March 31, 1998
 
 

MEMORANDUM FOR:         RAYMOND J. UHALDE
                                                  Acting Assistant Secretary
                                                       for Employment and Training
 

                                                             / s /
FROM:                                    JOHN J. GETEK
                                                  Assistant Inspector General
                                                      for Audit

SUBJECT:                             Audit of Fort Simcoe Job Corps Center
                                                  Final Audit Report No. 09-98-001-03-370

Attached is the final report on the Fort Simcoe Job Corps Center.

We concluded that Job Corps could not rely on financial or program information reported by the Fort Simcoe Job Corps Center (FSJCC). While performance results regarding General Education Development and High School Diploma attainments are accurate, performance results regarding overall vocational and academic achievements are not supported. Vocational training records did not support that FSJCC had properly trained students before certifying them as vocational training completers and allowing them to enter the employment force. Academic achievement claims were based on data that had been improperly manipulated and not corrected by FSJCC management. In our opinion, these problems significantly reduce the reliance Job Corps can place on FSJCC performance statistics in evaluating FSJCC program accomplishments.

We also concluded that financial systems used to report costs for the FSJCC need significant improvements. Until improvements are made, we do not believe that Job Corps can rely on the financial systems to produce accurate and timely financial information regarding FSJCC.

In response to the draft report, the U.S. Bureau of Reclamation (USBR) generally agreed with the findings and recommendations regarding program performance. However, USBR disagreed with the report's conclusion that the current financial systems related to Job Corps activities do not produce accurate and timely financial information. Also of major concern to the USBR was the implication that the financial and program deficiencies identified by the report, based on the Center's conditions in Program Year 1995 (July 1995 through June 1996), still exist.

We would appreciate receiving your written response to this report within 60 days. Please specify corrective actions either taken or planned. If you have any questions concerning this report, please contact Warren A. Seitz, Regional Inspector General for Audit, in San Francisco at (415) 975-4030.

Attachment

EXECUTIVE SUMMARY                                                                                                                     1

INTRODUCTION                                                                                                                                    6

OBJECTIVES, SCOPE AND METHODOLOGY                                                                               8

REPORTS

Independent Auditors' Report on the Job Corps' Conservation
Center Financial Reports (ETA 2110F)                                                                                 11

Independent Auditors' Report on the Internal Control Structure
Based on an Audit Performed in Accordance With
Government Auditing Standards                                                                                           13

Independent Auditors' Report on Compliance Based on an Audit
Performed in Accordance With Government Auditing Standards                                15

Vocational Completions Claimed Are Not Supported                                                      17

Academic Achievements Are Overstated                                                                             21

Internal Controls Need to be Improved                                                                                 26

Expenses Charged by USBR's Boise Regional Office Are Unsupported                   33

"Program Direction" Costs Need to be Defined                                                                 36

Required Records Are Missing From Student Files                                                          39

EXHIBIT A -- FSJCC Program Year 1995 Expenses                                                                     43

APPENDIX A -- USBR Comments to Draft Report                                                                        44

APPENDIX B -- Job Corps Comments to Draft Report                                                               45

CFR                                                         Code of Federal Regulations

DOI                                                           U.S. Department of Interior

DOL                                                         U.S. Department of Labor

ETA                                                         Employment and Training Administration

FSJCC                                                   Fort Simcoe Job Corps Center

GED                                                       General Education Development

HSD                                                       High School Diploma

JCAO                                                     Job Corps Accounting Office

JTPA                                                     Job Training Partnership Act

OIG                                                         Office of Inspector General

PRH                                                        Policy and Requirements Handbook

PY                                                           Program Year

ROAR                                                     Regional Office Annual Review

SGL                                                         Standard General Ledger

SPAMIS                                                 Student Pay Allotment and Management Information System

TABE                                                     Test of Adult Basic Education

TAR                                                         Training Achievement Record

USBR                                                     United States Bureau of Reclamation
 
 

The U.S. Department of Labor (DOL), Office of Inspector General (OIG) performed an audit of the Fort Simcoe Job Corps Center (FSJCC). This audit covered (1) program performance statistics for Program Year (PY) 1995 (July 1, 1995 through June 30, 1996) and (2) FSJCC expenditures as reported on the ETA Form 2110F, the Job Corps Conservation Center Financial Report for the same period.

We concluded that Job Corps could not rely on financial or program information reported by FSJCC. While performance results regarding General Education Development (GED) and High School Diploma (HSD) attainments are accurate, performance results regarding overall vocational and academic achievements are not supported. Vocational training records did not support that FSJCC had properly trained students before certifying them as vocational training completers and allowing them to enter the employment force. Academic achievement claims were based on data that had been improperly manipulated and not corrected by FSJCC management. In our opinion, these problems significantly reduce the reliance Job Corps can place on FSJCC performance statistics in evaluating FSJCC program accomplishments.

We also concluded that financial systems used to report costs for the FSJCC need significant improvements. Until improvements are made, we do not believe that Job Corps can rely on the financial systems to produce accurate and timely financial information regarding FSJCC.

Program Performance Review Results

We concluded that FSJCC accurately reported performance statistics for GED and HSD attainments but FSJCC could not support the vocational and academic achievements reported.

The following summarizes the audit findings:

A.       Vocational Completions Claimed Not Supported

Of the 146 vocational completers claimed by FSJCC in PY 1995, we reviewed 120 student files to determine whether FSJCC had documented the achievement of the necessary skills to be considered vocational completers. Of these 120, 80 (66.7 percent) did not have documented evidence that they had successfully obtained all required skills at the minimum proficiency level. This was primarily because FSJCC management did not properly monitor the training achievement records prepared by vocational instructors to ensure they were completed properly. As a result, neither Job Corps nor FSJCC management have adequate assurances that students graduating from FSJCC have actually developed the necessary vocational skills for successful employment in their chosen trades. Also, Job Corps cannot objectively evaluate FSJCC's vocational training performance or compare it with other centers. (See Finding 1.)

The statistical impact of significant improprieties in student academic achievement testing disclosed by a U.S. Bureau of Reclamation (USBR) monitoring review of FSJCC during PY 1995 has never been corrected. While FSJCC management took actions to prevent additional improprieties, they did not reassess students affected or correct FSJCC statistics. Since the integrity of the performance data has been compromised, Job Corps cannot rely upon FSJCC math and reading achievement statistics for the audit period. (See Finding 2.)

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to require:

• FSJCC instructors to properly record training in the Training Achievement Records;

 
• FSJCC to establish a management system to ensure all training has been completed and recorded before students are considered as vocational completers;

 
• USBR to review this management control system during monitoring reviews;

 
• FSJCC management to reassess and correct the impact of testing improprieties by:

a.  identifying all students tested during the period January 1996 through June 1996;

b.  retesting those students still enrolled to determine their actual educational level;

c.  providing remedial education for those students who score low on the retest; and

d.  adjusting their statistics to reflect actual retest scores.

For the audit period, the ETA Form 2110F prepared by FSJCC reported total operating and capital costs of $5,348,076 to Job Corps. Due to the weaknesses in internal control and lack of supporting documentation for certain costs, we have expressed an adverse opinion on FSJCC's Form 2110F for PY 1995. Also, we question $580,485 of the costs claimed by FSJCC for PY 1995.

A.      Internal Controls Need to Be Improved

USBR needs to make significant changes to improve internal controls over financial information. We identified weaknesses regarding a) reconciling cost reports and the general ledger, b) use of control accounts for equipment and stores, and c) segregation of duties at FSJCC. Management has not taken action to fully correct all these internal control weaknesses, despite a previous audit report recommending necessary improvements. As a result, the financial information from FSJCC is not reliable and FSJCC PY 1995 cost has been over reported by $460,429. (See Finding 3.)

