The Bureau of Reclamation (Reclamation) requests that the following information be considered in reevaluating the materiality of the findings cited by the report. We request also that language be added to appropriate sections of the report that recognizes the corrective actions completed or underway to resolve and correct the following audit findings and recommendations.

Executive Summary

Reclamation questions whether the report can draw conclusions regarding the current financial systems given the timeframe audited and the timely presentation of this information. The General Accounting Office's Government Auditing Standards (1994 Revision), Section 7.6, states that "Auditors should appropriately issue the reports to make the information available for timely use by management, legislative officials, and other interested parties." Reclamation believes that the reporting of Job Corps activities for Program Year 1995 (July 1995 through June 1996) and providing the draft report for official comment in January 1998 does not represent a timely presentation of information for management action and should not be used as a basis for providing an opinion on current operations. Also, in light of the corrective actions taken on the majority of the recommendations, Reclamation does not believe the report should state that "current financial systems" do not produce accurate and timely financial information. If the final report does make reference to Reclamation's or the Job Corps' "financial systems," it should identify the systems in question and the results of the financial systems' review. Additionally, the final report should state that the financial deficiencies noted for the Fort Simcoe Job Corps Center (Center) are not representative of Reclamation's accounting or financial systems as a whole.

I. Program Performance Review Results

Finding 1. Vocational Completions Claimed Are Not Supported

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

Finding 2. Academic Achievements Are Overstated

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 followup 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.

Recommendations

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

• FSJCC (Center) instructors to properly record training in the Training Achievement Records.

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

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

 
Complied. As indicated above, Reclamation has taken corrective actions to include Reclamation and Center management oversight and processes to ensure compliance with training data requirements.

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

a. Identify 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

Complied. As cited above this has been accomplished by the Center.

d. Adjusting their statistics to reflect actual retest scores.

Disagree. 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.

Finding 3. Internal Controls Need to be Improved

Prior report findings

Reclamation takes exception to the statement that "Management has not (1) taken action to fully identify and correct all weaknesses reported in a prior audit report. . .." The prior audit report in question is a Department of Labor Office of Inspector General's (DOL/OIG) Job Corps audit entitled "Independent Auditors' Report and Combining Schedules of Expenses for Fiscal Years 1992 and 1993" (Report No. 12-96-004-03-370, dated August 19, 1996). Attached is a brief chronological history that documents Reclamation's actions to address the prior report's findings and recommendations.

Based on Exhibit 1, Reclamation believes that timely, sufficient actions have been taken to address the prior report's findings and recommendations, and we continue to monitor the unimplemented recommendations. Since the prior report was referred to the Department of the
 

Internal controls need improvement

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. If not for the clerical error, the resulting questioned costs of $43,253 would have been considered nonmaterial. This was a simple mistake that occurred in the preparation of the Center worksheet and does not impact Form 2110F prepared for the other Job Corps centers managed by Reclamation. In a telephone discussion with the Department of Labor Job Corps National Office, Reclamation was informed that there is no need to correct the 2110F Form for Program Year 1995 since it is an internal document to the Job Corps National Office and is not part of any regulatory report to the U.S. Department of Treasury (Treasury).

In support of Reclamation's contention that the financial systems do provide accurate financial information, the report should acknowledge that the Job Corps' Treasury financial regulatory reports (2108 Year End Closing Statement and SF-133's Budget Execution) reconciled to the standard general ledgers of the financial systems. Additionally, Reclamation's Job Corps Accounting Office has implemented standard operating procedures, effective September 30, 1996, that require management review of cash reconciliation for forms SF-224 and TFS-6653 between the Treasury and Standard General Ledger (SGL) accounts.

Starting in ProgramYear 1998, Service Level Agreements (SLAs) between the Reclamation's Office of Youth Programs and the Job Corps Accounting Office and between the centers and their supporting Reclamation regional offices will be developed to outline services, costs, funding, and billing processes. These SLAs will provide clarification on the types of services performed by each office and the costs associated with the services provided.

