Summary: Comments were provided on the results of two financial reviews conducted by GAO on the Department of Labor (Labor) and selected Comprehensive Employment Training Act (CETA) grantees. The purpose of the first review was to determine how Labor carried out its CETA audit responsibilities. As part of that review, GAO evaluated the quality of the audits that had been performed at 13 prime sponsors. The results showed that billions of dollars of CETA funds have not been audited, and that those audits performed were not always in conformance with Comptroller General audit standards. Consequently, GAO decided to do a vulnerability assessment of Labor and its grantees in order to determine if Labor and its grantees are vulnerable to misuse and abuse of Government funds. The review was particularly interested in determining whether Labor as a whole had an adequate system of internal controls at all levels of its organization that would provide adequate protection against fraud, theft, and abuse of Federal funds and assets purchased with Federal funds. Some of the internal control weaknesses noted during the review were: (1) procurement invoices were approved for payment and later paid without purchase orders or other supporting documentation to ensure validity or without checking to see if the bill had already been paid; (2) employee travel advances were not being sufficiently reviewed; (3) payroll corrections and the resulting supplemental payroll were not being sufficiently reviewed at the time of the audit; (4) Labor's failure to seek competitive bids resulted in the award of a 12-month, sole-source contract for $99,985 of CETA title III funds to a contractor whose qualifications and expertise were questionable at best; and (5) equipment purchased with Federal funds at Labor headquarters was not being physically inventoried annually by persons other than those responsible for maintaining property records. Regarding the CETA program specifically, GAO found internal controls to be unacceptably weak at grantees despite numerous Labor regulations and publications which provide internal control guidance and requirements.