During PY 1995, the USBR Boise Regional Office billed FSJCC a total of $186,542 for various services. We question $120,056 of these costs due to a lack of adequate supporting documentation. The Boise billings apparently were for architectural and engineering services, and other review and advisory work performed for FSJCC construction projects and for related administrative functions. The Boise billings were not reviewed or approved by FSJCC and did not contain information necessary for determining whether the amounts billed were supported and reasonable or whether the specific services rendered were necessary. (See Finding 4.)

The funding purpose of "Program Direction" is unclear and Job Corps needs to define it better. The Interagency Agreement between the Employment and Training Administration (ETA) and USBR offers no clear explanation of what the funding does and does not cover. Similarly, the annual budgets approved by Job Corps, and the Policy and Requirements Handbook (PRH) are silent regarding the nature of the expenses for which "Program Direction" funding serves as reimbursement. Consequently, 1) neither Job Corps nor USBR clearly understand what "Program Direction" costs cover and do not cover, and 2) Job Corps may be getting overcharged for services properly allocable to "Program Direction" funding. (See Finding 5.)

Records that the PRH requires to be kept in the individual student personnel folders are often missing. Documents missing from the student folders included Training Achievement Records (TARs), Tests of Adult Basic Education (TABEs), and copies of HSDs and GED certifications. In some cases, FSJCC's staff found these records in inappropriate locations, such as the office of a terminated teacher. In many cases, the records simply were not found. As a result, FSJCC cannot support certain reported performance data. In addition, if a terminated student transfers or is later readmitted to
 

a different Job Corps center, FSJCC may be unable to provide the new center complete information critical to assessing that student's background and needs. (See Finding 6.)

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to require USBR to:

• improve internal control by reconciling the form 2110F to the SGL quarterly;

 
• correct the FSJCC Form 2110F for the $460,429 reported above and adjust reports to the Department of Treasury accordingly;

 
• establish control accounts and subsidiary records as required; and

 
• immediately segregate duties among FSJCC employees.

 

• review and approve all intra-agency billings;

• obtain adequate supporting documentation for billings received;

 
• remove the $120,056 from FSJCC costs until adequate supporting documentation can be presented; and

 
• establish a management control system to ensure adequate records are being kept.

 

In response to the draft report, USBR stated:

Reclamation disagrees with the report's conclusion that the current financial systems related to Job Corps activities do not produce accurate and timely financial information. Also of major concern is the implication that the financial and program deficiencies identified by the report, based on the Center's conditions in Program Year 1995 (July 1995 through June 1996), still exist.

During the past 2 months, we have researched the concerns expressed in the report. Increased management attention and

assistance are being provided to ensure that the required processes and procedures are in place at the Center to meet Reclamation's Job Corps responsibilities. Many of the findings and recommendations from your review and the recent Department of Labor audit report have been addressed and resolved or action is continuing on outstanding issues, particularity [sic] in the area of documenting program activities. The enclosed comments provide additional supporting documentation for your consideration in reevaluating the materiality of the report's findings, and we do not believe, based on the actions taken, that the findings support an adverse opinion.

In response to the audit report, Job Corps Region X generally agreed with findings 1, 2 and 6, but reserved comment on findings 3, 4 and 5 until Job Corps reviewed USBR's response to this report.

Job Corps Region X comments are included with each finding and are presented in their entirety as Appendix B to this report.
 

Background

Congress enacted the Job Training Partnership Act (JTPA) to establish programs to prepare youth and adults facing serious employment barriers for participation in the labor force.  These programs provide job training and other services that result in increased employment and earnings, increased educational and occupational skills, and decreased welfare dependency.  They improve the quality of the workforce and enhance the productivity and competitiveness of the nation. T he Job Corps Program, which is authorized under the JTPA Title IV, Part B, is a residential education and training program to help disadvantaged youths to become more employable and productive citizens.  This important mission, coupled with the fact that the program's costs exceed $1 billion per year, makes ensuring Job Corps' success vitally important.

The Fort Simcoe Job Corps Center (FSJCC) is a Civilian Conservation Center operated by the U. S. Bureau of Reclamation (USBR) of the U.S. Department of Interior (DOI).  Located near the town of White Swan, Washington, on the Yakima Indian Reservation, FSJCC has a capacity of 224 Job Corps members.  FSJCC has a staff size of approximately 70 full-time personnel.  For Program Year (PY) 1995, FSJCC had an approved operating budget of approximately $4.0 million.  FSJCC's vocational training programs emphasize the building trades such as carpentry, cement masonry and bricklaying, painting, plastering, and heavy equipment operation and repair.  Other vocational programs offered by FSJCC include truck driving, automobile repair and painting, culinary arts, and business/clerical.  FSJCC has an education department where students can prepare for their General Education Development (GED) certificates and/or earn high school diplomas (HSD).  For PY 1995, Job Corps rated FSJCC's overall performance as 66th of the 109 Job Corps centers.

Principal Criteria

The Job Training Partnership Act (JTPA), Title IV-B, 29 U.S.C. 1691-1709, as amended, is the authorizing legislation for Job Corps.

20 CFR, Part 638 - Job Corps Program Under Title IV-B of the Job Training Partnership Act, was established to delineate the policies, rules and regulations that govern the operation of the Job Corps program as authorized under Title IV-B of the JTPA.  This part contains all the regulations applicable to Title IV-B programs.

Policy and Requirements Handbook (PRH) issued by Job Corps establishes the policies and procedures for the operation of all Job Corps centers.

PRH-9, Appendix 901 - Job Corps Center Financial Management establishes the Job Corps centers' financial management requirements and procedures.

The Interagency Agreement For Administration of Job Corps' Civilian Conservation Center Program outlines the joint and separate roles, authorities and responsibilities of the Employment and Training Administration (ETA) and USBR concerning the administration of Job Corps centers that are on Federal lands controlled by USBR.  The agreement includes the requirements that USBR operate its Centers according to the relevant rules, regulations, and guidelines issued by ETA and that USBR properly control, use and account for Job Corps funds.

OMB Circular A-123 provides guidance to Federal managers on improving Federal program and operations accountability and effectiveness by establishing, assessing, correcting, and reporting on management controls.
 

Program Performance Review

The overall objectives of our program performance review were to determine whether FSJCC accurately reported the following performance results:

• Vocational training program completions;
• Academic achievements (improvement in reading and math scores); and
• GED and HSD attainment rate.

We have included the internal control weaknesses and performance results overstatements as findings in the Findings and Recommendations section of this report.

Financial Audit

The primary objectives of our audit were to determine whether the FSJCC costs claimed were:

• reasonable;
• allowable; and
• allocable and chargeable under the Interagency Agreement and the applicable cost principles.

• obtain an understanding of FSJCC's internal controls relating to accounting records used in reporting costs under Federal grants to ensure that funds were properly controlled and accounted for, used prudently and only for the purposes intended; and

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

Statistical sampling was not used since the audit universe (number of transactions and/or records) related to individual accounts or cost elements rendered its use impractical.  This was principally because USBR made a large number of unusual journal entries to FSJCC's general ledger at the very end of the program year.  We determined that, in light of these events, we should concentrate on judgmental sampling of transactions processed during PY 95. T herefore, we used nonstatistical sampling to test individual account transactions and balances.

