Improvements Can Be Made in the Fiscal Management of CETA

HRD-82-53: Published: Apr 8, 1982. Publicly Released: Apr 8, 1982.

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GAO reviewed the fiscal management practices and procedures at 8 Comprehensive Employment and Training Act (CETA) prime sponsors and 23 subgrantees in 4 Department of Labor regions.

GAO found that Federal interest costs could be reduced by better management of CETA cash held by prime sponsors and subgrantees. Four of the eight prime sponsors which GAO examined held excess cash and seven of the eight allowed their subgrantees to hold excess cash. There was inaccurate reporting of prime sponsor cash balances, surplus cash not recovered from prime contract periods, and premature advancement of cash to the subgrantees. Recent Labor actions should help correct the problems identified. Prime sponsors' property and managment systems did not provide adequate accountability over CETA property which they and their subgrantees used. As a result, some prime sponsors and subgrantees did not know how much property they were responsible for, while others could not account for all of their property. Questionable costs were charged to CETA because prime sponsors and subgrantees did not have adequate procedures for determining the reasonableness and allowability of costs. In addition, future problems may occur because prime sponsors and Labor do not know the cost, amount, and location of property acquired under the CETA program. Should the current prime sponsor structure change and the CETA property have to be transferred to other organizational units, such as States or private industry councils, Labor may not be able to ensure that the Federal Government's interests are protected.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Assistant Secretary of Labor for Employment and Training should take the following actions to identify and correct problems resulting in the Federal Government incurring unnecessary interest costs because of excess cash held by prime sponsors and their subgrantees: (1) emphasize to the Employment and Training Administration regional officials the need to conduct onsite reviews and to help prime sponsors seek changes to their and subgrantees' operations for eliminating excess cash; (2) emphasize to prime sponsors that they work first with their largest subgrantees to identify excess cash balances; and (3) carry out as soon as possible the plan for requiring each prime sponsor to identify and promptly recover any unexpended funds held by subgrantees at the end of each fiscal year.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Assistant Secretary of Labor for Employment and Training should direct Employment and Training Administration officials to emphasize to prime sponsors: (1) the importance of establishing property records, periodic physical inventories, and controls to prevent loss or theft of property; (2) their responsibility for CETA property held by subgrantees; (3) that Labor's regulations requiring approval of property purchases include property acquired through lease-purchase arrangements and property purchased by subgrantees; and (4) their responsibility for acting on recommendations of correcting problems identified by the Labor Inspector General, independent auditors, and prime sponsors' independent monitoring units.

    Agency Affected: Department of Labor

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Assistant Secretary of Labor for Employment and Training should direct the responsible regional offices to take steps to recover funds expended for nonallowable items or purposes.

    Agency Affected: Department of Labor

 

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