Cost reports not reconciled

The report states that "Within the FSJCC cost center, JCAO uses different accounts to segregate and identify different types of costs according to USBR needs." This statement should reflect that Reclamation's Job Corps Accounting Office segregates and identifies different types of accounts and costs according to the Job Corps National Office "needs" not Reclamation's "needs."
 

Reclamation offers the following in response to the $102,000 recorded in the general ledger but reported as not in agreement with Form 2110F. This finding was initially identified in a prior audit conducted by the DOL/OIG of Job Corps activities for fiscal years 1992 and 1993. The following response was provided to address the finding in July 1995:

In response to the auditor's request, reconciliation of the ETA-2110F report to the general ledger and the Detailed Budget Status report was performed. The Job Corps staff were able to reconcile all general ledger amounts with the exception of $102,000 of the $1.8 million difference. At the request of the auditors, BOR staff stopped the reconciliation process when only $102,000 of the difference was left. The auditors declared that amount immaterial. Reclamation was able to attribute the $102,000 difference to the conversion from the H2 system to FFS. Currently, the automated ETA-2110F report agrees with other financial records.

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.
 

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.

Finding 4. Expenses Charged by USBR's Boise Regional Office are Unsupported

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. See Exhibit 2 for additional information to support these charges. Source documents supporting the charges are available for review at the Job Corps Accounting Office.

Finding 5. Program Direction Costs Need to be Defined

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.

Program Direction funds are provided by the Job Corps National Office to assist Reclamation in administering and supporting the centers we operate. The Office of Youth Programs allocates the Program Direction funds for (1) policy and program support of the centers provided by Office of Youth Programs, (2) administrative support services to centers provided by Reclamation regions, (3) financial support to the centers provided by the Job Corps Accounting Office, and (4) sometimes by direct payment of center expenses by Office of Youth Programs. Regional office charges to Program Direction funds include direct support to centers from regional office staff for management, personnel, acquisitions, budget, property, information resources (computer), public affairs, safety, and engineering services.

Reclamation regional offices currently receive Program Direction funds of $90,000 per center to provide basic administrative services support for their assigned centers. The SLAs to be enacted

Finding 6. Required Records Are Missing From Student Files

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.

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

Complied. On September 30, 1996, the Job Corps Accounting Office implemented standard operating procedures that require management review of Form 2110F to ensure quarterly reconciliation to the SGL accounts prior to submission to the Job Corps National Office.

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

 
Agree. The Job Corps Accounting Office has adjusted the clerical error of $417,176 and requested the auditor's workpapers for the other differences identified ($43,253). However, as cited above, we disagree that Form 2110F needs to be submitted to the Treasury. The Job Corps Accounting Office has reviewed for the remaining centers the 2110Fs for the period September 30, 1996 to present and they all reconcile to the system's SGL accounts. The Job Corps Accounting Office also is in the process of reviewing the 2110Fs for all the remaining centers for the period audited to ensure they also reconcile to the system.
 

• Establishing control accounts and subsidiary records for equipment and stores as required

 
Agree. Reclamation addressed this recommendation in response to the prior Job Corps audit report. Reclamation's Job Corps Accounting Office Team has received most of the property, plant, and equipment inventory certifications. The Team has also obtained recent property listings from the Movable Property System and the Resource Information System. The certifications and property listings will be used to post the capitalization entries to the financial system.

Reclamation is currently tracking and reporting on this recommendation from the prior audit report and sees no value in tracking and reporting this recommendation twice. The estimated completion date is June 30, 1998.
 

• Immediately segregating duties among FSJCC employees

 
Complied. The Center has issued directives to segregate duties to the extent possible and has clarified processes and responsibilities. See Exhibit 3 for a copy of the directive.

• Review and approve all intra-agency billings.

 
Agree. The Job Corps Accounting Office has improved the process for all On-line Payment and Collections (OPAC) billings. The process will provide the centers with OPAC information for reviewing the charges, assignment of the account numbers, and approval of the billings.

