Audit of the Office of Justice Programs Office of Juvenile Justice and Delinquency Prevention Awards to the Education Development Center, Inc., Newton, Massachusetts

8/7/2019 Audit of the Office of Justice Programs Office of Juvenile Justice and Delinquency Prevention Awards to the Educatio

1/65

REDACTED - FOR PUBLIC RELEASE

AUDIT OF THE OFFICE OF JUSTICE PROGRAMS OFFICE OF JUVENILE JUSTICE AND DELIQUENCY

PREVENTION AWARDS TO THE EDUCATION DEVELOPMENT CENTER, INC

NEWTON, MASSACHUSETTS

U.S. Department of Justice Office of the Inspector General

Audit Division Audit Report GR-70-11-002

Jan u ary 20 11



2/65

REDACTED - fOR PUBLIC RELEASE

AUDIT O f THE OffICE Of JUSTICE PROGRAMS OffICE O f JUVENILE JUSTICE AND DELIQUENCY PREVENTION

AWARDS TO THE EDUCATION DEVELOPMENT CENTER, INC NEWTON, MASSACHUSETTS

EXECUTIVE SUMMARy1U.S. partment of Justice (DOJ) Office of the Inspector I,

Audit Division, has completed an audit of the grant for the ining andn I nce Program Monitoring Involved Youth (MSIY),grant number 2006-JU-FX-0161, and the cooperative agreement fo r theI Youth Program ining and n I Assistance (TYP), agnumber MU- KOO awarded to the ucation Development Center,Inc. (EDC) in Newton, Massach .2 The Office of Justice ram (OJP)Office of Juveni J and Delinquency Prevention (OJJDP) awarded boththe MSIY grant and the TYP ag In total, received $3,093,400rant award, the reement award, and each awards'hroughsu

M grant provided a total award of , including an initialof $499,996 in September 2006, a supplemental award of $197,437ber 2 and a second supplemental award of $ 000 in

2008. pu of the M grant was to provide trainiand techn I nce to support the development, enhancement, orexpansion of mentoring res and programs designed foster careentry f and juvenile justice system involved youth.

The TYP reement provided a total award of I including aninitial award of $599,967 in ber 2007 1 a supplemental award of$600,000 in September 2008, and a supplemental award of$946,000 in 2009.4 pu of TYP reement was toprovide training and technical nce to Indian Tribes and Alaskan Nativecommun that received gra under OJ piS Tribal Juvenile

1 The full version of this i information that the GIG considered to beand therefore could no t be publicly released. To create this public version of thereport, the GIG redacted the portions of the full report that are considered sensitive andindicated where those redactions were made.

2 vn


3/65


Accountability d ary grant program. The ining and technicalnce was incl the development programs tosafety within the tribal communities by ucing juveniviolence, and lid victim

The of our audit was determine whether ituresclaimed fo r costs under the awards were allowa supported, and inaccordance with appl ble laws, ulations, guideliconditions of awards. We also E ram nce inmeeting the awa objectives and overall accomplishments.

We determined that EDC did not fully comply with the awarduirements we . We reviewed E compl nce with nessential conditions and found weaknesses in of nine areas we

L'L..JL'L.U: (1) internal controls, ) award expenditu (3 ) budgetmanagement and control, (4 ) compliance with award I conditions,( monitoring contractors and sub-gra and (6 ) program performanceand accomplish We d not find wea to fina I andprogress reporting, drawdown of funds, or indi cost expenditures.use of identified, we are questioning $286,698 or about9 percent of the nding spent on the award related projects. 5

In performing our fieldwork, we found EDC did not comply with theI requi of the awards. We found : (1) written internalcontrol ures were not uniformly applied resulting in both questionedand unsupported for transactions re to conference, travel,and consulting itures; (2 ) budget management controls wereinad ) compl nce with award special conditions wasinadequate; (4) monitoring of consulta and subcontractors wasincomplete; and (5 ) performance metrics to award fundedpu techn I and the number visits tograntees remained incomp at the time of our field work.

These items are discussed in detail in the findirecommendations section of report. Our audit scope, andmethodology appear in Appendix 1.

We discussed the results of our audit with EDC officials and haveincluded their com in the report, as appl ble. Additionally, werequested a response to our d report from EDC and OJP, and their

5 General Act of 1978, as amended, contains our reportingrequirements fo r costs. However, not findings are dollar-related. SeeAppendix I I for a breakdown of our dollar-related fi and for ofcosts.

iiREDACTED - FOR PUBLIC RELEASE


4/65


responses are appended to this report as Appendix I I I and IV , respectively.Our analysis both respo as well as a summary of the actionsnecessary to close the recommendations can be found in Appendix V of thisreport.

iiiREDACTED - FOR PUBLIC RELEASE


5/65

REDACTED - FOR PUBLIC n..L.IL..L., . . ' ' ; ; 'L.TABLE OF CONTENTS

INTRODUCTION ........................................................................ 1 Office Justice Programs ............................................................. 2 Office Juveni Justice and Delinquency Programs ......................... 2

ucation Development ................................................3 Our Audit Approach ......................................................................4 FINDINGS AND RECOMMENDATIONS ........................................6 Internal Control ment .........................................................6 Award Expenditures .....................................................................7 Reporting ................................................................................. 13 Drawdowns ............................................................................... 16 Budget Management and Control ................................................. 17 Indirect ............................................................................ 18 Compliance with Award I Conditions .................................... 18 Monitoring Contractors a Subgra ....................................... 20 Program Performance and Accomplishments .................................. 21 Conclusions ............................................................................... 24 Recommendations ...................................................................... 25 APPENDIX I - OBJECTIVES, SCOPE, AND METHODOLOGy ........ 27 APPENDIX - SCHEDULE OF DOLLAR RELATED FINDINGS .... .APPENDIX III - EDUCATION DEVELOPMENT CORPORATION

RESPONSE TO THE DRAFT AUDIT REPORT ...................... 29 APPENDIX IV - OFFICE OF JUSTICE PROGRAMS RESPONSE

TO THE DRAFT AUDIT REPORT ........................................48 APPENDIX V - OFFICE OF THE INSPECTOR ENERAL

ANALYSIS AND SUMMARY OF ACTIONS NECESSARYTO CLOSE THE PORT .................................................. .



6/65


INTRODUCTION The U.S. rtment of J (DOJ) Office of the Inspector I,

Audit Division, completed an audit two awards from the Office ofJ Program (OJP) Office of Juvenile Justice and DelinquencyPrevention (OJJDP) the Education Development Center, Inc. (EDC) locatedin Newton, awa included a grant fo r the ining andTechnical Assistance Program Monitoring System Involved Youth (MSIY),grant num 2006-JU-FX-0161, and a fo r the TribalYouth Program ining and nical Assistance (TYP), agreem number2007-MU- K002. 6 Collectively, these two DP awa including allsupplemental funding totaled $3,093,400.

IVlSIY grant a $947,433 included aninitial award of $499, in Septem 2006, a supplemental award$197,437 in September 2007, and a second supplemental award of$250,000 in Septem 2008. The purpose of the MSIY grant was toprovide ining and technical nce support development,enhancement, or expansion of mentoring strateg and programs designedfo r care, reentry, and juvenile j system involved youth.

The TYP agreement provided a I award $2,145,967 that i udedan initial award of $599,967 in September 2007, a supplemental award of$600,000 in 2008, and a second supplemental award of$946,000 in 2009. The purpose of TYP agreem was toprovide ining and technical nce Indian Tribes and Alaskan Nativecommu that received grants under OJJ Tribal JuvenileAccountability discretionary grant program. The training andnce included developing programs to increase withinthe tribal commun by reducing juveni delinquencYI violence l and childvictimization.

objective our audit was ine whether reimbuclaimed fo r costs under the awa were allowable, supported, and inaccordance with appl ble laws, regulations, gu ines, and the andconditions of awards. We also program performance inmeeting award objectives and overall accomplish . The lowing bleshows total nding period fo r the awards.