In planning and performing our audit of the costs reported for PY 1995, we analyzed FSJCC's and USBR's internal control structures 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 structures.  We obtained an understanding of relevant policies and procedures and whether they have been placed in operation for the significant internal controls, which we identified as payroll and disbursements.  Our understanding was based on the results of interviews, system narratives and/or a review of prior audit and monitoring reports. Based on this understanding, we assessed control risk related to the significant internal controls for USBR and FSJCC.

As required by the 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.

We have included the internal control weaknesses and instances of noncompliance as findings in the Findings and Recommendations section of this report.

Entrance/Exit Conferences

At the request of the personnel involved, we held four separate entrance conferences. We met with Job Corps representatives at the Seattle Regional Office on April 2, 1997.  On April 7, 1997, we met with USBR's representatives in their offices in Denver, Colorado.  On April 22, 1997, we met with FSJCC and Boise Regional Office representatives at FSJCC.  At the request of USBR, we had one final entrance conference with additional USBR staff in the Denver office on May 12, 1997.  We performed our fieldwork at FSJCC between April 22 and August 27, 1997. We also conducted fieldwork at the USBR offices in Denver during this period.
 

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 reported.  We believe that our audit provides a reasonable basis for our opinion.

As discussed in the Findings and Recommendations section of this report, FSJCC had significant procedural weaknesses which resulted in misstatements of program costs.  The cost of FSJCC operations was overreported by at least $460,429 and additional costs may be determined to be improper by Job Corps. The total effect of these determinations cannot be estimated at this time.

In our opinion, because of the effects of the matters discussed in the preceding paragraph, FSJCC's Form 2110F does not present fairly, in all material respects, the results of FSJCC operations for Program Year 1995.
 

This report is intended for the information of Job Corps 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.
 
     / s /
JOHN J. GETEK
Assistant Inspector General
    for Audit
August 27, 1997

We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in the 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 reported for FSJCC for the period July 1, 1995 through June 30, 1996, we considered both USBR's and FSJCC's 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.

The managements of USBR and FSJCC 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 USBR's and FSJCC's reporting of costs to DOL 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 may become inadequate because of changes in conditions or that the effectiveness of the design and operation and procedures may deteriorate.

Our consideration of the internal control structures 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 material weaknesses in the FSJCC and USBR internal control structure related to (1) reconciling cost reports to the general ledger, (2) segregating duties among employees, and (3) unsubstantiated costs. As a result of these weaknesses, the costs of FSJCC operations for PY 1995 were overreported by at least $460,429 and additional costs may be determined to be improper by Job Corps.  These weaknesses are discussed in the Findings and Recommendations section of this report.

This report is intended for the information of Job Corps 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.
 

      / s /
JOHN J. GETEK
Assistant Inspector General
    for Audit
August 27, 1997
 
 

We have audited the ETA 2110F, Job Corps Conservation Center Financial Reports (Exhibit A) of Fort Simcoe Job Corps Center (FSJCC), as administered by the U.S. Department of Interior's Bureau of Reclamation (USBR), for the period July 1, 1995 through June 30, 1996, and have issued our report thereon dated August 27, 1997.

We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial 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 reported are free of material misstatement.

Compliance with laws, regulations, and contracts applicable to FSJCC is the responsibility of USBR and FSJCC management. As part of obtaining reasonable assurance about whether the costs reported are free of material misstatement, we performed tests of FSJCC's compliance with certain provisions of laws, regulations, and contracts. 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 material instances of noncompliance, described in the Findings and Recommendations section of this report in Findings 3, 4, 5, and 6, that are required to be reported under Government Auditing Standards. The costs of FSJCC operations for PY 1995 were overreported by at least $460,429 and additional costs may be determined to be improper by Job Corps.

We considered these material noncompliance instances in forming our opinion on whether the FSJCC's ETA 2110F, Job Corps Conservation Center Financial Report is presented fairly in all material respects and this report does not affect our report dated August 27, 1997, on that statement.

For Program Year (PY) 1995, the Fort Simcoe Job Corps Center (FSJCC) reported vocational completions for 146 of 336 (43.5 percent) eligible students. FSJCC reported academic gains in reading for 64 of 150 (42.7 percent) and in mathematics for 100 of 210 (47.6 percent) of eligible students.  We found FSJCC's training records did not support the claimed vocational completions and the academic achievement statistics included improperly manipulated data which had not been corrected.  For PY 1995, FSJCC reported costs of $5,348,076 to Job Corps.  We question $580,485 of these costs.
 

1.    Vocational Completions Claimed Are Not Supported

FSJCC's training records do not support two-thirds of the number of students claimed as Vocational Completers for PY 1995.  This is primarily because FSJCC management did not monitor Training Achievement Records (TARs) prepared by vocational instructors to ensure the TARs were completed properly.  As a result, neither Job Corps nor FSJCC management have adequate assurances that students who have graduated from FSJCC developed the necessary vocational skills for successful employment in their chosen trades.  Also, Job Corps cannot objectively evaluate FSJCC's vocational instruction performance or compare it with other centers for PY 1995.

In the Job Corps program, vocational skills achieved by each student are recorded on TARs.  Each vocation has a different TAR that lists the core skills and proficiency levels for each skill that a student must develop to be considered as completing training for that vocation.  For example, the Auto Body Repair vocation TAR lists 85 skills which students must learn to a prescribed proficiency level to complete the Auto Body Repair vocational training.  The Auto Body Repair TAR has an additional 65 skills that a student must develop to be considered an advanced completer.  As the students learn each skill and demonstrate the required proficiency, the instructor and the student both are required to initial the TAR to show the student developed the necessary skill proficiency.

The TARs are a critical record of training. For PY 1995, a performance measure of Job Corps centers was "Vocational Completions." Job Corps defined this measure in PRH-8 as "all completers and advanced completers of approved TARs" divided by "all terminated students." Job Corps staff monitor this measure to evaluate a center's performance. The completion rate is also used to evaluate specific vocational programs at each center.

For PY 1995, FSJCC reported that it had a vocational completion rate of 43.5 percent. In PY 1996, the completion rate jumped to 56.5 percent. FSJCC's ranking in this performance measure went from 70^th in the nation during PY 1995 to 17^th in PY 1996. However, the FSJCC vocational training records do not support either of these performance levels.

For PY 1995, FSJCC claimed 146 student vocational completers out of a total terminated student population of 336. Of the 146 vocational completers, we reviewed 120 student files to
 

In most deficient TARs, required skills and their proficiency level were not initialed as completed by either the student or the instructor. Many showed the student had been developing a specific skill but the student was certified as a completer before the TAR documented the required proficiency level. In some cases, instructors lined out specific skills or put "n/a" for a required skill without explanation. In all cases, the TARs were processed through the students' completion procedures and into their final folder without effective review to ensure proper completion.

For example, one TAR reviewed from the Auto Body Repair vocation had only 54 of the 85 (63.5 percent) required skills shown as completed by either the student or instructor signing off as required. The skills required for completion, but not shown as completed, included preparing an estimate, preparing surface for painting, and other important basic skills. Job Corps does not have adequate assurances that this student actually developed these required skills with minimum proficiency before FSJCC claimed the student as a completer.

Another TAR reviewed for the Dental Assistant vocation had 130 required skills the student had to develop. Of these 130 skills, the TAR showed the student did not develop 24 (18.4 percent) to any proficiency at all and the TAR showed another 7 (5.4 percent) to be at a proficiency level below that needed for completion.  The skills not acknowledged as developed at all included such basic skills as identifying oral surgery instruments, instructing patients in post-operative care and listing the most common drugs used in a dental office and their side effects.  Again, Job Corps does not have adequate assurances that this student actually learned the necessary skills before FSJCC acknowledged the student as a vocational completer.

