oversight

Audit of Office of Economic Opportunity Legal Services Program Grant to Project BRAVO, Incorporated, El Paso, Texas

Published by the Government Accountability Office on 1971-09-02.

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

Audit Of Office Of
Economic Opportunity Legal
Services Program Grant
To Project BRAVO, Incorporated
EI Paso, Texas 6.130515




BY THE CQMPTROLLER    GENERAL
OF’ THE UNITED STATES
                                 COMPTROLLER     GENERAL      OF      THE       UNITED    STATES
                                               WA!3HINGTON.    D.C.         20548




       B-130515                                                                                       SEP   2 191t




cf ye Dear Mr.        Perkins:
             Pursuant    to your request   of June 16, 1971, we are enclos-
  2    ing a report    on our financial    audit   of the Office   of Economic     7~‘7
  ('   Opportunity    grant to Project    B&WO, Incorporated,       to operate
       a Legal Services     program in El Paso County,     Texas,     Project
       BRAVO delegated     operations   of the Legal Services     program to
 ]     the El Paso Legal Assistance       Society,   El Paso, Texas.           ',I' d'
               Our    audit,     which included        an examination           into selected
       financial        transactions      and internal          controls      for the period
       September        1, 1970, to May 31, 1971, showed that expenditures
       of grant       funds,     for the most part,           had been for authorized
       purposes.          There had been some deviations,                 however,      from
       Office    of     Economic Opportunity           policies       and instructions        re-
       lating    to      (1) personnel,      payroIl!,      l?ave,      and time and
       attendance         repZFZ?ZKd      (2) authorization             and documentation
       of travel.           We noted that expenses of the current                    grant year
       had been       improperly      charged against           prior    year's     grant.
               We brought       these deviations                     to the attention                      of the
       society’s     officials,      who stated                    that corrective                      action   would
       be taken.
              We plan to make no further         distribution    of this report
       unless copies      are specifically     requested,     and then we shall
       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,




                                                              of the                United         States

       Enclosures        - 2


       The Honorable  Carl D. Perkins
       House of Representatives
                                           50TH ANNIVERSARY 1921-1971
                                  AUDIT OF
                       OFFICE OF ECONOMIC OPPORTUNITY
                        LEGAL SERVICES PROGRAM GRANT
                                      TO
                         PROJECT BRAVO, INCORPORATED

                                   INTRODUCTION


          Pursuant     to a congressional         request  dated June 16, 1971,
    the General Accounting         Office   audited    the records    pertaining
    to a grant to Project        BRAVO, Incorporated,        the El Paso Commu-
    nity Action    Agency,    for operation       of a Legal Services       pro-
    gram in El Paso County,         Texas.     The grant of $120,290 was
    made under section       222 of the Economic Opportunity           Act of
    1964, as amended (42 U.S.C.           2809), by the Office       of Economic
    Opportunity     (OEO) for the period        September    1, 1970, to
    August 31, 1971.       Project      BRAVO delegated    operations      of the
    Legal Services     program to the El Paso Legal Assistance                Soci-
    ety, El Paso, Texas.
              Our audit was made during        June and July 1971 at the                  c;ey
  r
  -. society's      office     in El Paso, Texas, and at OEO headquarters
/' office       in Washington,       D.C., and was directed     toward deter-
     mining whether         grant funds had been expended in accordance            with
     financial      conditions      of the grant and applicable      OEO
     policies      and instructions.
            We examined the El Paso Legal Assistance        Society's    rec-
    ords and examined into financial         transactions   for the period
    September     1970 through May 1971.       Our test of financial
    transactions      covered about $25,000,      including non-Federal
    contributions      of about $4,000,  of the expenditures        of $107,623
    during     the g-month period   ended May 31, 1971.
           Our review    did not encompass a determination             as to
    whether   the activities     of the society were being           carried     out
    in accordance     with objectives   of the authorizing           legislation
    and with OEO policies.
           As of May 31, 1971, the society's        personnel      consisted
    of five   lawyers,  two secretaries,      one administrative         assis-
    tant,   and one bookkeeper-receptionist.         It also included           two
    VISTA volunteers,     one Neighborhood     Youth Corps enrollee,            one
    youth whose salary     was being paid from private          funds,    and
    two lawyers    whose salaries     were being paid by the Reginald
    Heber Smith Community Lawyer Fellowship          Program.       Howard


                                            1
                                               ,     .




