We performed an audit of the State of Louisiana, Office of Community Development (State), Recovery Workforce Training Program (Program) administered by the State’s subrecipient, Louisiana Workforce Commission (LWC). We initiated the audit as part of the Office of Inspector General (OIG) Gulf Coast Region’s audit plan and examination of relief efforts provided by the Federal Government in the aftermath of Hurricanes Katrina and Rita. Our audit objectives were to determine whether the LWC, as the State’s subrecipient, (1) ensured that its subrecipients under agreement expended Program funds for eligible expenses and (2) adequately monitored its subrecipients under agreement.
The LWC did not always ensure that its subrecipients under agreement expended Program funds for eligible and supported expenses. In addition, it did not maintain adequate internal controls over the Program’s financial management. Specifically, the LWC did not (1) ensure that reimbursements were consistent with approved budgets before disbursing funds, (2) review its subrecipients’ reimbursements for compliance with agreement requirements or Federal regulations, or (3) maintain adequate records to support the eligibility of reimbursed costs. As a result, the State misspent $147,681 for ineligible and unsupported costs. Further, although the State generally provided technical assistance, the LWC did not always adequately monitor its subrecipients under agreement or submit quarterly reports to the State that included all required performance data. Without this monitoring and compliance assurance, the State could not (1) effectively monitor the Program’s progress and (2) ensure that Program goals were met and deliverables were provided as required.
We recommend that HUD’s General Deputy Assistant Secretary for Community Planning and Development require the State to repay ineligible costs totaling $2,289 and support or repay unsupported costs totaling $145,392. In addition, the State must ensure that the LWC (1) completes its subrecipient agreement amendments in a timely manner; (2) ensures that its subrecipients comply with the approved budgets; (3) receives periodic reviews to ensure that it maintains documentation that accurately and adequately identifies and accounts for all Program funds disbursed; (4) implements adequate internal controls to ensure that sufficient reimbursement reviews are conducted; and (5) implements procedures to ensure that its subrecipients comply with laws, regulations, and agreement terms. Further, the State must (1) ensure the LWC conducts and maintains documentation of on-site monitoring for all subrecipients; (2) ensure the LWC maintains adequate staffing levels to ensure that sufficient on-site monitoring visits are conducted; (3) clearly convey and document its expectations to the LWC pertaining to on-site monitoring; and (4) ensure the LWC submit quarterly report data required by the interagency agreement or formally amend the reporting requirements.