillance over prime sponsor audits to make sure that the effectiveness of controls over sub-granted or contracted funds is tested.

    Agency Affected: Department of Labor

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Labor should institute more comprehensive quality assurance procedures to ensure that all CETA audits meet required audit standards. The quality testing procedures should be applied to a scientifically selected sample of audits. Further, the tests should be a balanced mix of contract reviews, desk reviews, workpaper reviews, and onsite reviews. The results of such testing would provide a standard against which the quality of all audits being done by Labor auditors, independent accountants, and state and local auditors could be measured.

    Agency Affected: Department of Labor

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Labor should determine the amount of resources necessary to perform needed audits as soon as it becomes clear what Labor will be responsible for under the single audit concept. Such resources should include both the Labor audit staff and the funds necessary to engage independent accountants and state or local government auditors. t required audit standards.

    Agency Affected: Department of Labor

 

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