In fact, based on the documentation maintained, FSJCC has not qualified these students to be vocational completers and may be exposing FSJCC and Job Corps to liability litigation risks. If employers, such as dentists, rely on the Job Corps vocational completion as a measure of competence yet FSJCC documentation does not support this completion, FSJCC and Job Corps may be held responsible if something goes wrong during the students' employment. FSJCC and Job Corps would be unable to defend themselves when the official records do not show that FSJCC properly trained students before presenting them to the public for employment, especially where competence could have health or safety consequences.

Two factors caused this situation. First, FSJCC instructors became lax in preparing and maintaining TARs for students.  Secondly, FSJCC management did not implement effective controls to detect incomplete TARs and obtain corrective action, including providing additional
 

Overall, training records do not support FSJCC's vocational completion rate for our audit period. Job Corps does not have adequate assurances that students who left FSJCC as completers have, in fact, received the required training and developed the necessary skills to maintain employability. Also, Job Corps cannot objectively evaluate FSJCC's vocational instructional performance or compare FSJCC's performance with that of other Job Corps centers. Finally, Job Corps may expose itself to litigation for presenting students as having a certain level of competence when FSJCC has not documented that level. Therefore, FSJCC management needs to implement actions to ensure TARs are properly completed before students are considered vocational completers.

Recommendations

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to require:

• FSJCC instructors to properly record training in the Training Achievement Records;

 
• FSJCC to establish a management system to ensure all training is completed and properly documented before students are certified as vocational completers; and

 
• USBR to review this management control system during monitoring reviews.

 

In response to the draft report, USBR stated:

Reclamation agrees that for Program Year 1995 the Center instructors and management were lax in maintaining the Training Achievement Records (TARs) for students. This has been a recurring problem, and management is implementing processes to resolve these issues. Technical assistance has been provided from other Job Corps centers, and additional training on completing TARs has been provided to instructors. Management will review and approve TARs to ensure they are accurate. Weekly staff meetings and on-site monitoring of individual departments will be used for additional instruction and monitoring. A desktop file of terminated students will be maintained in the student records office. This file will contain a check-off list of items necessary to close the permanent files, including a final TAR verification prior to a student terminating the program. In addition, a check-off system is being developed to reference those students who are center transfers, advanced training transfers, and advanced career training transfers. This should assist the Center in knowing when and why a file is not located in student records.  Vocational completions and TARs will be reviewed

during site visits to ensure compliance with the Job Corps' Procedures and Requirements Handbook. The Center has set in place ongoing monitoring and oversight review responsibilities to ensure the integrity of the TARs. These actions will help ensure training records accurately document vocational completions.

In response to the draft report, Job Corps Region X stated:

We agree with the auditors' finding that training records do not support the Vocational Completions reported.  Based on a review of training records, it is not possible to determine if students graduating from Fort Simcoe JCCCC have actually developed the requisite vocational skills for successful employment.

Based on the positive placement results, it appears that Fort Simcoe students are adequately prepared for employment, and that the audit finding primarily discloses a record keeping issue, rather than a training issue.

We do not agree with Job Corps' statement that this audit finding primarily discloses a record keeping issue, rather than a training issue. In PY 1996, FSJCC placed 79 percent of its terminees into an initial job, exceeding Job Corps' national standard of 75 percent. However, Job Corps' post placement followup found that only 62 percent of FSJCC's placed students were still working 13 weeks after their initial placement. Students may be having difficulty retaining employment because they had not developed the necessary vocational skills for successful employment in their chosen trades.

The actions proposed by USBR and Job Corps should provide adequate assurance that students who leave FSJCC as completers have, in fact, received the required training. The recommendations related to this finding are resolved and will be closed when all actions are completed.
 

The statistical impact of significant improprieties in student academic achievement testing disclosed by a monitoring review of FSJCC during PY 1995 has never been corrected. While FSJCC management took actions to prevent additional improprieties, they did not reassess students affected or correct FSJCC statistics. As a result, students may have graduated from FSJCC without adequate reading and math skills. Also, management compromised the integrity of the performance data and Job Corps cannot rely upon FSJCC math and reading achievement statistics.

As part of the overall program to improve disadvantaged youth employability, Job Corps provides basic and remedial education and GED and HSD attainment classes. To assess each student's academic level on entry to a Job Corps center, and the student's ongoing needs and progress, Job Corps uses the Test of Adult Basic Education (TABE). This test is designed to measure individual proficiency in reading and math. Each center tests students upon entry to determine their academic level. If an entry score of 8.5 is not earned, the center provides remedial or basic education classes and retests the student at least every 90 days to measure academic progress. This continues until a score of at least 8.5 is obtained.

Job Corps measures academic performance by progress shown in the TABE scores. Job Corps monitors centers and rates them on their academic gains as reflected in TABE score gains. For PY 1995, two performance measures reflected academic achievements. One was Academic Attainment in Reading, and the other was Academic Attainment in Math. Both used TABE scores to measure students academic progress. These measures track the progress of students who came into FSJCC with a demonstrated need for basic remedial education. Students who make material academic progress as documented by higher TABE scores qualify as academic gains for performance purposes. The key document in this performance process is the individual TABE test.

In April 1996, Job Corps issued a report that focused on the TABE testing procedures at FSJCC. The report indicated that manipulation of TABE testing was occurring at FSJCC. In response, in May 1996, the USBR performed a more extensive review of FSJCC's TABE testing procedures. The review included an analysis of 48 students' TABE test documentation and oral interrogation of students. USBR also determined that significant improprieties had occurred in student academic achievement testing. Their report concluded: "It appears tests were manipulated in order to achieve greater TABE gains." The report stated that the manipulation of test results probably occurred in the period January 1996 through May 1996. They recommended FSJCC management take disciplinary action on the parties involved.

As part of our audit, we attempted to verify the results of the USBR report regarding TABE testing. We selected 10 names listed in the USBR report and reviewed the students' files for TABE documentation.

Despite the evidence of manipulation, FSJCC management did not take actions to correct the manipulated data. They did not retest any of the students potentially affected. They did not remove any of the invalid test scores from FSJCC statistics. FSJCC did take steps to end the practice of TABE manipulation. During the week of April 1, 1996, the ETA Project Manager first brought the problem to the Center Director's attention and asked for the retirement of both the Education Department Principal and the TABE Administrator. The Project Manager also requested that the TABE Administrator be changed immediately. At the time of USBR's May review, none of these requests had been acted upon. However, as part of the USBR review's action plan, the TABE Administrator was replaced during the monitor's visit. Subsequently, the replaced TABE Administrator retired. However, FSJCC management took no corrective action to correct the test results or, more importantly, to retest students still in residence and identify those that erroneously passed the test but who may have needed additional academic training.

For example, one student entered Job Corps with a TABE reading score of 1.9 and a math score of 2.0 or about a second grade level in both areas. Six months later, the manipulated score gave him a 12.9, or above high school level, in both reading and math. The student later admitted receiving the correct answers from the TABE administrator during the second test. Despite this, and the specific inclusion of this case in the USBR report, FSJCC never retested the student who then graduated from Job Corps with the 12.9 scores. These scores remain in FSJCC's performance data and they still claim the huge academic gains in the PY 1995 results. FSJCC had no real indication of the student's actual reading or math level at the time of graduation. Job Corps has no assurances this student was adequately prepared academically.

Another student entered FSJCC with approximately second grade TABE scores for both math and reading. Only 2 months later, the manipulated TABE scores showed an academic gain to above high school level. The student admitted that the TABE administrator told her which questions were answered wrong and gave her the correct answers. Despite this and the specific inclusion of this case in the USBR report, FSJCC never retested the student and the student graduated from Job Corps with the manipulated scores. These scores remain in FSJCC's performance data and they still claim the huge academic gains in the PY 1995 results. FSJCC had no indication of the student's actual reading or math level at the time of graduation.

