Internal Control Weaknesses Contributed to the Mismanagement and Misuse of Federal Funds at Selected Community Action Agencies

Highlights

In 1979 the Federal Government provided an estimated $1.5 billion to 897 community action agencies to develop and conduct programs aimed at eliminating poverty and aiding the poor.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Community Services Administration	The heads of Federal departments and agencies that provide funds directly or indirectly to community action agencies should develop systems to prevent grantees from claiming reimbursement for the same expense under more than one program.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The heads of Federal departments and agencies that provide funds either directly or indirectly to community action agencies should follow current cash management policy and recover any excess funds being held by grantees.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The heads of Federal departments and agencies that provide funds either directly or indirectly to community action agencies should enforce the provisions of OMB Circulars A-102 and A-110 that deal with establishing a strong system of internal controls at the grantee level.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The heads of Federal departments and agencies providing funds either directly or indirectly to community action agencies should impose sanctions against grantees who repeatedly maintain excessively high balances of Federal cash. Such sanctions may include suspension of cash advances or the charging of interest on excess balances.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The heads of Federal departments and agencies that provide funds either directly or indirectly to community action agencies should ensure that grantees adhere to Federal standards relating to property management by periodically reviewing their property management systems.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The heads of Federal departments and agencies that provide funds either directly or indirectly to community action agencies should, where specific weaknesses exist, develop a system for ensuring that grantees' internal controls are adequate to protect Federal funds from mismanagement and misuse. Such systems should include sanctions which can be applied against grantees who are repeatedly found to have inadequate systems.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The Director of the Community Service Administration should develop monitoring procedures for overseeing the implementation of this overall policy.	Closed Please call 202/512-6100 for additional information.
Office of Management and Budget	The Director of the Office of Management and Budget (OMB) should followup on the community Service Administration's efforts to regulate service corporations as part of the OMB budget review process and Financial Priorities Program.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The Director of the Community Service Administration should review service corporations established by community action agencies prior to this new overall policy to determine if an arm's length relationship exists between the two organizations. Where this is not the case, the Director should act to make the relationship conform to the new policy, and determine if the Government has a residual interest in any property acquired by these service corporations and establish how such interest will be protected.	Closed Please call 202/512-6100 for additional information.
Community Services Administration	The Director of the Community Services Administration should develop an overall policy governing the establishment of service corporations or similar type organizations by community action agencies or their delegates and/or employees. This should, at a minimum, (1) require that Federal approval be obtained before any Federal funds are transferred to such an organization; and (2) include applicable provisions of Community Service Administration procurement standards, particularly those rules that promote the establishment of an arm's length relationship between a buyer and seller.	Closed Please call 202/512-6100 for additional information.

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Full Report

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Office of Public Affairs

Chuck Young

Managing Director

youngc1@gao.gov

(202) 512-4800

Topics

Auditing and Financial Management

Community development programsExpense claimsFederal grantsFederal social security programsFinancial managementGrant administrationInternal auditsLoansProperty and supply managementPublic assistance programs