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The U.S. Department of Labor (DOL), Office of Inspector General (OIG), contracted with Harper, Rains, Stokes & Knight P.A. to perform an audit of the Workforce Investment Act National Farmworker Jobs Program (NFJP) to determine whether the program was operating in accordance with applicable regulations. DOL provides 53 grants to states and non-profit organizations to operate the program within 48 states and Puerto Rico. We selected a statistical sample of 9 grantees for review and tested the direct and indirect costs claimed for reimbursement by these grantees to determine if the costs claimed were reasonable, allowable and allocable under the cost principles set forth in OMB Circular A-122, or OMB Circular A-87, as applicable, and grant guidelines, and performance reported to determine whether it was accurate and properly supported. The NFJP was audited for program year (PY) 2000 (July 1, 2000 through June 30, 2001).

This report discusses the results of our audit of Proteus Inc. under DOL Grant Number AC-10751-00-55. Under the authority of the Workforce Investment Act (WIA), DOL's Employment and Training Administration (ETA) awarded Proteus Inc. a grant in the amount of $3,177,813 to provide training and services to eligible migrant and seasonal farmworkers in the central valley of the state of California to strengthen their ability to achieve economic self-sufficiency. Proteus Inc. operates an administrative office and education center in Visalia with satellite offices in Fresno, Tulare and Kings Counties. During PY 2000, Proteus Inc. placed 188 participants in unsubsidized jobs, and provided 43 with supportive services.

We found that some costs not directly attributed to the NFJP were charged against the Proteus Inc. grant, rather than to all programs that benefited. We also found a violation of the special clauses of the grant requiring prior authorization for equipment purchases over $5,000. The performance data totals reported were found to not have adequate backup support and required amendment to agree to supported totals.

Findings

For the audit period, Proteus Inc. reported costs of $3.02 million and served 507 participants. We question $34,281 charged to the DOL grant as described below:

1. Equipment and Supply Purchases That Benefit More Than One Funding Source Were Directly Charged to the DOL Grant.

We question $27,047 as a result of Proteus Inc. failing to allocate costs that benefited more than one grant. We recommend that ETA recover the $27,047 and require Proteus Inc. to revise its policies to ensure that costs that benefit more than one cost objective are properly allocated and all cost objectives bear their fair share of costs.

2. Equipment Purchase Over $5,000 Was Made Without Prior DOL Approval.

A scanner costing $7,234 was directly charged to the DOL. There was no prior approval as required in the Special Clauses and Conditions section of the grant, which requires the grantee to receive prior approval from the DOL/ETA grant officer before purchasing equipment costing over $5,000. We recommend that ETA recover the $7,234, and require Proteus Inc. to develop the necessary policies and procedures to comply with all grant conditions.

3. Performance Data Reported to ETA Not Supported.

The performance data that Proteus Inc. reported to ETA did not agree with the data made available to us. Subsequent to our audit, Proteus Inc. prepared and provided us with a properly supported amended program status summary. We recommend that ETA accept the new program status summary as an amended report, review what effect the changes will have on performance goals and require Proteus Inc. to revise its reporting procedures to ensure that all reports submitted to ETA are properly supported.

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