According to the USBR report, more than 50 percent of the TABE documentation contained evidence of manipulation.  This makes FSJCC's entire academic achievements questionable and unreliable.  Although the manipulation stopped in late PY 1995, the effect of this will
 

The USBR report concluded that the TABE administrator manipulated the scores to achieve greater TABE gains. The report indicated that the motivation for this appeared to have been widespread concern that continuing low performance ratings would result in FSJCC being closed.

This situation has many effects.  First, the PY 95 academic performance data of FSJCC has been compromised to an undeterminable extent.  With more than 50 percent of the test scores reviewed by USBR being open to question, the actual academic achievement is undoubtedly less than that claimed, and potentially significantly so.  Neither FSJCC nor Job Corps have any reliable measure of FSJCC's actual academic improvement accomplishments.  As noted above, this also affects PY 1996 and 1997, although to lesser degrees.

Also, and most important, this situation has adversely affected the students at FSJCC.  An undeterminable number of students who received high TABE math and reading scores did not earn them, and did not get the chance to obtain additional academic opportunities required by their actual needs and abilities.  Job Corps recognizes that reading and math difficulties adversely affect a student's long-term employability. The jobs for which FSJCC trains students, such as auto mechanic and carpenter, require reading of technical manuals and mathematical computations such as estimates and material needs.  Neither Job Corps nor FSJCC management know if the students with manipulated scores actually can perform at a employable level.

Recommendations

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to require FSJCC management to reassess and correct the impact of testing improprieties by:

• identifying all students tested during the period January 1996 through June 1996;

 
• retesting those students still enrolled to determine their actual educational level;

 
• providing remedial education for those students who score low on the retest; and

 
• adjusting their statistics to reflect actual retest scores.

In response to the draft report, USBR stated:

Reclamation agrees that there were problems with assessing and documenting academic achievements during Program Year 1995. Through increased management attention and specific technical assistance provided by staff from other centers, we are addressing the issues identified by this report to resolve all identified findings, ensure compliance with the Procedures and Requirements Handbook, and improve the academic program at the Center.

Center personnel have researched files from the Computer Managed Instruction System and reviewed all 101 student test records for the period January through June 1996. There were 46 students who took initial Test of Adult Basic Education (TABE) tests and 55 students who took follow up tests. The majority of students taking initial tests scored high enough not to be retested. Those students whose results were questionable or below standards were retested. Some students were not retested because they terminated from the Center. Students who were retested and scored low were placed in classes for additional training. These students were given exit tests because of earlier questionable scores. Most students scored higher on the exit tests but some students did not improve their test scores prior to leaving the Center.

To strengthen staff capabilities, the primary TABE administrator has attended basic and advanced TABE administrator training, and the backup administrator has attended basic TABE administrator training. To prevent testing problems from recurring, the Center processes have been strengthened to ensure proper scheduling, administering, and recording of TABE testing. Once a TABE test is scanned and posted, the TABE administrator cannot change the scores. If an error is noted, it must be corrected in the Student Pay Allotment Management Information System (SPAMIS) within 30 days.

Test and Retest scores are entered into the computer system, and this process has been strengthened to meet the Policy and Requirements Handbook. However, neither the Center nor Reclamation has the authority to adjust Program Year 1995 statistics. The SPAMIS has an open window for adjustments of only 30 days.
 

In response to the draft report, Job Corps Region X stated:

We agree with the auditor's finding that the integrity of the performance data for math and reading achievements is compromised for the period covered by the audit.

Job Corps' and USBR's proposed actions are appropriate. However, our recommendation that adjustments be made to FSJCC's statistics to reflect actual retest scores is unresolved, pending a decision by Job Corps on this issue.
 

USBR and FSJCC need to improve accounting internal controls for the Job Corps program.  Management has not (1) taken action to fully identify and correct all weaknesses reported in a prior audit report or (2) implemented all internal controls required by USBR policies.  As a result, USBR's financial information on FSJCC is not reliable and PY 1995 program costs have been overreported by at least $460,429.  We question these costs.

The "Interagency Agreement for Administration of Job Corps Civilian Conservation Center Program" (Interagency Agreement) between DOL and USBR states that USBR: ". . . shall ensure that Job Corps funds are properly controlled and accounted for and used prudently and only for the purposes intended."  To properly control Job Corps funds, Job Corps expects that USBR will maintain internal controls that are reliable and effective.  However, all necessary internal controls are not in place.

Despite an earlier DOL audit report recommending improvements, USBR has not established an internal control system that adequately protects Job Corps assets and data.  As discussed in the following sections, internal controls continue to be inadequate resulting in unreliable FSJCC financial information being reported to Job Corps.

Cost Reports Not Reconciled

USBR is not reconciling its Job Corps cost reports to the USBR's Treasury Standard General Ledger (SGL) for accuracy.  USBR's failure to reconcile has weakened internal controls and resulted in inaccurate cost reporting to Job Corps.

USBR's Job Corps Accounting Office (JCAO) records the FSJCC's financial transactions in the SGL using a separate cost center for FSJCC.  Within the FSJCC cost center, JCAO uses different accounts to segregate and identify different types of costs according to USBR needs. JCAO then converts the accounts into categories for the ETA Form 2110F, Job Corps Conservation Center Financial Report.  This form is used to report expenses for the current quarter and cumulative expenses and obligations for the current program year.  These one-page reports are prepared and submitted to Job Corps quarterly for each center. Job Corps uses the reports to monitor each center's financial activity.

USBR's SGL accounts do not match the Form 2110F categories. Some accounts need to be added together for the Form 2110F, some need to be allocated, and others are not used at all. The mathematical transformation from the general ledger to the Form 2110F contains many opportunities for errors and miscalculations. Yet, for both USBR and Job Corps to know the Center's financial status, it is important that USBR accurately report the costs incurred at its Centers.

Recognizing this need for accurate reporting, PRH-9, Appendix 901, paragraph 6, states that:  "Since [2110] reports are used by Job Corps both to monitor the progress of center contracts
 

USBR, however, did not meet these requirements. USBR JCAO prepared the Form 2110F and forwarded it to Job Corps without checking to ensure accuracy. Specifically, the cost reports have been forwarded without reconciliation to the SGL.

As a result, the cost reports contained errors that USBR JCAO did not detect before submission. During PY 1995, USBR's Form 2110Fs for FSJCC claimed $460,429 in expenses that the general ledger does not support. This overreporting of expenses was due to several clerical errors made while preparing the Form 2110F cost reports. USBR did not detect the errors because of the lack of review and reconciliation.

The errors included the following:

a)   The Form 2110F for the quarter ended June 30, 1996, erroneously included claims for $417,176 in year-to-date expenses twice. USBR JCAO made an error in transferring data from source documents to the Form 2110 worksheet. Specifically, they reflect $417,176 in the Program Year-To-Date Expense column for both "Construction/Rehab/Acquisition" and "Current PY Appropriation" lines.

b)   Every line of the Form 2110F for the quarter ended December 31, 1995, disagreed with the general ledger. The discrepancies followed no pattern. Some lines exceeded the underlying general ledger balances while other lines understated the recorded expenses. The net result was that the Form 2110F overstated recorded expenses for the quarter by $40,247.

c)   Other miscellaneous differences for the year ended June 30, 1996, caused the Form 2110F to exceed the general ledger by $3,006. The cause of this discrepancy is unknown.