University  Law School operates    this program,   which is funded
by OEO at about $5.4 million    annually,   to recruit,       train,    and
place young graduate   lawyers  in Legal Services       programs     through-
out the country.
      Although    the officials       of OEO and the society    have not
been given an opportunity           to examine and comment formally      on
this report,    the findings        were discussed  with representatives
of the society.
                                  AUDIT   RESULTS
        Our audit   of financial      transactions   revealed   that ex-
penditures    of grant funds,       for the most part,      had been for
authorized    purposes.       There had been some deviations        from
OEO policies      and instructions,        however, which we brought
to the attention      of society     officials.
      OEO's Audit     Division        made an audit      of Project      BRAVO dur-
ing the current     program year, including              certain    aspects    of
the society's    activities.           Although    the Audit     Division's      re-
port dated March 26, 1971, indicated                 that the accounting
system and internal         controls      of the society       were adequate,
the auditors    commented on a number of procedural                   weaknesses
and made recommendations            for correcting       them.
        The last   audit of the society      by a certified  public
accountant      (CPA) was made for the program year ended August                       31,
1970.     In his report     dated September    18, 1970, the CPA
stated    that the society's      accounting   system and internal
controls     were adequate.
PERSONNEL MATTERS
       OEO instructions      require  grantees    to maintain    (1) a rec-
ord of all personnel        actions,  (2) records     for each employee
showing balances        for annual leave,    sick leave,    and compensa-
tory time,    and (3) time and attendance         reports   to substanti-
ate payroll     costs.
       Our audit    of payroll    expenditures   of about $18,000 of
the total   payroll    expenditures     of $76,616 for the period
September   1, 1970, through        May 31, 1971, showed certain  weak-
nesses in documentation        and procedures,    which should be
corrected,



                                          2
      OEO instructions        require     that starting        salaries      of new
employees   paid over $5,000 annually               be limited      to an increase
of 20 percent      over their     prior     salary,    or $2,500,        whichever
is less,  unless     OEO approval       to exceed the limit            is obtained.
       OEO's Audit    Division   stated  that it could not determine
the society's    compliance    with OEO guidelines        regarding     start-
ing salaries    of employees,     because personnel       folders,     which
should contain     such information     as prior   salaries       of the em-
ployees,    were incomplete    or were missing.       The report       contained
a recommendation      that adequate personnel      folders      be established
for employees.
        Although     personnel   folders   had been established            for
current     employees      at the time we started       our review,        the
folders      did not contain     data on their    prior    salaries.           We were
therefore       unable to determine      whether  starting       salaries       were
within     OEO limitations.        We did obtain    information,          however,
on salaries       paid by the El Paso county attorney's               office     and
found that the salaries          paid by the society       were comparable.
         According    to society    procedures,         salary     increases    were
initiated       by the society's      executive      director        and approved
by its board of directors.             We were able to verify              that all
increases       had been within     OEO salary        limitations        and, with one
exception,       had been approved by the board.                  The exception      was
the result       of a procedural      oversight.         We did find that          .
documentation        on salary   increases,        however,       had not been
filed     in the employees'      personnel       folders.
      We noted the following        weaknesses      in the society's
procedures    and practices    relating     to leave records:        (1) rec-
ords did not show current        balances     of employees'      annual,
sick,   or other types of leave,        (2) formal     procedures     had not
been established     for the approval       of leave,      (3) leave rec-
ords were not designed       to readily     provide    leave information,
and (4) leave records       had not been prepared         for two employees.
       For two former employees,    we were unable to deter-
mine whether    the amounts paid for accumulated        leave had been
accurately    computed because of the poor condition          of the
leave records.      The payments totaled   about'S         for both
employees,    and only the payment of $400 to one of the former em-
ployees    had been approved by the executive      director.
      The following    deficiencies      relate    to the preparation         of
time and attendance     reports:      (1) time and attendance         re-
ports  for one period     were not signed by the executive            direc-
tor,  (2) time and attendance       reports     for two employees      did not
agree with their    leave records      which qndicated     that they
had taken leave,    and (3) the time and attendance           report      for
one employee who was paid for working             40 hours showed that he
had worked only 24 hours.
      The executive     director    agreed with our findings         and
said that action     would be taken to determine          the validity
of payments to employees         and to improve    the preparation       of
leave records     and time and attendance       reports,,
TRAVEL EXPENSES
      OEO instructions     require    full    documentation     of all tra-
vel expenses     and adherence     by grantees     and delegate    agencies
to the Standardized     Government      Travel    Regulations.
        Our examination     of travel    expenditures        of about $600,
selected    from the total      travel   expenditures        of $1,320 for
the period      September   1, 1970, through        May 31, 1971, showed
that the society        had not followed      certain      administrative
practices     required    by the regulations        relating      to the author-
ization    and documentation       of travel.