6 We audited a cooperative agreement and a grant award. However, fo r purposes ofthis audit we will refer to these as awards throughout the report.

- 1 REDACTED - FOR PUBLIC RELEASE


7/65

REDACTED - FOR PU RELEASE

OFFICE OF JUVIN JUSTICE AND DELINQUENCY PREVENTION AWARDS THE EDUCATION DEVELOPMENT

..... .....r n _ ~ _ - , I 1"'1 I AWARDAWARD START DATE DATE AMOUNT

. TECHNICAL ASISSTANCE PROGRAM FORMONITORING SYSTEM INVOLVED YOUTH:2006-JU-FX-0161 10/ ./2 6 9/30/2008 $499,996 ,

I Supplement 1 9/11/2007 6/30/2009 197,437 ISupplement 2 9/23/2008 6/30/2010 250,000 '

I Total 2006 rant $947,433 III TRIBAL YOUTH PROGRAM TRAINING AN Di TECHNICAL ASSISTANCE: I 2007-MU-FX-K002 7/1/20071_ Supplement 1 9/23/2008Supplement 2 9/24/2009Total 2007 Agreement

Total AU Awards

6/30/20088/31/20091/ 1/2010

$599,967 :600,000 I,,001

$2, , f I

$3,093,400Source: Office of Justice Programs.

Office of Justice ProgramsOffice of J Programs (OJP), within the U.S. rtment ofJ provides primary management and oversight of the awa we

audited. rough programs and funded by bureaus andoffices, the OJP works to form partnerships among federal, state, and localgovernment officia in an effort im criminal jincrease knowledge about crime, assist crime victims, and improve the

ministration of j in America.Office of Juvenile Justice and Delinquency Programs

of Juvenile J and Delinq Prevention (OJJDP)within OJP. miSSion the OJJDP to provide nationalip, coordination, and resources to prevent and respond to juven

delinquency and victim . The OJJDP supports and communin their efforts to develop and implement effective and coordinatedprevention and intervention programs and to improve juveni j



8/65

REDACTED - FOR PUBLIC RELEASE it publ holds offenders accou bie, and

provides nt and rehabilitative tailored to the needs ofjuveni and their milEducation Development Center, Inc.

According to ucation Development Center l IS (EDC) website l theorgan is a global non th d nSf delivers, and evalprograms which ress challenges in education, health, and economicopportunity. e site on to that working with both pu ic-sectorand private cond 350 projects in cou around

world. research, training, and d opmented with ranging fromprojects to la Ie national and international initiatives. EDCs work isfu through grants and contracts from a variety of sources, udingU.S. and n government agencies, private foundations, nonprofitn and corporations.Training and Technical Program for Monitoring System InvolvedYouth

E award ment n the M would supportdevelopment, enhancement, or expansion of mentoring ies andprograms desig fo r and juvenile justiceinvolved youth. By Is ag to provide trainingand techn I nce to im of ring ramssystem involved youth.

Officials blished a delivera desig to measure theprogress of the program. A list key delivera to:

Develop a national mentoring inventory identify programsng involved youth; Cond a planning m and orientation fo r the four mentoringreceiving awards under OJJD Mentoring Initiative for

Involved Youth; Maintain an information ring data to

communication between four demonstration sites; Conduct at least eight cross-site training to re the

innovations and accomplishments ach by other mentoriprogra



9/65

REDACTED - FOR PUBLIC RE ..........> J

.. Conduct two ional mmg ded to implementingand enha ng mentoring programs system involved youth; andthree technical assistance bull ns and three nical

nce b addressing of three categories of minvolved youth.Tribal Youth Program Training and Technical Assistance

EDC nding provide ining and nicalTribal Youth Program grantees. To ieveTraining and Techn I nce Centerthat was designed strengthen American Indian and Alaska Native juvenij education, mental Ith I services, culture, andemployment programs. bel that the of ncecenter would support OJJDP's mission of reducing juveniviolence, child victim , and increase safety bal communities.EDC planned to provide technical assistance through a team Technicallists from across n country. These Iprovide in juvenile justice risk reductiontribal youth, capacity building, and systems nge, evaluation, andsustaina lity.

EDC ned the ademonstrating the importancespecial and the E assistance center were to providetechn I assistance to fou special and project directornned to re problem-solving and capacitybuilding blish a close working relationshipwith grantees it supported, E assistance center plancarry out a variety of award-funded activities including: (1) strategicplanning meetings, (2) I (3) visits, (4 )learning, and (5) phone and web consultations. In addition, assistance

staff planned to new products and pt E existiproducts and resources to the program.Our Audit Approach

We compl nce with what we mostimporta conditions the awa The against arefound in the current version of OJP Fina which serves as amanual assisting award reci in their fiduciary bility



10/65

REDACTED - fOR PUBLIC RELEASEuard award nds and ensure funds are appropriately. We alsorelied on the General Service Administration Travel Regulations in

conjunction with our compl nce ng. We Internal control environment to determine whether the finaaccounting system and related internal controls were uate touard award funds and ensure compliance with the terms andconditions the awards. Award expenditures to ine whether the chargedawards were allowable and supported. Reporting to determine if the uired periodic FinancialReports and Progress Reports were submitted on andaccurately reflected award activity. Drawdowns to determine if EDC adequately supported its requests

fo r funding and managed award receipts in nce withI requ Budget management and control to ine overall

bility of budgeted by identifying any budget deviationsbetween the amou authorized in the budget and the Iincurred fo r each budget category. Indirect costs to determ E procedures and charges related

to ind Compl with award conditions to ine ifcomplied with special conditions or specified in the award

documents. Monitoring contractors and subgrantees determine Eprocedures and performance in monitoring contractors andra Program performance and accomplishments inewhether achieved award objectives and to assess performanceand award accomplishments.When appl ble, we also fo r compliance in areas of matchingprogram income, and accountable property. For both of EDC'sawards, we found no evidence matching program income, oraccountable property.

5 -REDACTED - fOR PUBLIC RELEASE


11/65

REDACTED - FOR PUBLIC

FINDINGS AND RECOMMENDATIONSCOMPLIANCE WITH ESSENTIAL AWARD REQUIREMENTS

We determined that EDC did not fully comply with the awardrequi in the areas lIy, we found:(1) unallowable and unsupported costs related to conferencefood and beverage, room, travel, and consultingexpenditures; (2) budget management controls wereinadequ because E accounting m could notaward expenditures based on approved budget categories;(3) noncompliance with award I conditions for 2006grant; (4 ) monitoring of consultants was incomplete becauseEDC did not properly document all of the work performed byits consultants; and (5) selected performance metricsremained incom time our field work. As a resultof these defiCiencies, we question $286,698 in awardexpenditures representing about 9 of the combinedtotal award budget. These conditions, including theunderlying causes and potential on both awards, arefurther discussed in the body of the report.

Internal Control EnvironmentOur audit included a review of accounting and financial

management system and ngle Audit Reports to assess the risk ofnoncompl with laws, regulations, guidelines, and the terms andconditions of the awards. We also interviewed management from theorganization, observed accounting activities, and performed transactionng to further assess risk.