DOL OIG audit reports have identified this weakness in USBR procedures previously. In a report dated September 23, 1995, the DOL OIG stated:

The expenses reported to Job Corps on BOR's ETA 2110F reports did not match expenses reported in the agency's financial records for the fiscal year ended September 30, 1993 by approximately $102,000. USBR did not prepare or maintain documentation to support adjustments between expenses reported on the ETA 2110F reports and the agency's financial records.  The ETA 2110F initially differed from the financial records by more than $1.8 million. At our request to reconcile the financial records

to the ETA 2110F reports, a USBR employee could reconcile all except $102,000 of the $1.8 million difference.

Control Accounts Not Used for Property or Materials

The USBR accounting manual states that USBR will establish Standard General Ledger Control Accounts for nonexpendable items. However, USBR has not established control accounts, with appropriate subsidiary accounts, for equipment or materials at FSJCC. As a result, equipment and stores are not properly controlled.

The USBR Accounting Procedure Manual, Chapter 5 requires USBR to establish and maintain Standard General Ledger Control Accounts for moveable property (equipment valued at more than $5,000) and "stores inventory." "Stores inventory" generally consists of miscellaneous materials and supplies USBR uses but does not capitalize.

Further, the USBR manual states that USBR will maintain subsidiary records to support the value of the control account. For "stores inventory," USBR is required to compare information in the control account with monthly summary reports showing inventory receipts, issues and adjustments. USBR is required to reconcile the balances annually.

USBR, however, has not been complying with these requirements. Instead, USBR has expensed purchases of stores and equipment - written them off as they purchase them. They have not maintained adequate internal control over these items. As a result, accounting information is inaccurate. The general ledger does not reflect the value of equipment on hand, the financial reports do not reflect depreciation and accounting records do not reflect "stores inventory."

For example, USBR has equipment at the Center valued at more than $2 million. USBR records none of this property in a control account in the general ledger. Also, they are not depreciating any of this equipment in the USBR accounting system.

In addition, FSJCC uses a large volume of "stores inventory" that USBR has not properly recorded. During PY 1995, FSJCC spent more than $250,000 on food they did not record in a control account as required.

Segregation of Duties Not Adequate

Segregation of accounting duties at FSJCC is not adequate. Several staff members each have the authority to authorize a financial transaction, obligate the funds for it, and then advise JCAO how to record the same transaction. This lack of segregation of duties would permit the
 

Segregation of duties is a critical element of internal accounting control. OMB Circular A-123 provides guidance on improving the accountability of Federal programs. The Circular states:

Key duties and responsibilities in authorizing, processing, recording, and reviewing official agency transactions should be separated among individuals.

Key duties such as authorizing, approving, and recording transactions, issuing and receiving assets, making payments, and reviewing or audits are to be assigned to separate individuals to minimize the risk of loss to the government. Internal control depends largely on the reduced opportunities to make and conceal errors or to engage in or conceal irregularities. This, in turn depends on the assignment of work so that no one individual controls all phases of an activity or transaction, thereby creating a situation that permits errors or irregularities to go undetected.

• FSJCC allows warehouse personnel to perform all phases of transactions. They authorize and approve orders and payments, receive assets, and review transactions.

• The FSJCC Administrative Officer prepares and submits third party billings, instructs JCAO accounting personnel on proper account classifications, and receives and processes checks to pay the bills.

• FSJCC has authorized Food Service personnel to initiate orders, obligate funds, make accounting entries and receive goods.

Conclusion

USBR and FSJCC management need to improve internal controls within their organizations.  A material weakness in the internal control structure is a reportable condition in which the design or operation of the internal control structure elements do not reduce to a relatively low level the risk that material errors or irregularities may occur and go undetected by employees
 

Recommendations

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to require USBR to improve internal control by :

• reconciling the Form 2110F to the SGL quarterly;

 
• correcting the FSJCC Form 2110F for the $460,429 reported above and adjust reports to the Department of Treasury accordingly;

 
• establishing control accounts and subsidiary records for equipment and stores as required; and

 
• immediately segregating duties among FSJCC employees.

In response to the draft report, USBR stated:

Reclamation disagrees with the report's conclusion that Reclamation's internal control system does not adequately protect Job Corps funds. The report's primary data for concluding that the internal controls need improvement are based on the audit of Form 2110F. The audit questioned costs of $460,429 that occurred in the preparation of the worksheet used for completing Form 2110F. Of this amount, $417,176 is attributed to a single clerical error. In Reclamation's opinion, a single error does not adversely impact the capability of the financial systems to provide reliable financial data but rather is representative of a lack of supervisory review of the worksheet used in completing Form 2110F.

. . . Other than the clerical error of $417,176, the report identified differences in December 31, 1995, and June 30, 1996, which amounted to questioned costs of $43,253 that were not reconciled to the SGLs. The Job Corps Accounting Office has requested the audit workpapers to determine what these amounts represent and will adjust Forms 2110F for both quarters; the clerical error has been adjusted. The report also raised some concerns about the manual transfer of data to the worksheet that is used in preparing the Form 2110F. Reclamation does not believe that it is cost effective to establish an expensive cost allocation process for the distribution of overhead to the various indirect accounts.

Control accounts not used for property or materials

In accordance with current policy, Reclamation posts movable property (equipment) in its Movable Property Accounting System where it is controlled and depreciated. However, Job Corps movable property has been expended, and therefore, no capitalization of the movable property has taken place. As stated in the response to the prior audit report, the Job Corps Accounting Office is currently working on capitalizing and depreciating equipment and other property over $5,000 and updating the proper SGL accounts. This work is scheduled for completion by September 30, 1998.

The report states that Reclamation has expended the purchases of STORES and equipment, i.e., written off as they are purchased. In fiscal year 1996, Reclamation implemented a new policy eliminating the STORES Inventory System because it was no longer cost effective. The STORES purchases will no longer be capitalized in the financial system but will be expended when purchased. The auditors were not aware of the latest streamlining procedures implemented by Reclamation.

Segregation of duties not adequate

Although the audit found ". . . no instance of malfeasance . . . ," Reclamation is aware of the need to segregate certain duties to reduce or eliminate the opportunity for impropriety. While current Job Corps National Office funding and staffing constraints do not support the hiring of additional office personnel, the Center has taken actions to segregate duties and clarify responsibilities through published Center Operating Directives. Additional management oversight has been added to these processes to ensure compliance with established procedures. The Pacific Northwest Regional Office presently reviews cash management practices at the Center and provides management reports documenting the findings.

Job Corps Region X reserved comment pending a review of USBR's response to this report.

OIG Evaluation of USBR and Job Corps Comments

We believe that the system weaknesses fully support our opinion. Statement on Auditing Standards Number 60 (SAS 60) defines a material weakness as:

. . . reportable condition in which the internal control does not reduce to a relatively low level the risk that material misstatements could occur in the financial statements

and not be prevented or detected within a timely period by employees in the normal course of performing their functions.

Furthermore, USBR did not indicate at all in their response that they would initiate any corrective action on reconciling the SGL and the Form 2110. Therefore, the recommendations concerning the reconciliation remain open.

Actions on the recommendations concerning the control accounts and segregation of duties appear responsive and are considered resolved but will not be closed until USBR completes its corrective actions and informs Job Corps of this completion.
 

USBR charged Job Corps for costs that are not supported or approved. During PY 1995, the USBR Boise Regional Office charged Job Corps, through FSJCC, $186,5423 for various services. Apparently these services were architectural and engineering services as well as other review and advisory work performed for Center construction projects and related administrative functions. The Boise billings contained insufficient information necessary for FSJCC to determine whether the amounts billed were supported and reasonable, or whether the specific services billed for were necessary and received. Supporting documentation was not adequate and we question $120,056.

