2001 - Audit Report

U.S. Department of Labor
Office of Inspector General
Office of Audit

National Association of Counties -- Audit of Financial Status Report of July 1, 1997 through April 30, 1998 and Indirect Cost Proposal for Calendar Year 1998

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Goal 1

MARGIN: NACo Indirect Cost Pools Contain Substantial Costs Unallowable to Federal Awards

Under the authority of the Job Training Partnership Act, DOL provided the National Association of Counties (NACo) a series of grants to provide technical assistance to county executives. The OIG audited direct grant costs of $202,145 which NACo claimed for July 1997 through April 1998, and indirect costs of $7,041,452 which it claimed for Calendar Year (CY) 1998. The audit of direct costs resulted in no reportable findings. NACo's claimed indirect costs for 1998 contained a substantial amount of unallowable costs. As a result of the accounting adjustments made to the charges within the indirect cost pool for CY 1998, we examined CY s 1995, 1996, 1997, and 1999.

We questioned $1,243,392 of unallowable costs in NACo's indirect cost pools for CYs 1995 through 1999. Additionally, because of the unallowable costs charged to NACo's indirect cost pool for the audited period, we found DOL grants were charged excess indirect costs of $10,098 and other Federal awards were overcharged by $50,669.

The following table shows the unallowed costs by expense category.

Expense	1995	1996	1997	1998	1999	Total
a. Rent	$168,476	$177,284	$221,000	$192,924	$199,569	$959,253
b. Management Fee	47,259	48,812	49,938	50,951	52,026	248,986
c. Bad Debt	0	0	0	22,710	0	22,710
d. Non-personnel Costs	0	0	0	12,443	0	12,443
Total	$215,735	$226,096	$270,938	$279,028	$251,595	$1,243,392

We recommended DOL's Office of Cost Determination disallow $1,243,392 of indirect costs claimed by NACo for CYs 1995 through 1999, and adjust its indirect cost rates as appropriate. The recommended disallowance will require a reduction to NACo's proposed indirect cost rates which will result in DOL cost reductions of $10,098.

NACo agreed bad debts should not have been claimed in its indirect cost pool, and disagreed with the remaining costs recommended for disallowance. The OIG does not concur with the explanations provided by NACo for allowing these costs.

(Audit Report No. 03-01-003-07-735; issued Sept.21, 2001)

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