According to O]P ncial Gu award are responsiblefo r blishing and maintaining an adequate system of accounting andinternal controls. An internal control system provides cost andproperty controls to ensure optimal use of funds. Award reCipients mustadequately ua funds and assure they are used solely for authorizedpu

Whi our audit did not assess overall internalcontrols, we did the i I controls of EDC's financial managementsystem to administration of DO] award funds during the periodsunder review. From our review we identified internal control wea insome the areas we tested. officials told us they believed anadequate system of internal controls was in place and offered no further



12/65


explanation. However, our review of budg controls,campi nce with I conditions, the monitoring of award ndedconsultants l and performance demonstrated inconsistent applEDC's internal Iy, we determi whi EDC hadwritten internal control procedu it did not uniformly apply proceduresto ensure that controls were working as i ded. From our review andng, we conel that th condition contributed to noncompl nce withsome award ui These i I control deficiencies weidentified are discussed in greater detail in body of the report.a ce a effectively nctioni internal controlenvironment award funds and undermines the ability the

pient to ensure federal fu are ng adequately uarded andaccu and properly in accordance with the award objectives. Inment, E management should the internal controlwe identified.Award Expenditures

We a judgmental sample of expenditures to determine ifthey were allowable and supported. To determine if expenditures wereallowa we compared the expenditures to the award budget andperm uses of funds oullin in the OJP Fi I uide andincorporated in the terms a conditions of the awa To determine if

itures were supported, we reviewed pu docu invoices,and accompanying accounting system data. We also tested personnelexpend res cha to awards by reviewing accounting for twonon-consecutive pay periods.

In most recent Federal nancial Reports fo r the qua ending inDecember EDC reported I expenditures $776,668 and$1,460,990 for the 2006 and 2007 awards, respectively. 7 For both awaE expended $2, on awa related related indirectministrative conferences, person ,travel, and outsideconsu

EDC officials told us that created a unique project code withinr accounting system seg and Ily track expendituresmade under the awards. Using the unique project codes, EDC officialsprovided us with a tra list awa -funded expend res totaling

604 2006 grant and $1 5,004 fo r the 2007 agreement. The7 In October 2009, the was from the Financial

Status Report to the Financial Because most of the forms we reviewed wereFinancial Status Reports, that is how we refer to them in our- 7



13/65


primary nsactions included itures fo r travel, consu andEDC-sponsored conferences. We tested a judgmental sample of100 invoices Ii $220, or 28 percent, of the 2006 funds, and125 invoices totaling $780,487, or 54 percent, of 2007 funds expended

the time of our on-site field work.We initially sampled 25 detai expenditures from the each of the twoawards. However, we noted a trend concerning potentially excessiveconference food and expenditu we nded our sam toinclude a 100 expenditures for the 2006 award and 1 expenditures

for the 2007 awa use the 2007 award included a la number offood and beve itu we sampled more nsactions from2007 award.

After sampling 225 transactions fo r both awards, we found unallowableexpenditures related food, beverage, and room expenditurestotaling $47,980, unsupported fo r consultant expenditures totaling$111,381, unsupported travel nditures totaling $991 and otherunallowable itures totaling $1,3 . Collectively, expenditurestotaled $161,

Food, Beverage, and Room ExpendituresWe tested the expenditures made in support of 11 conferences with

nificant food and expenditures 3 from the 2006 award and 8from the 2007 award. To determine the allowable food and beveragefo r conference, we on guidance outlined in OJP FinancialGuide. We calculated meal rates based on the GeneralAdministration's (GSA) Travel u covering Is and Incidental(M&IE) in effect the time and location of each conference. 8

Because OJP n that the cost of meals consumed duringconferences may exceed the normal GSA allowable meal costs, the nanGuide permits meals consumed during a conference to exceed normal ratesby up to 50 percent per meal when all hotel service charges are included.The Financial Guide also provides an allowance fo r light refreshments of up23 percent above the normal daily meal charges. We calcu avalue fo r each conference-provided meal that included the normal meal rateplus an addi tiona l 50 We a included an addit ional 23 percentabove the normal daily meal rate for light refreshments. We multiplied our

8 According to GSA travel regulations, approximately nine percent of a locationstotal M&IE is allocated to incidental expenses.



14/65


meal rates by the number of attendees fo r each day of the conference todetermine the total allowable conference food and beverage expenditures.

We compared allowable food and beverage expenditures to theinvoiced conference expenditures we received from EDC. We found actualfood and beverage expenditures exceeded allowable expenditures in 10 ofthe 11 conferences tested resulting in questioned costs totaling $46,149.We summarized the results of our conference food and beverage testing inthe following table.

Conference Food and Beverage TestingAllowable Actual

Food & Food & QuestionedLocation Date Attendees Beverage Beverage Costs

New Orleans LA Dec 2006 24 $2,690 $6814 $4 124New Orleans LA Sept 2008 24 4,609 14 230 9,620Newton MA Nov 2009 23 3359 8252 4893

Total 2006 71 j;10,658 $29J 296 $18,637Santa Fe NM Jan 2008 47 $3,910 $5 121 $1 211Squamish WA Feb 2008 53 2 157 1 120 0New Orleans LA April 2008 29 2 019 5952 3933Minneap_olis MN July 2008 69 ~ 1 5 1 7 526 3 375Albuquerque MN Jan 2009 95 6,564 9493 2929San Diego CA Mar 2009 0 4,211 5903 1 692Oklahoma City, OK April 2009 65 5 180 6091 911Crystal City, VA Nov 2009 117 15,991 29452 13,461

Total 2007 545 $44 183 $70,658 $27,512Total Both Awards 616 $54841 $99,954 $46,149

Source: EDC accounting records and OIG Analysis.For a 3-day conference held in New Orleans, LA, during September

2008, which was attended by 24 people, we determined actual food andbeverage expenditures exceeded allowable expenditures by $9,620, or $401per person. The conference schedule included light refreshment breaks eachday totaling $3,386, or $47 per day per person. During the first day of theconference, light refreshment cost averaged $64 per person. On the datethe conference was held, the GSA rate fo r IVI&IE in New Orleans totaled only$59. Based on the GSA M&IE rate of $59, we calculated light refreshmentrates equal to $14 per day per person. The following table provides asummary of both the dollar and the percent that actual light refreshmentexpenditures exceeded allowable fo r the 3-day conference.



15/65


September 2008 New Orleans, LA ConferenceActual Light Refreshment Compared to Allowable For 24 Attendees

Actual Allowable Allowable ActualctualBreak Cost Per Break Cost Per ExceedsAllowableession Cost Person Cost Person 457%ay - 1 $1 526 $1464 $336

336%ay - 2 47 14 128 336 221 %ay - 3 1432 31 336336%otal/Avg $3,386 $47 $336 $14.

Sources: EDC Accounting Records and GSA Travel Regulations.In 10 of the 11 cases tested, we found conference food and beverage

expenditures exceeded allowable rates for either conference provided mealsor light refreshments. We asked EDC officials about the excessive food andbeverage charges in New Orleans and they told us OJP's Program Managerapproved a large conference in New Orleans totaling 450 rooms and $25,000in food and beverage costs. However, when we questioned EDC officialsfurther on this issue, they were not able to provide us with anydocumentation supporting their position that OJP gave specific approval fo rthis conference. EDC officials told us that after they signed a bindingcontract with the hotel, OJP's Program Manager cancelled the conference .However, the hotel held EDC liable fo r the original 450 contracted rooms andthe $25,000 committed to food and beverage expenditures. EDC officialssaid they had to conduct numerous conferences at the New Orleans hotel tomeet the terms of the original contract.

