Audit of the Office of Justice Programs Grants Awarded to Childhelp, Inc
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Office of the Inspector General U.S. Department of Justice Audit of the Office of Justice Programs Grants Awarded to Childhelp, Inc. Phoenix, Arizona Audit Division GR-60-15-001 AUDIT OF THE OFFICE OF JUSTICE PROGRAMS GRANTS AWARDED TO CHILDHELP, INC PHOENIX, ARIZONA EXECUTIVE SUMMARY The U.S. Department of Justice, Office of the Inspector General, Audit Division, has completed an audit of six grants totaling $1,250,000 awarded by the Office of Justice Programs (OJP), Office of Juvenile Justice and Delinquency Prevention (OJJDP), to Childhelp, Inc., (Childhelp) as shown in Exhibit 1. EXHIBIT 1: GRANTS AWARDED TO CHILDHELP, INC. PROJECT AWARD START PROJECT AWARD NUMBER DATE DATE END DATE AMOUNT 2010-JL-FX-0058 07/14/10 10/01/10 03/31/12 $100,000 2010-JL-FX-0428 09/14/10 08/01/10 12/31/11 $100,000 2010-JL-FX-0429 08/19/10 08/01/10 07/31/13 $300,000 2010-JL-FX-0430 09/03/10 08/01/10 12/31/11 $200,000 2010-JL-FX-0431 09/03/10 09/01/10 03/31/13 $300,000 2010-JL-FX-0432 08/19/10 10/01/10 10/31/11 $250,000 Total: $1,250,000 Source: OJP’s Grants Management System (GMS) The grants were awarded under OJP’s Fiscal Year (FY) 2010 Earmarks Program for Developing, Testing, and Demonstrating Promising New Programs. The objectives of the program are to develop and implement programs that design, test, and demonstrate effective approaches, techniques and methods for preventing and controlling juvenile delinquency. The purpose of the audit was to determine whether costs claimed under the grants were allowable, supported, and in accordance with applicable laws, regulations, guidelines, and terms and conditions of the award. The objective of our audit was to review performance in the following areas: (1) internal control environment; (2) drawdowns; (3) grant expenditures, including personnel costs; (4) budget management and control; (5) federal financial and progress reports; (6) program performance and accomplishments; (7) compliance with grant requirements; and (8) post grant end-date activities. We found that property management, local match, indirect costs, and program income were not applicable to these awards. We tested compliance with what we consider to be the most important conditions of the grant award. Unless otherwise stated in our report, the criteria we audited against are contained in the OJP Financial Guide, Office of Management and Budget (OMB) Circulars, grant award documents, and relevant sections of the Code of Federal Regulations. We examined Childhelp’s accounting records, internal control environment, drawdowns, grant expenditures, budget management and control, financial and progress reports, program performance, compliance with grant requirements, and post grant-end date activity. We found that Childhelp did not comply with essential grant conditions in every area we tested. Specifically, the system of internal controls is not sufficient to effectively document and safeguard the use of federal funds, and drawdowns were not made in compliance with the OJP Financial Guide. Additionally, Childhelp did not maintain required personnel records for all full and part-time employees. We also identified unsupported and unallowable personnel and fringe expenditures, unallowable and unsupported direct cost expenditures, and unallowable budget transfers. We found that federal financial reports and semi-annual progress reports had been submitted inaccurately. We also found that Childhelp could not provide any documentation related to program performance for Grant Numbers 2010-JL-FX-0058, 2010-JL-FX-0430, and 2010-JL-FX-0431. Finally, we found not all goals and objectives of the awards had been achieved, and a complete and accurate financial reconciliation was not performed during closeout. Overall, we identified $1,044,081 in net questioned costs, mostly comprised of unsupported costs, but also including $30,076 in unallowable costs charged to the grants.1 Our report contains 18 recommendations, which are discussed in detail in the Findings and Recommendations section of the report. Our audit objectives, scope, and methodology are discussed in in Appendix 1, and our Schedule of Dollar-Related Findings appears in Appendix 2. We discussed the results of our audit with Childhelp officials and have included their comments in the report, as applicable. In addition, we requested a response to our draft audit report from Childhelp and OJP, and their responses are appended to this report as Appendix 3 and 4, respectively. Our analysis of both responses, as well as a summary of actions necessary to close the recommendations, can be found in Appendix 5 of this report. 