Maryland Department of Labor, Licensing and Regulation -- Audit of
Indirect Costs Charged to Employment and Training Grants Awarded by DOL from July 1, 1995 through June 30, 2000
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MARGIN: Maryland Department of Labor, Licensing and Regulation
In the prior semiannual period, we recommended ETA recover over $1.3 million
from the Maryland Department of Labor, Licensing and Regulation (DLLR) related to
DLLR central service costs it charged to DOL grants. The current audit of the DLLR
is related to indirect costs it charged to DOL grants.
MARGIN: OIG Recommends Recovery of $9.8 million from DLLR
The OIG conducted an audit of the Maryland DLLR to determine whether the
indirect costs charged to DOL grants administered by DLLR for the period July
1995 through June 2000 were allocable and allowable.
Our audit found that although OMB Circular A-87 expressly requires that indirect
costs be allocated to cost objectives on the basis of "relative benefits received,"
DLLR failed to comply with this requirement. We determined that for the 5-year
period ended June 30, 2000, DLLR billed and received a total of $50,523,999 in
indirect costs from DOL while, for this period, its actual allowable indirect costs
properly allocable to DOL grant awards on the basis of "relative benefits received"
totaled only $40,690,940. In short, DLLR over-charged DOL grant awards a total
of $9,833,059 in indirect costs during this 5-year period ended June 30, 2000.
We recommended ETA recover the $9.8 million in questioned indirect costs and
direct DLLR to develop and implement internal control policies and procedures to
ensure that its indirect cost rate proposals fully comply with the Federal cost
principles mandated by OMB Circular A-87. Maryland DLLR disagreed with the OIG
findings and recommendations.
(Audit Report No. 03-01-006-03-315; issued Sept 21, 2001)
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