We asked both EDC and OJP officials to document the circumstancessurrounding commitments to the hotel in New Orleans. However, neitherEDC nor OJP provided an explanation to support the original commitment forsuch a large amount of award funding or the excessive food and beverageexpenditures we found at each succeeding conference in New Orleans. Wewere unable to discuss the matter with the EDC and OJP Program Managerswho we were told made the initial decisions related to the cancelledconference because the program managers were no longer employed bytheir respective organizations. We were also told in our discussions withEDC and OJP that there was no supporting documentation in writing thatwould have explained the basis fo r the decisions.

For each conference tested, we found EDC entered into contractsdescribing services the hotels would provide. We examined the contractsand found evidence of management review in each contract tested.



16/65


However, in five we found unallowable room chargestotaling $1,831. Four of the conferences included no-show roomcharges or unallowable alcoholic charges $831 and in one casewe found a dupl bill paid to a hotel totaling $1,000.

Un a traveler can demonstrate exceptional circumstances,ment travel ulations place responsibility for no-show roomwith traveler. As rt our review, we found no evidence thatfollowed up with the travelers determine causes fo r no-show

room charges.Because we found ma fo r most of thewe tested and

q ned $47,980 inConsultant

For both awards, E officials frequently provided n I assistanceusing outside consulta functioning as independent contractors.2006 grant, our review showed EDC's consu nts had experience

Ii with troubled youth. For the 2007 award/ we in thatemployed individuals with related to Native American youth andsensitivity to Native American culture. We found of managementreview in many of the consultant nsactions we tested. Additionally I weconfirmed that consu nts provided iled descriptions of their Iizedand included vendor agreements that were reviewed by EDCmanagement a signed. However, our ng also disclosedofficials did not always have supporting documentation the workperformed and invoiced by award-fu consulta and the consultantsdid always com their work. a result , we q ed unsupportedaward-fu nt expenditures of $111, 1 in total.

During our testing, we found 15 cases where consultants documentedwork with only an incom sentence ng they workedon a project for a specific number of hours or days. In addition, in 3 caseswe nd incom consulta work. work was incom

because the consultants provided the work in a draft format and we did notfind final work. our view/ consultants should have completedall required projects and submitted detai invoices with supportidocumentation specifyi days and hours worked on eachMoreover, because of the limited evidence supporting contracted consultantwork/ we could not ine level of techn I nce provided byEDC officials to its consultants. As we d report, EDC



17/65


receives an indirect cost reimbursement to manage the work completed byits consultants.Our unsupported consultant expenditures also included one $79,000

contractor payment with limited supporting documentation and no evidencea signed contract. The payment involved consulta in support ofa national conference fo r Native American youth. September 2009, theconsu nt submitted an incomplete invoice that EDC's accounting officialscorrectly questioned. However, EDC paid the invoice based on a onedocument bing services provided in only I Moreover! wefound no documentation of the work performed by the consultant in theprogress report submitted for the period, and no ofmanagement's ht of consultant's work.Travel Expenditures

Most of the travel vouchers we demonstrated sign ntmanagement scrutiny by EDC officials. Travelers submitted authorizationsto EDC officia for approval and EDC officials reviewed the authorizations,insured the non conformed to government travelulations! and documented supporting invoices fo r award-funded travelpayments. However, from our sample testing l we a single travelexpenditure totaling $991 because of incom supporting documentation.

incomplete travel documentation concerned a trip made by anemployee who drove 1,708 mi between Min and Oklahoma

attend a 2007 award-funded meeting. The mileage expenditure totaled$991 1 but we found no that Is conducted aanalysis to determine the most method of travel.Documentation supporting trip did not uately explain the reasonsfo r the long auto trip or the total costs incurred.Other Unallowable Expenditures

We questioned as unallowable two 2006 award-funded expenditurestotaling $904 because the project codes were i officia did notprovide supporting documentation for an additional 2006 award-fundedexpenditure ling $471, and we questioned it as unallowa

Our review of 2 expenditures resulted in $161, in questionedOur results are summarized in the following table.



18/65


Expenditure Testing Results Total

Expenditure Unallowable Unsupported QuestionedCategory Cost Cost Costs

Food & BeverafJe $46,149 - $46 149Conference Hotel 1 831 - 1 831Consultant & - $111,381 111,381ContractorTravel - 991 991Other 1 375 - 1,375

Total $49,355 $112,372 $161,727Source: EDC accounting records and OIG analysis.

Personnel ExpendituresFor both awards, we tested a judgmental sample of personnel

expenditures during two non-consecutive pay periods. For the 2006 award,we sampled salaries for four employees totaling $3,721 of $218,328, or2 percent of the award's personnel expenditures. For the 2007 award wesampled salaries for six employees totaling $6,596 of $203,348, or 3 percentof the award's personnel expenditures.

We tested personnel transactions to determine if salary and benefitexpenditures were computed correctly, properly authorized, and accuratelyrecorded in EDC's accounting system. To determine if the expenditureswere computed correctly we compared the payments made to EDCemployees to their hourly rate and verified the payments matched thenumber of hours worked on award funded projects. To determine if theexpenditures were properly authorized, we reviewed them for evidence ofsupervisory approval. To determine if the transactions were properlyrecorded, we verified that EDC officials accurately recorded each personneltransaction in their accounting system. We determined that EDC correctlycomputed, properly authorized, and properly recorded each personneltransaction tested.ReportingFinancial Status Reports

The financial aspects of OJP agreements are monitored throughFinancial Status Reports (FSR). According to the OJP Financial Guide, FSRsare designed to describe the status of the program's funds and should be



19/65


submitted within of the of the most recent quarterly ngperiod. For periods when have been no program outlays, a reportthat effect m submitted. fo r current award or future awardsmay withheld if reports are not submitted or are late.

E officials told us they complete the FSR using aReport (PSR). based on a projectns award and expenditures inaccounting system ng the project's ned code. To determine eachexpenditures fo r a period, produces a R

summarizing the expenditures by the date ra specified for eachWe tested the four most submprior to our field work fo r both awards. We concluded each of the eightreports were accu because each total expendituresreported in the FSR agreed with the totals reported in EDC's accountingrecords PSR.

We also tested R for timeliness using the criteria noted aand we found EDC submitted seven of eight FSR's within time periodspecified by OJP. We found one report was subm two days late but weconsidered th rdy fili im I. use FSR's wewas accurate and submitted in a timely mannerl we concluded metOJ fina I reporting nda

Progress reports provide information relevant to the performance of anaward-funded program and the accomplishment of objectives as set forth inapproved award application. According to the OJP I

reports m be submitted twice yearly, within 30 days after the end ofreporting periods of June 30 and ber 31, fo r I of the award.an award recipient does not provide or include full details of thefunded ram implementa tion, OJ ability to monitor award activity isimpaired and there an increased risk that a project will be delayed or notcompleted as intended. Additionally, is may cause funds to be wasted orfor unallowable purnr",.:u

both awards, we tested the timeliness of the four most recentprogress According to OJP's nt Ma System Msubmitted four of the eight required reports on time. However, because

four reports subm ranged from only 1 to 18 days late, wedid not consider the lateness a material finding.



20/65


measure the accuracy and com the progress reportsboth awa we each report to determine if the reports containedI data, included accomplishments to program'sand accurately reported the data.

the 2006 Monitoring Involved Youth grant we found eachreport included statistical d that related to the program objectives andaccurately repo the . For example in report endiDecem 31 1 2009, EDC reported progress on the following objectives:

EDC completed atnded mentoring program; developing a national d on survey

responses from over 400 organizations serving system-involvedyouth; a published a monthlyng cross-cu in mentoring relationshi and

evaluation and ration site and dindividuals including all rgeted grantees.