FSJCC organizationally reports to the USBR Regional Office in Boise, Idaho. The Boise Regional Office performs various services for FSJCC and, in return, charges FSJCC for these services. These include architectural and engineering services for Center projects, procurement reviews, and administrative assistance. USBR includes the cost of these services in the 2110F reports to Job Corps and the financial reports to the Department of Treasury.

FSJCC does not see the charges and cannot determine what they are for. The billings go directly to USBR in Denver and are processed against FSJCC's budget. No one reviews or approves the billings.

We attempted to review the billings and determine whether USBR (1) incurred the costs for approved Job Corps purposes and (2) could support the costs. However, USBR could not tell us what they incurred the costs for nor could they provide adequate supporting documentation.

This does not meet the requirements of the Interagency Agreement that states:

USBR is responsible for ensuring that its Centers are operated in accordance with relevant rules, regulations, and guidelines that are issued by ETA . . . USBR shall ensure that Job Corps funds are properly controlled and accounted for and used prudently and only for the purposes intended.

During PY 1995, the Boise Regional Office charged FSJCC $186,542 for services. The documentation did not explain or support the amounts billed. For example, one billing for $25,345.10 contained the explanation: "Costs through September 30, 1995, for the Fort Simcoe dormitory design." We requested the support for this billing and obtained only a print-out summary of charges. There was no other support. More importantly, FSJCC had not reviewed or approved these charges.
 

This situation occurred because, as a normal practice, USBR does not require support or explanations for intra-agency billings. Since FSJCC is organizationally a part of USBR and more particularly, the Boise region, USBR did not require support for the billings.

As a result, we could not determine whether the amounts charged were reasonable nor whether the services billed were both necessary or completed. USBR, in its response to our draft aduit report, provided adequate documentation for cost totaling $66,487 incurred outside USBR.  However, USBR could not provide documentation for $120,056 of costs incurred by USBR for services billed to FSJCC, and those costs remained questioned.

Conclusion

The lack of documentation to explain what service the Boise Regional Office provided to FSJCC and how they arrived at the billing amounts does not provide adequate assurance that USBR properly controls and prudently uses Job Corps funds.  USBR needs to initiate corrective action to ensure the necessary documentation is maintained.

Recommendations

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to require FSJCC to:

• review and approve all intra-agency billings;

 
• obtain supporting documentation for billings received; and

 
• remove the $120,056 from FSJCC costs until adequate supporting documentation can be presented.

 

The Office of Youth Programs has researched and identified the financial records for the costs in question ($186,542) and has located copies of studies, reports, and other documents prepared by the Pacific Northwest Regional Office to substantiate these charges. Source documents supporting the charges are available for review at the Job Corps Accounting Office.
 

Job Corps stated that they would reserve comments pending a review of USBR's response.

OIG Evaluation of USBR and Job Corps Comments

USBR comments regarding billings seemed to be directed at whether Job Corps had approved the projects billed instead of the support for the billings. Based on USBR comments, we obtained adequate documentation for costs totaling $66,487 incurred outside USBR. However, USBR could not provide additional documentation for $120,056 of costs incurred by USBR for services billed to FSJCC. Specifically, this cost relates to six OPAC billings to FSJCC from the USBR Pacific Northwest Regional Office. Despite USBR's response that all source documentation was now available in the Job Corps Accounting Office, we again determined that the source documents are not available. We have adjusted the amounts in the finding to reflect this and $120,056 continues to be questioned.

We are still concerned that FSJCC has little control over the expenditure of these funds except for the "not to exceed" amount. We continue to believe FSJCC should review and approve/disapprove all billings to Job Corps funding.
 

USBR needs a clear definition of the cost category "Program Direction."  The Interagency Agreement between Job Corps and USBR offers no clear explanation of what the cost category does and does not cover.  Similarly, neither the annual budgets approved by Job Corps nor the PRH explain the nature of the expenses for which "Program Direction" funding serves as reimbursement.  Consequently, neither Job Corps nor USBR are clear on what "Program Direction" costs do or do not cover.  This confusion, particularly over what costs are not covered, may cause improper billings.  Improper billings may result because, as previously noted, USBR regional offices are billing FSJCC certain administrative costs separate from, and in addition to, "Program Direction" costs.

The Interagency Agreement outlines "the joint and separate roles, authorities, and responsibilities of ETA and USBR concerning the administration of Job Corps Centers that are on federal lands controlled by USBR." The agreement recognizes that USBR will have costs besides the direct costs of running the centers. For example, USBR's Regional Office of Youth Programs in Denver oversees the operation of five centers. The cost of operating this office is not a direct cost to each center but USBR allocates the cost to each center. To meet these expenses, the agreement provides that Job Corps will fund USBR "Program Direction" costs. For PY 1995, the total "Program Direction" budget was approximately $1 million, about $200,000 per center in the Region. However, the agreement offers no guidance as to what these costs are, other than an indirect reference to ". . . overhead (or program direction) costs. . . ."

For FSJCC, USBR uses "Program Direction" funds to cover Office of Youth Programs expenses and some Boise Regional Office expenses. USBR initially records these costs in the general ledger. Quarterly, they prorate these expenses equally among the five USBR Centers. They do not record this allocation in the general ledgers of the Centers. Instead, USBR reports its allocation to each center directly on the "Indirect Administration Expense" line of its Form 2110F.

It is not clear what expenses USBR must include in the "Program Direction" cost category. USBR interprets "Program Direction" to be indirect expenses only and bills some costs of the two Regional offices directly to the Centers as part of their operating budgets. For example, besides its indirect allocation of "Program Direction" funding of $200,000, the Boise Regional Office billed FSJCC directly for an additional $186,542 for various costs. These costs included Boise Regional Office costs for engineering for construction projects, procurement actions, special studies, and telephones. Thus, USBR received a total of $386,542 for Regional office costs associated with the Fort Simcoe Center rather than the $200,000 budgeted for "Program Direction."

The lack of a clear "Program Direction" definition in the Interagency Agreement or Job Corps' regulations makes it difficult for both Job Corps and USBR to make proper decisions regarding
 

For example, according to USBR, the Regional Office cost allocated to "Program Direction" may include cost of procurement services, personnel functions, and engineering services. For PY 95, FSJCC budgeted $200,000 for these services. However, USBR also charged $186,542 directly to FSJCC for these types of costs. Since they were direct billings to FSJCC, USBR recorded the costs in other cost categories as part of the FSJCC operating budget and did not apply them against the budget limitations of the "Program Direction" cost category. Therefore, depending on the definition of "Program Direction" costs, Job Corps may have paid up to $386,542 for "Program Direction" costs. Job Corps does not have assurances that the $186,542 did not include services included in the $200,000 budgeted and paid to USBR for "Program Direction."

If "Program Direction" costs are to include all USBR non-center costs, USBR overstated FSJCC costs by $186,542 for program year 1995. A similar overcharge would probably recur each year. If they can bill additional costs directly, Job Corps needs to define these costs to ensure that USBR does not overcharge Job Corps for USBR services and adheres to budget limitations.

In either case, Job Corps needs to provide USBR with a clear definition of "Program Direction" costs.

Recommendation

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to provide clarification to USBR regarding what is and is not included in "Program Direction" costs and what USBR can bill directly.

