DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: National Urban Indian Council
Docket No. 87-22
Audit Control No. 08-60550
Decision No. 897
DATE: September 8, 1987
DECISION
The National Urban Indian Council (NUIC) appealed a disallowance by
the
Office of Human Development Services (OHDS) of $444,118 received
under
two Administration for Native American grants. The Office of
Inspector
General, Office of Audit (OIGOA), of the Department of Health and
Human
Services had performed a limited scope audit of grant funds awarded
to
NUIC for the period October 1, 1982 through February 25, 1985.
OHDS
based the amount disallowed on the audit report as well as
its
additional determinations.
The OIGOA audit recommended a disallowance of $210,911 ($157,109 for
costs
found unallowable and $53,802 because of failure to meet
cost-sharing
requirements). The audit also set aside for further
determination
$32,868 in property improvement costs and the question of
whether $79,000 in
NUIC income was grant related. The auditors rejected
documentation offered by
NUIC to show additional cost-sharing because
the items were not recorded in
NUIC's general ledger nor sufficiently
detailed to be acceptable.
After reviewing the audit findings and documentation submitted by
NUIC,
OHDS made additional determinations regarding the costs and
income
questioned in the audit report. OHDS determined that NUIC
had
unallowable expenditures of $153,719, had received $211,399 in
federal
funds in excess of the cost-sharing percentage allowed under the
grants,
and had generated $79,000 in program income that was not applied to
the
program in accordance with 45 CFR Part 74, Subpart F.
In its February 4, 1987 notice of appeal, NUIC stated that it
was
compiling documentation for each of the costs questioned by
OHDS.
Following a delay of several months.in which NUIC experienced
difficulty
in retaining counsel, the Board gave NUIC until June 22, 1987 to
submit
its brief and documentation supporting its claim. When the Board
had
not received a submission from NUIC, it contacted NUIC on July 1,
1987
and set a new deadline of July 10, 1987 for the submission of
NUIC's
brief and documentation. The Board noted that failure to meet
this
deadline could result in the Board dismissing the appeal with
prejudice
for failure to prosecute. See 45 CFR 16.15(b).
On July 10, 1987, NUIC filed a submission which stated that, while all
the
relevant documents were within the control of NUIC, NUIC had not
been able to
compile all the documents to forward to the Board because
NUIC was dependent
on voluntary help, including the services of the
former chief executive, who
was on vacation. NUIC further stated that
only after an appeal file is
developed could legal argument be submitted
in support of its claim.
The Board subsequently held a telephone
conference during which NUIC
elaborated on its difficulties in compiling
the documentation. Based on this
information, the Board granted NUIC an
extension to August 17, 1987 to
present argument and documentation in
support of its claim.
By letter filed August 18, 1987, NUIC informed the Board that it could
not
meet the Board's deadline. In view of NUIC's repeated failure to
meet
Board deadlines, the Board determined to proceed to decision on the
record
already made, supplemented by the audit report, which OHDS
requested the
Board to include.
Despite being given numerous opportunities and extensions of time
to
refute the disallowance, NUIC failed to provide the Board with
any
documentation to dispute the OHDS findings or anything other than
the
conclusory statements in the notice of appeal about why
conclusions
reached by OHDS are erroneous.
NUIC had requested a hearing to present testimony to dispute
the
conclusion by OHDS that certain expenditures resulted from less
than
arm's length transactions. NUIC specifically disputed the finding
that
NUIC's chief executive had an ownership interest in real property
leased
by NUIC. The Board directed NUIC to provide documentation
concerning
the ownership of the real property if NUIC wished to pursue that
issue,
but NUIC failed to supply any such documentation in its response and
did
not renew its request for a hearing. NUIC did submit some
documentation
to the auditors (Appendix E to the Audit Report). We have
examined that
documentation and have concluded that the auditors properly
rejected the
documents as insufficient to support NUIC's claims of
cost-sharing. See
45 CFR Part 74, Subpart G. Furthermore, we have
determined that the
other findings and conclusions by the auditors and OHDS
appear
reasonable and consistent with the applicable grants
management
provisions.
Accordingly, we sustain the disallowance in the full amount of
$444,118
based on the audit report and the notice of disallowance, which
we
incorporate by reference here.
_____________________________ Norval
D.
(John) Settle
_____________________________ Cecilia
Sparks
Ford
_____________________________ Judith
A.
Ballard Presiding Board Member