DAB Decision 56
May 31, 1979 Vocational Guidance and Rehabilitation Services, Cleveland,
Ohio; Docket No. 78-9; Decision No. 56 Dukes, David V.; DeGeorge,
Francis D. Hastings, Wilmot R.
SUMMARY
(The following summary is prepared on the responsibility of the
Executive Secretary of the Board as a convenience to the interested
public. It is not an official part of the decision and has not been
reviewed by the Panel. Similar official summaries of earlier cases
appear in 45 CFR Part 16, Appendix.)
The then Acting Commissioner of Rehabilitation Services sustained audit
exceptions of $56,014 in costs incurred by the grantee under twenty-five
discretionary project grants for eight programs.
The grantee appealed on the basis of mitigating circumstances such as
"the confusing nature of the audit as a whole". The Board found no
merit
to the claim and stated that a review of the record indicated that any
confusion was the result of unreliable and incomplete financial record
keeping on the part of the grantee. On this aspect of the case, the
appeal was denied.
After reexamining its financial records, the grantee claimed, and the
Office of Rehabilitation Services subsequently conceded, that the
grantee had received $53,464 less than the accepted expenditures. As to
this amount, the Board sustained the grantee's appeal, subject to a
reconciliation between the grantee and the Office of Rehabilitation
Services as to any unexpended cash balance as of June 30, 1968, under
prior Departmental grants. Such unexpended cash balance, if any, should
be deducted from the $53,464 otherwise payable to the grantee.
DECISION
This appeal by Vocational Guidance Rehabilitation Services ("VGRS"),
a
private nonprofit agency located in Cleveland, Ohio, which provides
services to the handicapped, stems from an audit report (No. 05-60301)
dated April 11, 1976, conducted by the Department's Audit Agency. The
audit covered twenty-five separate discretionary project grants for
eight VGRS programs for the period July I, 1968, through June 30, 1975.
After considerable correspondence and exchange of information between
VGRS and the Office of Rehabilitation Services, the then Acting
Commissioner of Rehabilitation Services, on August 26, 1977, sustained
audit exceptions for unallowable expenditures totaling $56,014 for all
twenty-five grants. From this action VGRS has taken this appeal to the
Board.
Throughout the prior proceedings culminating in the final agency
determination in August of 1977, VGRS maintained that the then disputed
amount of $56,014 should be abated or waived, not because the auditors'
recommendations as to the disallowance of specific expenditures were
erroneous, but because of "mitigating circumstances," including a
lack
of prior knowledge or guidance as to applicable cost accounting
procedures and a matching contribution by VGRS which was in excess of
that required by the individual grant awards.
Since that time, this appeal has taken a rather different tack.
Numerous extensions of time were granted to VGRS in order to permit it
to reexamine its own financial records and obtain further data from the
Department. In the course of this reexamination, VGRS apparently
discovered that it had actually received less funds from the Department
than had previously been believed to be the case.
Finally, in its statement of appeal dated March 27, 1978, as amended May
5, 1978, VGRS stated that although the
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Department had allowed (after final action on the audit exceptions)
$1,986,209 in grant expenditures, VGRS had been paid only $1,932,745 for
those grants, leaving a shortfall of $53,464.
While in its statement of appeal, VGRS still disputes the disallowance
of the $56,014 in claimed costs, it raises no new grounds for its
position.on that issue except a general characterization as to "tho
confusing nature of the audit as a whole." We find no merit in this
claim. A review of the record indicates that any confusion was the
result of unreliable and incomplete financial record keeping on the part
of VGRS. On this aspect of the case, the appeal by VGRS is denied.
On the other hand, the Office of Rehabilitation Services now concedes
that VGRS in fact received "$53,464 less than the accepted
expenditures." As to this amount, the appeal of VGRS is sustained,
subject, however, to a negotiated reconciliation between VGRS and the
Office of Rehabilitation Services as to any unexpended VGRS cash balance
as of June 30, 1968, under prior Departmental grants. Such unexpended
cash balance, if any, should be deducted from the $53,464 otherwise
payable to VGRS. D11 May 15, 1992