• Obtain adequate supporting documentation for billings received.

 
Complied. See response to the following recommendation.
 
• Remove the $186,542 from FSJCC costs until adequate supporting documentation can be presented.

 
Disagree. Documentation for the $186,542 has been researched, and the costs in question have been validated. As cited above, the supporting documentation has been located. Most of the charges were not billed by the Pacific Northwest Regional Office, but those that were billed were approved in accordance with established procedures in place during the time period audited.

• Clarification to USBR regarding what is and is not included in "Program Direction" costs and what USBR can bill directly.

Disagree. Reclamation is aware of the purpose and use of Program Direction funds. In addition, as cited above, Reclamation is clarifying the purpose and use of Program Direction funds and Center Project Funds between the centers and the Reclamation regional offices that support those centers. Copies of the SLAs will be provided to the centers' Job Corps regional office project managers for information purposes.

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

 
Complied. Appropriate Center staffs have received training to successfully monitor, maintain, and adequately control student records at the Center. The training included on-site technical assistance and instruction from experienced staff from other Reclamation centers and additional training from the Job Corps Data Center. The technical assistance will continue to be provided as long as it is needed.
 
• USBR to establish a management control system to ensure adequate records are being kept.

 
Complied. Records processes have been strengthened through technical assistance provided by staff from other centers. Reclamation management will monitor records activity to ensure the Center meets the provisions of the Procedures and Requirements Handbook.
 
 

Attached is a brief history of actions taken by Reclamation to address the findings and recommendations of the prior report (Independent Auditors' Report and Combining Schedules of Expenses for Fiscal Years 1992 and 1993" - Report No. 12-96-004-03-370, dated August 19, 1996).

06/12/95         Received DOL/OIG "Statement of Facts" for Reclamation review and comment.

07/03/95         Provided written comments to the DOL/OIG.

08/19/96         Final report issued to the Assistant Secretary-Employment and Training (AS-ET) for resolution of AS-ET recommendations. Report also provided to the Department of the Interior's Office of Inspector General (DOI/OIG) for resolution of recommendations related to Reclamation's Job Corps activities.

08/20/96         DOL/OIG referred the report to the DOI/OIG for final resolution of report's findings and recommendations.

08/96         Final report presented to Reclamation.

Note - the DOL/OIG did not require a response to the final audit report from Reclamation since the report was referred to the DOI/OIG for final resolution and implementation of the report's findings and recommendations.

03/21/97         Reclamation provided response to DOI/OIG.

Note - in responding to the 11 recommendations in the report, Reclamation indicated that sufficient actions had been taken on 8 of the recommendations to consider them implemented. For the three remaining recommendations, Reclamation identified (1) specific actions to be taken to implement the recommendations, (2) estimated target dates for completing implementation actions, and (3) the Reclamation officials responsible for implementation.

Upon completion of the implemented actions, documentation will be presented to the Department for determination of final disposition. To date, Reclamation has provided quarterly reports to the Department regarding the status of the implementation dates.
 
 
 

Total $ 186,542
 
 

² When Reclamation is funded to accomplish studies of various kinds, i.e., A-106 type studies, or to perform specific design and architectural services, the funding provided is "regular" construction and rehabilitation funding and should not be confused with Program Direction funding. It may not be commingled with Program Direction funding and in fact, is funded from a distinct and separate appropriation. The funds, however, are a separate allocation to the center and accounted for through Center financial records maintained in the Job Corps Accounting Office. This is done to maintain a "running" total on the amount of C&R funding provided to a particular center.

Prior to transferring funds to Reclamation for these studies, regional offices have to prepare a detailed funding request. The funding request is submitted to the Job Corps National Office for approval and contains detailed information. Subsequently, when the OPAC billings are generated by the regional offices additional detail is not required, as long as the amounts funded are not exceeded. Much of the actual work in studies or design is performed off-site, therefore the Center is not really "approving" the work, but rather it is approving the OPAC billing for processing and verifying the account number and that total funding authorized is not exceeded.