For the 2007 Tribal Youth Program reement we found each reportincluded statistical that to the program's objectives andaccurately reported the data. For example in its report ending June 30,reported:

program mathat incl tribal culturalby 88 pa pa ng 21rated positively;

and i thatby experts n Indian andn cultures, was by partici nts ng

tribes, and 89 percent of the attendees rated positively; EDCofficials planned and coordi regional training that i udedining suicide prevention and Tribal Youth Program Video



21/65

REDACTED - FOR PUBLIC RELEASE ing, was attended by 40 partici nting bes,

of the positively; and

From our of the progress we EDCIs generally subm in a timely manner. considered

reports nically because they accurately bed workaccompl to program's objectives, and rts aincluded statistical describing EDC's progress towards meeting theprogram objectives. However, fo r 2006 award we noted several keyprogram objectives that were either incomplete or Wed these concerns in Program Performance and ADcornsection of report.Drawdowns

Drawdown a term used by P to descri when a pientfunding for expenditures associated with an award program. The OJPFina I ide the methods by which DOJ makes payments toawa . The methods and procedures fo r payment are desig tominimize the time between transfer funds by government and thed rsement of funds by the awa . Awa may id in nce,provided maintain procedures the time between thetransfer nds by govern disbu of fu by the

The nancial Gu recom that drawdowns completed innce of expenditures expended immediately or within 10 days ofdrawdown

At the time of our field work, EDC had drawn down $748,354 for the2006 award a $1,348,697 for the 2007 award, for a total of ,097,051.An official told us that had not requested any advances duriaward periods and we found no ce of nce payments. Th sameofficial said drawdowns were calculated for period on theexpenditures found in a nsaction detail rt i fromaccounting system. The transaction II report provided a summary ofaward-funded expenditures by project e fo r award. e resu ofthe drawdown calcu were provided to an accounting manager whoprepared invoice to req funds fo r each EDC projectAward-funded expenditures were reimbu by OJP through ic fundtra to E account desig financial institution.



22/65


Because we found had adeq procedures in place to calculaterequi amount of the drawdown, and use procedures wereworking as intended and minimized that the time between the drawdownand d ursement of funds, we concluded that met OJP's drawdownsta rds. However, we did find an inconsistency drawdownamounts and its compliance with the award's special conditions. We dissue later in the report.Budget Managem ent and Control

The OJP Financial uide resses budget controls surround thefinancial management of awa reci Accordi tonancial Guide, awa are permitted to make nges to their approvedb to unantici program uirements. However, themovement funds between approved budget in excess of10 percent the I award m be approved in nce by OJP. Inaddition, Financial Guide uires all award reci esta andmaintain program accounts which will enable sepa identification andaccounting funds appl to each budget included in theapproved award.

In making each award, OJP provided EDC with an approved itemizedbudget r both awa OJP approved budgetsproviding additional funding through two supplements fo r each award.

Is told us that the budgets they maintained in their accounting systemwere not on the appl submitted OJP. a EDC couldnot provide a report on the OJP approved budget fo r awardwould allow for a budg versus actual expenditure comparison by individualbudget category. E officials told us they believed that their method ofaccounting for award funding on application was morecompreh use it included more budget categories than OJapproved budget, and in their view was a more meaningful managementtool. After completing our field work, EDC officials reed to provide us witha budget ma supported by detai expenditu based onOJ approved budget categories fo r each award. Our intention was useth report expenditure testing pu and to ma an independentbudget versus actual expenditure com rison. However, after completingour field work, E never provided a budget management report wecould reconci to the expenditures reported in EDC's accounting system.

As rt of our audit we compared the total expenditures by theapproved bud category to award funded expenditures nd in thegrantee's accounting system. However, because EDC did n ma n



23/65

REDACTED - FOR PUBLIC RELEASE financial records based on OJ approved budget categories, we could notine if E budget management were uate. In ourjudgment, when pients do not track expenditures by approved budget

or monitor the budget verses actual , awa managementis potentially undermined and the ability to adequately uard awardfunds is compromised.Indirect Costs

Indi are of an orga are not readilyassignable to a rticu r project, but are necessary to the operation of thenization and performance of project. The of operating andmaintaining facil depreciation, and administrative salaries are examplesof the types of costs that are usually as indi OJP nancialGuide stipulates that recipient's may use current indirect cost rates approvedby another I agency.

provided us with current app indirect from theAgency International Development (USAID). USAID approvedEDC's indirect costs for overhead indi (.5 percent) and sub-awa orcontractor indi (5.0 percent) cost

officials told us they report from raccounting system to calculate total indirect cost expenditures fo raward on a quarterly basis. To verify E indi calculations fo rboth awards, we selected the five fiscal quarters ending between December2008 and ber 2009 1 and computed the I ind cost expendituresfo r both the overhead and sub-award cost categories. For each quarterru c rLC>r l , we calculated indirect expenditures that withcalculated indi cost expenditures.

use used an indirect approved by another federaluse we determined methodology for calculatingmet the indirect costui

Campi with Award Special ConditionsAward I cond are included in terms and conditions reach award and are provided in the accompanying award documentation.The I conditions maya include I provisions unique to theaward. We reviewed the special conditions found in the award documentsand accompanying adjustment for both awards. Whi we

determined from our review that E met the special condition requirements18REDACTED - FOR PUBLIC RELEASE


24/65


for the 2007 award, we also identified several instances where did notall of the I condition requi for the 2006 award. useofficials made funding req (drawdowns) during a period when theywere not in compliance with all mandated I conditions, we question$1 971 as unallowable award-funded expenditures.

Our independent review of OJP's Grant Management System (GMS)showed that did not comply with I conditions included in2006 grant award documentation. We summarized those instances ofnoncompliance with award special conditions below:

.. The recipient II submit one copy to OJJDP, including anelectronic copy, of any final reports, publications, video, compactdisk (CD), or d ital video d (DVD) developed with fundsawarded by OJJDP;

.. Deviations from the project's approved timeline must receive priorapproval from OJJDP;

.. pient to submit , on performancemeasurements approved by OJJDP 1 to OJJDP's PerformanceMeasures Website;

.. Prior to publication, the reCipient m submit all reports andwritten products developed from award funding to OJJDP for reviewand comment;

.. The reCipient agrees to comply with all confidentiality and privacyrequirements noted in the Consolidated i Regulations, Part; and

.. The reCipient agrees to uti! OJJDP Protocols as minimumstandards in developing curricula, delivery of technical aSSistance,and evaluation of training.

We officials and OJP's Program manager to providecomplied with the special conditions noted above but wereceived no to our req information.did not to our inquiries, we concluded that

comply with six award I conditions.We addit ional award special condit ions for the 2006 and

2007 awards that restricted ability to drawdown award funding.Those special conditions related to two : (1 ) final OJP approval of19 -



25/65


budget, and (2) submission of implementation plans or milestones toOJP. prior audit we seen OJP generally providesa Grant Adjustment Notice (GAl\!) to remove the funding restrictions oncethe award pient the terms of the I conditions.