       Reimbursements        by the society   for travel          expenses were
not prepared       on the basis of travel       authorization          and expense
forms prescribed         by OEO for out-of-town         travel.       Consequently
the travel     expense forms used did not contain                 all the infor-
mation required,         such as departure    and arrival          times which were
necessary     for the computation       and verification           of per diems.
By checking      airline     tickets or hotel     bills      included     in the travel
files,    however,      we were able to determine          that the amounts of
per diem paid were about what they should have been.
        The OEO audit        completed    prior     to our review       had disclosed
similar      problems     in travel     voucher preparation.            To correct
this    situation,      the executive       director    issued     an instruction
requiring        that employees      show arrival      and departure       times and
that per diem be computed on a quarter-day                    basis.      We noted,
however,       that the instruction         had not been adhered to in the
one instance         of travel    that had occurred        after     its issuance.
        The executive   director   said that he would            take correc-
tive    action  to ensure that future       travel would         be formally
authorized     and adequately    supported.


                                          4
EXPENSE OF CURRENT GRANT YEAR
CHARGED AGAINST PRIOR-GRANT-YEAR         FUNDS
        Rent amounting      to $2,400 for the first    3 months of     the
current    program year (September,       October,  and November      1970)
had been prepaid        near the end of the prior    program year      with
that year's      funds.     This resulted  in an improper    charge    of
$2,400 to the grant for the prior          year.
      The executive  director    agreed this      should not have
been done and stated    that probably       funds had been available          at
the end of the prior    program year that were used for this
purpose by the then-executive       director.      We referred
this matter   to OEO for resolution.




                                     5
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                                                                                                                  APPENDIX




                                           EL PASO LEGAL ASSISTANCE                SOCIETY

                                            PROGRAM BUDGET FOR YEAR ENDING
                                  AUGUST    31,     1971,      AND RECORDED EXPENDITURES

                                            INCURRED        THROUGH MAY 31,          1971

                                            Program   budget                               Recorded        expenditures
                                          9-l-70    to 8-31-71                                9-l-70       to 5-31-71
           Expense     Category          Federal       Non-Federal                         Federal             Non-Federal
        Salaries       and related
           costs                         $98,982               $31,010                     $76,616                 $14,370
        Consultants         and con-
           tract     services                 500                                                566
        Travel                              1,275                                             1,320
        Space costs and
           rental                           9,600                                             4,800a
        Consumable        supplies          2,400                                             2,569
        Rental,      lease,      and
           purchase       of
           equipment                        1,983                                             1,627
        Other     costs                     5,550                                             5,755
              Total                      120,290                31,010                      93,253                  14,370

            Total   Federal        and
               Non-Federal                          $151,300                                           $107,623




    a
        Does not include      $2,400     charged      against            prior    year's      grant      that      should    have
        been .charged   against     current-grant-year                   funds.




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