USBR Comments on Draft Report

In response to the draft report, USBR stated:

Reclamation maintains that the definition, purpose, and use of Program Direction funds are clear to Reclamation and to the Job Corps National Office. It is possible that Job Corps regional staff are unaware of the definition, purpose, and use of Program Direction funds since they are not involved in Program Direction funding issues of Civilian Conservation Centers operated by Federal agencies. The Office of Youth Programs deals directly with the Job Corps National Office on funding matters involving the Civilian Conservation Centers. It is also possible that some Center staffs are unaware of the definition, purpose, and use of Program Direction funds since they have their own operating budgets and do not

receive Program Direction funds.  Often, the Office of Youth Programs will fund certain activities or expenses for a center from Program Direction funds as the situation requires and funding is available, but the Office of Youth Programs accounts for these funds.

Job Corps stated that they would reserve comments pending a review of USBR's response.

OIG Evaluation of USBR and Job Corps Comments

We continue to believe that "Program Direction" expenses need to be clarified. As noted in the USBR response, FSJCC may be confused on what "Program Direction" covers. While the Office of Youth Programs controls these funds, it is important that all parties be clear on what is covered so that direct expenses to FSJCC can be evaluated.
 

Records that Job Corps requires to be kept in the individual Student Personnel Folders are often missing. During our audit, we found many documents missing from the student folders including TARs, TABEs, copies of high school diplomas and GED certifications. In some cases, FSJCC's staff could find these records in inappropriate locations such as the office of a terminated teacher. In many cases, the records simply were not found. As a result, certain reported performance data cannot be substantiated. In addition, when a terminated student transfers or is later readmitted to Job Corps, information critical to assessing that student's background and needs cannot be provided to the new center.

Job Corps' regulations stipulate which documents FSJCC must retain in each student's permanent file. PRH-8-5.2, "Required Records" states:

Student Personnel Folder (File) . . . is a file maintained on each individual student. The contents become part of the student's permanent Job Corps file upon termination. . . . The following must be included . . . TARs and TABE Tests, and Answer Sheets . . . Copy of official GED certificate . . . Copy of high school diploma earned while in Job Corps.

• TARs.  We examined the files of 125 students who had entered vocational training programs but had not completed their training. Of the 125, 70 (56 percent) were missing the required TARs. FSJCC could not adequately explain the whereabouts of the TARs or the cause of their absence.

• TABEs.  As noted in Finding 5, we attempted to examine the TABEs for the 10 students whom USBR quoted in the May 1996 report on TABE testing improprieties. Of the 10, 5 sets (50 percent) of TABEs were not in the student files. FSJCC staff could not find these TABEs nor could they explain the disappearance.

• GEDs and HSDs.  We examined the files of the 120 students for whom FSJCC had claimed GED and/or HSD attainment credit. The GED support was missing from 14 (12 percent) student files, and the HSDs from another 12 (10 percent). Eventually, the Education Department staff found the missing support for all but four GEDs and one high school diploma (for which they explained that they had claimed attainment credit in error). Despite the fact the records were found, they had not been kept in the folders of the terminated students as required by PRH 8-5.2.

Many program elements were not functioning effectively in Student Records. Center-wide communication is irregular, staff are unaware of current policies, direction, and/or program guidance. Center staff, supervisors, and managers were totally unaware of how the automated student record systems worked or how their efforts contributed to the accurate recording of data on each student. While on center, the reviewer witnessed minimal effective communication and cooperation between other departments and the proficient student records staff. Team work and working relationships with other center departments is nonexistent or poor. Center managers and supervisors are not held accountable when their departments fail to provide timely accurate data to the Student Records Department.

A DOL OIG audit of FSJCC's performance data for PY 1991 (July 1, 1991 to June 30, 1992) also reported that:

Program Year 1991 . . . statistics were incorrect and unsupported. We reviewed documents in 35 terminated student files and found the following incorrect and missing information: 10...contained a TABE test . . . incorrectly . . . graded . . . 3 . . . showed an incorrect completer status . . . 1 . . . an incorrect GED status . . . 13 . . . were missing copies of the initial TABE test . . . 11 . . . did not contain TARs (for students in program over 30 days) . . . 7 . . . were missing copies of the highest follow-up TABE test . . . 1 . . . missing the GED certificate . . . 18 . . . contained a TABE test which did not have the date the test was taken and/or the level of the test taken.

FSJCC has not made record keeping a high priority and has not monitored the record keeping process. The Vocation and Education Departments were lax in submitting required documents to the Student Records Department. The Student Records Department was lax in reviewing the files they received and demanding complete submissions. Center management was lax in oversight. Outside monitors were lax in reviewing the overall process and in achieving any improvement.
 

Recommendations

We recommend the Assistant Secretary for Employment and Training direct the Director, Office of Job Corps to require:

• USBR to familiarize the entire staff (USBR and FSJCC) with PRH-8, Section 5.2; and

 
• USBR to establish a management control system to ensure adequate records are being kept.

 

In their response to the draft report, USBR stated:

Reclamation agrees that student record keeping must be improved. This has been a recurring problem, and management action has been initiated to ensure that the required processes are in place. Technical assistance from other centers is being provided to ensure that proper processes are being used to resolve these issues and make certain that the student records are accurate and contain all required information. Management reviews will provide assurance that these processes are working correctly.

We agree with the auditor's finding regarding the inconsistent maintenance of required documentation in official student files.

OIG Evaluation of USBR and Job Corps Comments

USBR's proposed actions appear appropriate. These recommendations are resolved. They will be closed upon completion of the corrective actions.
 
 

Unsupported expenses charged by USBR's
Boise Regional Office (see Finding $) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$120,056

Total Questioned Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $580,485
 
 

Operating Expenses                                                                                               Program Year Expenses

Education Personnel Expense                                                                                     $ 316,612
Other Education Expense                                                                                                  30,329
Vocational Personnel Expense                                                                                       332,183
Other Vocational Expense                                                                                                 55,953
Social Skills Personnel Expense                                                                                    943,841
Other Social Skills Expense                                                                                            102,600
Food                                                                                                                                   284,569
Clothing                                                                                                                                96,492
Support Service Personnel Expense                                                                             101,937
Other Support Service Expense                                                                                     102,443
Medical/Dental Personnel Expense                                                                               279,428
Other Medical/Dental Expense                                                                                         72,444
Child Care Personnel Expense                                                                                                  0
Other Child Care Expense                                                                                                          0
Administration Personnel Expense                                                                                312,150
Other Administration Expense                                                                                        114,247
Indirect Administration Expense                                                                                     120,948
Facility Maintenance Expense                                                                                        117,480
Other Facility Maintenance Expense                                                                              173,654
Security Personnel Expense                                                                                                       0
Other Security Personnel Expense                                                                                             0
Communications                                                                                                                 71,209
Utilities and Fuel                                                                                                               217,510
Facilities Lease Expense                                                                                                            0
Insurance                                                                                                                                        0
Motor Vehicle Expense                                                                                                    100,409
Travel and Training                                                                                                              52,408
Contractor's Fee (Cont Ctrs Only)                                                                                               0
FECA Chargeback (CCCs Only)                                                                                      39,231
Total Operating Expenses                                                                                     $ 4,038,077

Non-Operating Expenses

Construction/Rehab/Acquisition                                                                                 $  439,312
        Current PY Appropriation                                                                                        417,176
        Prior PY Appropriation                                                                                                        0
        Next Prior PY Appropriation                                                                                               0
Equipment and Furniture                                                                                                   79,617
GSA Vehicle Rental/Amortization                                                                                    47,181
VST Expense                                                                                                                   125,662
Facility Protection Maintenance                                                                                                 0
Outreach/Screening/Placement                                                                                                 0
Student Pay                                                                                                                     239,447
Other (Reimbursable)                                                                                                     (38,395)
Total Center Expenses                                                                                         $ 5,348,076