In ng compl nce with I conditions for award, wedetermined th funding req (drawdowns) were made only afterng a GAN from OJP that removed all funding restrictions use Ehad satisfied all of the terms of special conditions. In reviewing the2006 grant, we under su I award fundingto Special Condition 16, EDC was required by OJP to submit a strategicimplementation plan making any funding uests (drawdowns).However j we found made funding requests beginning in April 2009 eventhough OJP had not issued a GAN removing all funding untilSeptember 2009. Moreover, during the period between initial April2009 funding uest until it received and OJP approved GAN removing allfunding restrictions, a total of $124,971 in award funding was requested. Asa result we question this amount as unallowable award-funded expenditures.

told us they believed they had submitted theirimplementation plan before making any award funding requests.

rthermore, these officials believed they met all of the awardconditions because OJ financial management system allowed them tocontinue making funding req without imposing any restrictions. Inreviewing the award documentation we determined that failure to complywith the award I conditions can lead to in the award.Noncompliance with this requirement not only places award funds at risk formisspending but also the possibility that the achievement ofaward-funded goals and objectives will be compromised.Monitoring Contractors and Subgrantees

According to the OJP nancial Guide, award recipients should monitororganizations under contract in a manner that ensures compliance with theawa overall financial management requirements. As noted ea inthe under expenditure testing, we i that officia didnot adequately document the work performed by their consultants and thataward-funded expenditures for food a beveragesconferences did not always conform the terms and conditions of awards.Duri our review of fo r under both awa we foundevidence that officials completed detailed contracts for award-funded event and EDC's consultant's completed contracts describing both thepayments to be made to contractors and the of contractor's work.



26/65


We 10 executed contracts supporting award-funded events andfound that each of contracts included i information bing thesupport provided by hosting facility (hotel) thatincluded a lodging rate equal to the I Services Administrationapproved per diem rate fo r time period the event occurred andgeograph location of the facility. However, because our award-fundedexpenditure transaction testi bed earlier in the report revealedweaknesses in both contractor work- monitoring and unallowable foodand expenditures, we determined monitoring of itscontracted work needs improvement.Program Performance and Accomplishments

EDC received award funding to provide Training and Technicalnce Monitoring Involved Youth and Tribal YouthProgram Training and Technical Assistance Agreement. The MSIY awardsupported the enhancement and implementation of mentoring organizationsto serve youth involved in the juveni justice system and foster caresystem. The TYP award objectives included ing American Ind nand Alaska Native programs critical to OJJDP's mission of reducing juveniledelinquency, violence, child victimization, and increasing in tribalcommun We found evidence made adequate progress towardsachieving program and OJJDP's program manager told uswas satisfied with the award progress. However, because EDC did notcomplete all delivera identified in the MSIY award we nded ourtesting and found incomplete program objectives.Tribal Youth Program Training and Technical " . . : J .71 . . : J< '

Between July 2007 and August 2010, receivedprovide technical assistance to federally recognized Indian tr ince included grant management training fo r new grantees, grantmanagement training for existing grantees, and program monitoring trainingfo r both new and gra OJJDP program managerreviewed specific examples of technical assistance provided to the Indiantribes including: (1) planning, ( regional training, and(3) individual visits. She noted that received posit ive feedbackfrom users fo r all of n I nce provided. Based on our reviewof the progress reports and tile feedback provided by the OJJDP programmanager, we concluded that EDC was making satisfactory progress towardsachieving TYP program objectives.

- 21 REDACTED - FOR PUBLIC


27/65


Training and Technical Assistance Program for Monitoring System InvolvedYouthBetween October 2006 and September 2008, EDC received $947,433to provide training and technical assistance to the four mentoring sites thatreceived OJJDP funded mentoring program awards. 9 The MSIY awardincluded 13 deliverables designed to measure program progress. We

verified the deliverables listed in the award against to those contained in theProgress Report fo r the period ending December 31, 2009, and found nodiscrepancies.We judgmentally selected 4 of the 13 deliverables fo r expanded testingand we asked EDC officials to provide evidence to support the completion of

those deliverables. We analyzed the supporting documentation obtained andcompared the content to the deliverable requirement. We found EDC did notmeet each deliverable requirement and we summarized the four deficienciesbelow.

MSIY AWARD PROGRESS As of June 2010

Deliverable DeliverableDescription Results Achieved

Conduct not less than Six of eight onsiteeight onsite technical technical assistance Noassista nce visits visits conductedWrite, edit, print, and Three TA bulletinsdisseminate three TAbulletins and three TA and three TA briefsremained in draft NobriefsConduct two regionaltraininq sessions No regional trainingconducted NoConduct not less than Three of the eighteight cross site training cross site training Novisits visits conductedSource: EDC Program Support and OIG analysis.

EDC officials told us they did not meet the award's deliverablesbecause:

9 The four sites include Chicago, Illinois; Oakland, California; Richmond, Virginia;and Portland, Oregon.



28/65

REDACTED - fOR PUBLIC RELEASE

Budget shortfalls and layoffs of site ma taking place twocaused delays in the required technical assistance visits, andofficial were waiting fo r OJJ to approve the revised visitschedule; Officials completed three draft copies of Technical AssistanceI ns and n I nce and were wa ng for OJJDP

to approve the draft documents; EDC revised the deliverable schedule and they conducted onenational instead of two ional training

noted in the award; Off ic ials modified the cross site visit program to substitute twoconferences five uired visits;We Is document their correspondence with OJJDP

regarding these An official told us they could not document thecorrespondence because followi events during awardperiod:

EDC's original OJJDP Program Manager no longer worked at OJJDP, The next OJJDP m Manager revised the MSIY program initial

objectives, Project Director unexpectedly away and was replaced

by a new Project Director, and The project's limited resources made it difficult to accomplish the

program'sWe asked an OJJDP official to comment on progress. The OJJDPofficial told us EDC was uired to : (1) perform an assessment of each site

to ine its requi (2 ) develop a nical nce Plan (TAP)to meet each site's requirements, and (3) conduct follow-up with each site todetermine

OJJDP official told us that although developed a fo r eachsite, they d not com a to determine each site'sunique prior to completing the TAP. In our view, to successfullyaccomplish the award's terms and conditions, should have completedthe site prior to developing the TAP.

- 23REDACTED - fOR PUBLIC RELEASE


29/65


The OJ] official also told us that the four mentori sites wereselected because the exhibited complex problems related to systeminvolved youth, and the found it was difficult to blish DP grafunded mentoring programs. We were told that EDC should have providedthe with the required ish mentoring programs.Moreover, EDC's visit reports did not provide any new information aboutany of the four mentoring sites th would help the address rcomplex mentoring O]JDP official said EDC focused on a morenational or global approach to mentoring when they should have focused onthe four identified in the award.

We found that site visit reports contained well documentedrvations made during the two However, our opinion the

reports did not any recommendations or solutions the problemsdocumented in site visit reports. could provide no documentary

support ims OJ] a the site visit,conference, or training schedu changes nor did we receive evidenceindicating developed all uired reports in the final format.believed that OJJDP approved all program changes and officials told us theyprovided d to O]JDP approval.

In summary, we found no evidence to ind conducted theinitial of the four mentoring sites and we could not documentthe schedule changes and substitutions officials claimed OJJDPapproved. Moreover, visit did not inrecommendations or solutions to identified in the reports.As a result, we determined that EDC did not the MSIY awarddelivera we a pient materially fai to comply with theterms and conditions an award, OJJDP may ta action includingterminating the current award or withholding future awards.Conclusions

We determined EDC did not fully comply with award requirements inthe areas we . We found wea in EDC's im of itsinternal control procedures resulting in questioned for foodand travel, and consu nt expenditures. We found thatwhi a comprehensive financial management andaccounting system, they could not track award expenditures by of theapproved budget as required by OJ Financial Guide. EDCofficia blished procedures fo r calculating award drawdowns; however,ures were incomplete use ey did not always considerfunding restrictions imposed by the awards' I conditions. We also



30/65


could not determine if officia complied with all of the I condnoted in the award.

nts executed iled vendor agreementsdescribing the work performed, but E officia d notalways effectively monitor the consultant's time charges to the award-fund projects. We fou several key performance related toaward-funded publications, techn I assistance, and the number of sitevisits provided to gra remam mcomp . As a result ofdeficiencies, we question $112,3 in unsupported expenditures and$1 in unal lowa expenditures. I dollar- findings of$286,698 represent about 9 percent of all funding under the awards.RecommendationsWe recommend that OJP:1. Remedy the $46,149 in questioned resulting from unallowableconference food and expenditures.2. Remedy the $1,831 in questioned costs resulting from unallowableconference lodging charges.3. Remedy $111,381 in q resulting from unsupported

consultant charges.4. Remedy the $991 in unsupported travel costs and the $1,375 inunallowable for other m laneous res.5. re EDC Is blish adequate internal controls fo r budget

management to include the design and implementation of proceduresthat enable sepa identification and accounting for budgetcategory described in the award, and allow for an ongoing budgetversus I comparison.

