oversight

Comments on the Capability of the Law Enforcement Assistance Administration To Provide Adequate Audit Coverage of Certain Grants and Contracts

Published by the Government Accountability Office on 1971-07-02.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

B-160759                             llllllllllllllllllllllllllllllllllll~llllllllllll
                                            LM090551
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Dear Mr.     Chairman:
                                                                                                3
        By letter      dated March 4, 1971, the Chairman of the Legal
and Monetary Affairs             Subcommittee      requested     that the General                   5
Accounting       Office     (GAO) furnish       comments and opinions             on
                                                                                            /
 (1) the capability          of the Audit and Inspection                Division,     Law       f
Enforcement       Assistance       Administration        (LEAA), Department           of
Justice,     to provide        adequate audit cov%??@e of certain                  grants
and contracts,          (2) the appropr?zteness            of this audit staff-.
and whXIi’&?‘-its        functions     were inconsistent         with- 6tir views on
$xternal     auditing,        (3) the functional         responsibilities          of the
Departmentls'centralized              Office of Internal         Audit over the
operations       of the LEAA audit staff,             and (4) the appropriate-
ness and legality           of the Department's          method of staffing
                                                                          _           and
financing      its Office        of Internal      Audit.

        LEAA, created by the Omnibus Crime Control           and Safe
Streets Act of 1968, has the responsibility              of providing    fi-
nancial    and technical    assistance     to State and local govern-
ments to improve their       criminal    justice    systems; i.e.,    police,
courts,    and corrections.       The program is designed to reduce
crime through several       means, including      the award of

       --planning         grants to State planning   agencies     (SPAS) to
          enable      them to develop statewide     comprehensive     criminal
          justice       plans and to administer    implementation     of the
          plans;

       --block     action grants on the basis of population         to the
          SPAS for subgranting         to State agencies,  cities,    and
          counties      for carrying     out the programs described    in
          the comprehensive        plans;

       --discretionary        action grants,     at LEAA's discretion,     to
          State and local units of government           to help modernize
          police     departments,    the courts,    and corrections    sys-
          tems;

       --technical       assistance  contracts           to Federal Government
           agencies     and other organizations            and to private



                             50TH   ANNIVERSARY        J92J- 1971J5oq
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            B-160759



                       individuals     in such fields         as police      operations       and
                       prisoner    rehabilitation;

                   --research    grants and contracts   to develop new law en-
                       forcement  equipment and technology   and new ways to re-
                      duce and prevent    crime; and

                   --grants     and loans      to finance     college      studies     by criminal
                      justice    personnel       and students      preparing       for criminal
                      justice    careers.

                   Appropriations      to LEAA were $63 million,        $268 million,
            and $480 million        for fiscal   years 1969, 1970, and 1971, re-
            spectively.        LEAA has requested      about $698 million     for fiscal
            year 1972.        LEAA has estimated     that 50,000 separate       grants and
            contracts    will     be in active   status during fiscal      year 1972.

            CAPABILITY      OF LEM AUDIT STAFF

                    LEAA's Audit and Inspection               Division       was established       by
            the Administrator,           LEAA, in August 1969 to provide                 audits    and
            inspections        of LEAA activities.            The    Division     reported     to  the
            Office      of Administration         through the Office           of Administrative
            Management until          May 1971 when the Division               was redesignated
            the Office        of Audit and made responsible                 to the Office      of Ad-
            ministration        with no organizational             ties to any other LEAA of-
            fice.       At June 1, 1971, the Division                had 26 professional          audi-
            tors,     including     seven transferred           on a temporary        basis from
            the Office        of Internal      Audit.     LEAA, in its fiscal            year 1972
            budget,      requested     additional       positions       to increase      the staff
            to 38.

                    We   believe     that LEAA's audit staff would have to be in-
            creased      substantially        over the 38 professional          positions  re-
            quested      for 1972 to provide          adequate audit coverage of the
            55 State      planning       agencies and the 50,000 active           grants and
            contracts       estimated      for 1972.      The staff     would have to be of
            sufficient         size to attract       and retain     qualified    personnel   and
            to make      possible      the productive      and flexible       use of staff   re-
            sources.         In determining       the size of the staff         needed, LEAA

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B-160759



should consider    the adequacy of each State's       audit capabili-
ties and resources     to be applied   to the audit of grants and
contracts,   the adequacy of grantees'      and contractors'    account-
ing and other internal     controls,   and the volume of expendi-
tures by grantees     and contractors.

        LEAA's Audit and Inspection            Division'has      developed    an au-
dit and inspection          manual and has participated           in preparing
guides for use by applicants              for planning,     action,     and discre-
tionary     grants.       The Division      has issued reports       on its au-
dits,    reviews,      and investigations       of State planning        agencies,
schools and universities            under academic assistance           programs,
and selected        grants and contracts.          Also the Division        has
made overall        reviews of four State planning           agencies.