1 Some costs were questioned for more than one reason. Net questioned costs, which exclude the duplicate amount, are detailed in Appendix 2. ii AUDIT OF THE OFFICE OF JUSTICE PROGRAMS GRANTS AWARDED TO CHILDHELP, INC PHOENIX, ARIZONA Table of Contents INTRODUCTION .......................................................................................... 1 Background ................................................................................................ 1 FINDINGS AND RECOMMENDATIONS .......................................................... 4 Internal Control Environment ....................................................................... 4 Financial Management System ................................................................... 4 Policies and Procedures ............................................................................. 5 Prior Audits ............................................................................................. 6 Drawdowns ................................................................................................ 7 Grant Expenditures ..................................................................................... 8 Personnel and Fringe Costs ....................................................................... 9 Other Direct Costs .................................................................................. 11 Budget Management and Control ................................................................ 12 Grant Reporting ........................................................................................ 13 Federal Financial Reports ........................................................................ 13 Progress Reports .................................................................................... 15 Compliance with Grant Requirements .......................................................... 16 Program Performance and Accomplishments ................................................ 16 Closeout Activity ....................................................................................... 19 Conclusion ............................................................................................. 20 Recommendations ................................................................................. 21 APPENDIX 1 - OBJECTIVES, SCOPE, AND METHODOLOGY ......................... 23 APPENDIX 2 - SCHEDULE OF DOLLAR-RELATED FINDINGS ....................... 25 APPENDIX 3 - CHILDHELP INC’S RESPONSE TO THE DRAFT AUDIT REPORT ...................................................................................... 26 APPENDIX 4 - THE OFFICE OF JUSTICE PROGRAMS’ RESPONSE TO THE DRAFT AUDIT REPORT ........................................................................... 33 APPENDIX 5 - OFFICE OF THE INSPECTOR GENERAL ANALYSIS AND SUMMARY OF ACTIONS NECESSARY TO CLOSE THE REPORT .................. 38 AUDIT OF THE OFFICE OF JUSTICE PROGRAMS GRANTS AWARDED TO CHILDHELP, INC PHOENIX, ARIZONA INTRODUCTION The U.S. Department of Justice (DOJ), Office of the Inspector General (OIG), Audit Division, has completed an audit of six grants totaling $1,250,000 awarded by the Office of Justice Programs (OJP), Office of Juvenile Justice and Delinquency Prevention (OJJDP), to Childhelp, Inc., (Childhelp) as shown in Exhibit 1. EXHIBIT 1: GRANTS AWARDED TO CHILDHELP, INC. PROJECT AWARD START PROJECT AWARD NUMBER DATE DATE END DATE AMOUNT 2010-JL-FX-0058 07/14/10 10/01/10 03/31/12 $100,000 2010-JL-FX-0428 09/14/10 08/01/10 12/31/11 $100,000 2010-JL-FX-0429 08/19/10 08/01/10 07/31/13 $300,000 2010-JL-FX-0430 09/03/10 08/01/10 12/31/11 $200,000 2010-JL-FX-0431 09/03/10 09/01/10 03/31/13 $300,000 2010-JL-FX-0432 08/19/10 10/01/10 10/31/11 $250,000 Total: $1,250,000 Source: OJP’s Grants Management System (GMS) Background OJP, a component of the DOJ, provides innovative leadership to federal, state, local, and tribal justice systems by disseminating state-of-the-art knowledge and practices across America, and by providing grants to assist with the implementation of crime fighting strategies. OJP works in partnership with the justice community to identify the most pressing crime-related challenges confronting the justice system and to provide information, training, coordination, and innovative strategies and approaches for addressing these challenges. The OJJDP provides national leadership, coordination, and resources to prevent and respond to juvenile delinquency and victimization. OJJDP supports states and communities in their efforts to develop and implement effective and coordinated prevention and intervention programs and to improve the juvenile justice system so that it protects public safety, holds offenders accountable, and provides treatment and rehabilitative services tailored to the needs of juveniles and their families. The grants identified in Exhibit 1 were awarded under OJP’s Fiscal Year (FY) 2010 Earmarks Program for Developing,