6. re compl with all of the ining and TechnProgram for Monitoring System Involved Youth grant awardconditions.

7. edy $124,971 in unallowable costs fromdrawdown of Monitoring System Involved Youth grant funds during aof non-compliance with the award special conditions.



31/65


8. Ensure EDC officia develop i I control procedures to adequatelymonitor work performed by consultants.

9. officials n performance measures and collect data toTraining and Technical Assistance Program fo r Monitoring

Involved Youth program objectives.10. re EDC completes each ned deliverables and meets all of

the bl by Training and Techn I nceProgram for Monitoring System Involved Youth award.



32/65

REDACTED - FOR PUBLIC RELEASE APPENDIX I

OBJECTIVES, SCOPE, AND METHODOLOGYThe objective of the audit was to determine whether reimbursementsclaimed under the awards were allowable, supported, and inaccordance with applicable laws, regulations, guidelines, and the terms and

cond of the awards, and to determine program performance andaccomplishments. The objective of our audit was to review performance inthe following areas: (1) internal controls, (2 ) awa expenditures,(3) progress and financial reporting, (4) drawdowns, (5) budgetmanagement and control, (6) indi (7 ) compliance with specialconditions, (8) monitoring contractors and ra and (9) programperformance and accompl ments.

We conducted th performance audit in accordance with lIyaccepted government auditing ndards. standards require that weplan and perform audit to obtain sufficient, appropriate evidence toprovide a reasonable fo r our findings and conclusions based on ouraudit objectives. We believe that obtained provides areasonable fo r our findings and concl based on our auditobjectives.

We audited a I of $3,093,400 in Tribal Youth Program Training andTechnical nce grant nding and Training and Technical nceProgram fo r Monitoring System Involved Youth grant funding awarded to theucation Development Inc. Our audit concentrated on, but was not

limited to, the initial award of the 2006 grant in July 2007, through the endof our additional field work in June 10.

We compliance with what we consider to be most importantconditions of the awards. Un otherwise stated in our report, the criteriawe audited nst are contained in the Office of Justice Programs Fina IGuide, the GSA Travel Regulations, and the award documents.

In conducting our audit, we tested award in thefollowing areas: award expenditures, progress and financial reporting,drawdowns, indirect costs, budget management and control, compliancewitl1 award special conditions, monitoring contractors and subgrantees, andprogram performance and accomplish . In addition, we reviewed theinternal controls of financial management system specific to themanagement of DOJ funds during the award period under review. However,we did not the reliability of the financial management system as awhole. We also performed limited of source documents assess theaccuracy and completeness of reimbursement and financialreports. These were expanded when conditions warranted.



33/65

REDACTED - FOR PUBLIC APPENDIX II

SCHEDULE OF DOLLAR-RELATED FINDINGSQUESTIONED COSTS AMOUNT PAGE

Unallowable itures - Travel and Other 13Unsupported Expenditures 11 372 13UnallowableSpecial Conditions itures - Noncompliance with 19Total Dollar Related Findings $286,698

Questioned Costs are expenditures that do no t comply with legal, regulatory, orcontractual requirements, or are not supported by documentation at the time ofthe audit, or are unnecessary or costs may be remedied

waiver, recovery of funds, or the provision of documentation.



34/65

REDACTED - PUBLIC RELEASE APPENDIX III

EDUCATION DEVELOPMENT CORPORATION, INC.RESPONSE TO THE DRAFT AUDIT REPORT

11111 Education Development Center,October 29. 2010

Mr. Thomas Puerzer Office of tile Inspector General Philadelphia Regional Audit Office 701 Market St.. Suite 201

PA 19106VfuFedEx

Dear Mr. Puerzer,Enclosed find th e hard of EDC's response to th e Audit of theOffice of Justice Office Justice an d DelinquencyPrevention Awards to Education )eVlelO1Dmlent Center, Inc. ThesemateliaJs were also scnt to you vi a Please let me know If you haveany

Sincerely.\ r : : [ { Z ~ J { i l & ~ ~ C h ~ H ~ ~ ~ a y Vice President and Chief anetal Officer

'j') eh.pd Sir"'" MA 02458 Tel: 617"969-7100 Pax: 6l7%9-5979 wwwcdc.org

http:///reader/full/wwwcdc.orghttp:///reader/full/wwwcdc.org


35/65


Education Development Center, Inc. Response to Draft Audit Report for Grants 2006-JU-FX-OI61 and 2007-MU-FX-K002

Office of the Inspector General of the U.S. Department of Justice (DOJ) recently conductedan audit of two projects funded by the DOJ's Office Juvenile Justice and DelinquencyPrevention (OJJDP) and conducted by Education Development Inc. (EDC). twoawards are a 2006 grant (the Technical and Program for Mentoring System-Involved Youth-MSIY: 2006-JU-FX-0161) and a 2007 agreement (theYouth Program Training and Technical 2007-MU-FX-K002).received the draft audit report on September 30,2010. In some instances we agree with theauditor's findings and recommendations. However, are inaccuracies the auditreport which would to clarify and have corrected.

A recurring theme of audit is that did not prior approvals.closely with the OJJDP Project approvalswhen we were required to do so, but not in writing. We the importanceof and frequent contact between the OJJDP and EDC.communication required in a Cooperative Agreement is frequently done in the form oftelephone and emaiL We have been particularly attentive to special condition 12 thecooperative agreement, which " ... OJJDP's participatory role in project is asfollows:

approve major work plans, changes to plans, andto operations.b) ... Provide guidance in significant project planning meetings, and participate in project sponsored training events or conferences."

believes that it was following proper protocol by working in such a collaborativemanner.The following the Following toten recommendations, we have noted other ""'''ClV'A'' the report should be removedorEDC's responses to the ten recommendations contained in the draft report follow.

~ ~ ! . ! ! ! ! ~ ~ ! . . ! ; ! . ! ; : ~ ~ Remedy the $46,149 in questioned costs resulting from unallowableconference food and beverage expenditures.

EDC Management Response: Of the $46,1 in questioned costs related to conference goodand 12 is associated with meetings that the 2006 (Le., the Tribal Youth- 30



36/65


Program and Technical carried out with OJJDP approval.For almost all of the meetings, OJJDP's process did not enable EDC to select meetinglocations or foods and beverages that were most cost The following describes thestandard process by which the meeting and foods and beverages were selected for

The OJJDP Tribal Youth Coordinator decided and informed of the and thecity in which an upcoming meeting was to be held. grantee meetings are rotatedfrom to region). EDC followed the instruction given in special condition 12, asnoted above, that states, "OJJDP is to provide II I project planning"project director contacted a wide variety of hotels that city to determine whichhad suitable meeting room and sleeping room accommodations the meeting. In manyinstances, including the meetings indicated below, there was only one hotel in the city that

had sufficient meeting and sleeping rooms available on the required dates. nochoice but to schedule the at that location, OJJDP required that provide all participants with a continental breakfast,beverages, and snacks for every day every meeting. None of the hotels in questionwould allow to provide food through an external thus, we were obliged topay what the hotel's catering charged for continental breakfast, beverages, and

following to snacks at the TYP also bear noting:American Indians TYP staff know that in order to earn the trust ofAmerican Indian grantees and to engage them in the content of a training event-essentialcomponents of providing effective TTA-it was crucial to provide participants with areasonable breakfast. At no point did staff order or food orbeverages for the TYP Breakfast was generally continental and at times includedother breakfast items like fruit, granola bars.Ali of the participants at the TYP were Indian.people suffer from disproportionately high rates of diabetes, EDC took care to servevegetables and fruit at meeting rather than sugar-laden, high-fat foods. Hotelscharge much more and vegetables than they do for cookies, brownies, and othersuch dessert foods served at meeting breaks.