      As of June 1971 the Division        had issued a report      on only
one of its four overall     reviews of State planning        agencies.
At that time the Division      was finalizing     reports   on its re-
views of the three other State planning          agencies.     Because
the Division    has only recently    issued its first      major report,
we believe   that it is too early to evaluate         the effectiveness
of the reviews by the Division.
SEPARATE LEAA AUDIT STAFF APPROPRIATE
AND CONSISTENT 'WITH GAO VIEWS
        The Attorney    General's  establishment      of a separate     LEAA
audit staff       to make external  audits    of grants and contracts
conforms with our basic principles           and concepts of internal
auditing    in Federal agencies.        In our opinion,     a separate     au-
dit staff     in.LEAA to make external       audits   and report    thereon
to the Administrator       can be justified      on the basis of LEAA man-
agement needs and the size and nature of its activities.

      The Department's   centralized     Office   of Internal     Audit has
been assigned broad responsibilities          to audit the activities
of the Department's    headquarters     and constituent      organizations,
except for the Federal Bureau of Investigation.              The Depart-
ment's requests    for additional    funds to finance      the centralized

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        B-160759



        internal     audit organization         have not been favorably             acted
        upon by the House Appropriations               Committee.        Accordingly,      in
        our opinion,        the Office    of Internal      Audit will      not, in the
        foreseeable       future,    be able to obtain        sufficient      staff     to
        adequately      evaluate     the efficiency       and effectiveness          of the
        administration         of law enforcement       programs by the large num-
        ber of LEAA grantees           and contractors.        We believe       that such
        evaluation      is needed by the Attorney           General and LEAA manage-
        ment officials         to carry out their       responsibilities          in admin-
        istering     the law enforcement         program.

                The establishment       of the LEAA Audit and Inspection         Divi-
        sion and its functions          is consistent     with the position    taken
        in our 1967 report         to the Congress entitled       "Need to Improve
        Internal    Audit in the Department of Justice"             (B-160759,   Decem-
        ber 26, 1967) and with the principles              and views in our publica-
        tions entitled       "Internal    Auditing    in Federal Agencies"      (1968)
        and "GAO Views on Internal           Auditing   in the Federal Agencies"
         (1970).

               At the time of our report,             the Department's       constituent
        organizations,          with the exception       of the Federal Bureau of
        Investigation,          did not appear to be large enough to warrant
        separate       internal     audit organizations.         In our opinion,       au-
        diting      the performance       and records of the LEAA contractors
        and grantees         is essential    to the administration         of the con-
        tracts      and grant programs.        We believe      that a separate audit
        staff     responsible       for the performance       of such external        audits
        is appropriate          because of (1) the volume of grants and con-
        tracts      awarded by the LEAA organization             in carrying     out the
        function,        (2) the high degree of specialized            knowledge re-
        quired of the programs,            and (3) the special       need for a close
        association         between program management personnel             and the audit
        staff.

        OFFICE OF INTERNAL AUDIT FUNCTIONAL RESPONSIBILITIES
        OVER THE OPERATIONS OF LEAA's AUDIT STAFF
               On May 19, 1969, the Attorney             General assigned    the re-
        sponsibility   for the Department's             audit function,   including
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B-160759



the review of contractors       and grantees,       to the Assistant      At-
torney General for Administration         and charged the Director
of the Office of Management Inspection             and Audit,    now the
Office of Internal      Audit,  with execution        of the audit respon-'
sibilities,   including     the review and appraisal          of all Depart-
ment programs and functions.          On April     24, 1970, the Attorney
General assigned the responsibility            for audits of grants and
contracts   awarded by LEAA to the LEAA Administrator,               subject
to review and monitoring       by the Office of Internal          Audit.

        We believe   that the responsibility           for reviewing        LEAA's
external    audit activities       was properly      left   with the Assis-
tant Attorney      General for Administration            and that this arrange-
ment is consistent        with the position       taken in GAO's "Internal
Auditing    in Federal Agencies"         (1968) that provision            be made
for independent      internal    review of the external            audit work in
the same manner as other operations             are reviewed        to ascertain
whether it is being carried           out properly       and efficiently.

APPROPRIATENESS AND LEGALITY OF DEPARTMENT'S FINANCING
OF THE COST OF CENTRALIZED INTERNAL AUDIT SERVICES

        The appropriateness         and legality     of the Attorney     Gen-
eral's.seeking         and obtaining      reimbursement    from constituent
units of the Department,            including     LEAA, for costs of cen-
tralized      internal    audit services       are being considered      by our
General Counsel.          Our comments and opinion         on this matter will
be furnished        to you as soon as possible.



       We trust     that the information    furnished     above will be of
assistance       to your Subcommittee    in carrying     out its oversight
responsibilities        in the law enforcement     area.

      We plan to make no further           distribution      of this re;?ort
unless copies are specifically           requested,       and then we shall



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               B-160759



               make distribution     only   after your agreement has been obtained
               or public    announcement    has been made by you concerning  the
               contents    of the report.

                                                   Sincerely   yours,




                                                   Comptroller  General
                                                   of the United States
    d
               The Honorable  John S. Monagan, Chairman
               Legal and Monetary Affairs   Subcommittee
               Committee on Government Operations
               House of Representatives        j#& olfj3