The $18, in questioned food and costs are associated withmeetings that the 2007 grant (Mentoring System-Involved Youth-MSIY) conducted. Themajority of questioned food and beverage costs MSIY are associated with a that theproject conducted in September 2008 at the Hotel Monteleone in New Orleans. We explained thecircumstances behind this meeting to the auditors. The foliowing describes thethat contributed to the food and costs at this meeting:- 31



37/65


The first OJJDP Program Manager (PM) assigned to the MSIY instructed staff tocarry out a national meeting for 100 or more mentoring practitioners from across the U.S. ratherthan small the four OJJDP-funded MSIY grantees that committed tocarrying out in application. The PM required that nationalpractitioners that were not funded by OJJDP and that held inSeptember 2007 New Orleans at a hotel that PM selected-the Hotel Monteleone.

March 2007, we were informed by OJJDP that a new PM had been to MSIY. We hadseveral with the new PM over the next several months. In December 2007, the newPM conducted a two-day to to learn more about MSIY and to discuss the budget,timelines, deliverables, etc. At that the new PM and it would beinappropriate to move ahead with the first PM had. Additionally,the new PM that should focus on four OJJDP-fundedmentoring grantees that our application was designed to serve, and not a national audience of

EDC consulted with General Counsel and the Hotel Monteleone to explorecancelling contract that the PM had required us to Both parties confirmed thatwas liable for entire amount of contract. Then: The new OJJDP PM with PMto if original PManother that could hold a assume the costsassociated with contract. answer was no. OJJDP Training and Coordinator contacted to whether there might anyother OJJDP-funded projects that could hold a at the hotel and assume the costsassociated with the contract. There were none. The new PM encouraged staff to identity other groups willing to hold a large meetingat the hotel and willing to assume the costs with contract. As a result ofmuch hard work on the of staft: we were able to the originally proposednational meeting for 100 participants with the following four atMonteleone:

,; A Tribal Youth held May 2008 (the was supported with OJJDP TYP funds) ,; Two Schools/Healthy Students held inApril 2008 (the meetings were supported with HHS/SAMHSAfunds).,; A small four MSIY through theMSIY (the was supported with OJJDPMSIY grant funds)



38/65


contract with hotel, four replacement meetings had to useguest room and $25,000 in costs (amounts thedetermined). The that were or wason food and EDC would be EDe presentedthis plan to our OJJDP Program Manager, who verbally agreed that replacing the onelarge meeting with four small meetings (three of which were not associated with the MSIYproject) was the available option.

to meet contract's required 450 guest room across four meetings.prior to final (the MSIY September 2008 there wasapproximately $14,000 in food and beverage costs remaining that to be spent at thatmeeting or the hotel would simply charge EDe that amount. Given the theSeptember MSIY participants), we would no t met minimumfood and beverage cost requirement without providing full meals and plentiful snacksthroughout the meeting. We do not dispute the tact that EOC exceeded allowable food costs

this Our doing so was an effort to the thatwould have had we reneged on this contract-which our first OJJOP PMrequired that even though it was not with the andobjectives. This explains why the and costs September 2008 MSIYat the Hotel Monteleone were significantly higher than customary.It should noted that the auditors' calculations of conference foodexpenditures. On draft audit report, is a table outlining a ofconference food ....F,''''u,'''' allowable costs.calculations same accounting that we provided to theestablished daily meal Financial Guide guidance on allowableconference meal costs. Our calculations Exhibit 1) reflect $38,515 in questioned costs, notthe $46,149 stated the report.For the reasons cited above, EDC requests that the $46,149 in questioned conference foodand beverage costs allowed and that the charts that appear on 10 and 11 beremoved from the audit report.~ ~ ~ ~ ~ ~ ! ! ! . . . ; : ! : : ' . . Remedy the $1,831 in questioned costs resulting from unallowableconference lodging charges.EDe Management Response: It is EDC policy that all costs charged to a project must beallowable and documented. with auditors' assessment related to$1,831 following reasons:

1) $499.29 is associated with a sponsored by 2006the Indigo in October 2009. When the hotel invoiced for meeting,they mistakenly charged an additional $499.29. We notified the hotel aboutovercharge. In August 2010, and deposited a fromIn amount of$499.29. credited the 2006 award for this amount,

http:///reader/full/of$499.29http:///reader/full/of$499.29


39/65

REDACTED - fOR PUBLIC RELEASEthereby completely eliminating the $499.29 overcharge. A copy of the check anda printout of ledger are attached as 2a and 2b

remainder with "noshows," participants who registered a meeting by didnot at the last due to or a medical condition. Webeen able to identify two instances no-shows, totaling $705.90. wethe events surrounding two

.. of a lastminute healthto

second case involved a participant who is partiallycrutches to This individual was booked on a flight that up not having a seatavailable to accommodate physical He was rebooked onto flight laterthat same day, Because arrived at hotel very at night, the considered him a"no show" and a no-show for his lodging that day, fact he wasPlease see Exhibit 4.

As stated in "Unless a traveler can demonstrate exceptionalcircumstances, GSA travel place responsibility no-show room charges with traveler." two situationsas exceptional circumstances.

F'or the reasons cited above, EDC requests that the $1,831 in questioned costs be allowed.

======:.:..:::.::. Remedy the $111,381 in costs fromconsultantEDC Management Response: In EDC's judgment, all $111,381 in consultant costsare allowable, supported, and well-documented. EDC the following m to

if the received are accurate processmg

- 34 REDACTED - fOR PUBLIC RELEASE


40/65


When a consultant submits an invoice, EDC Project Director reviews it to determine It lSconsistent with the work consultant was engaged in. PDs and consultants are in constantcontact and the PO is always aware the work consultant is performing. If Projectthe consultant completed the work in the invoice, or sheFinancial Manager to forwards it toAccounting department. EDe's Accounting checksthe funds on consultant's contract. If funds are not currently available,the invoice is held and not processed until an amendment to the consultant's contract is fullyand in EDe's vendor consultant agreement ""f


41/65


questioned invoices 8,9 and 10the documents from the database detail time period .50 . in Exhibits 10 11 thework during the period in one uestioned invoice totaling $1,800.00. See in 12 the memofrom documenting his work the time period question.

: one questioned i n v o i c e ~ 7 5 . in Exhibit 13document from the that ___ during thequestion. National Youth Project: one questioned totaling$79,000. see Exhibits 1 15 and 16 which document the work out by theNIYLP (in form of the subcontract agreement, NIYLP evaluations, and thereport.In addition, on Draft Audit Report it states NIYLP was paid and there "was no a signed contract." This is not true. The contract was fully executed on 7,2009. was not the contract was signed by both EDC has in place to ensure contractors are not paid before a contract is fully signed. On 22,2010 auditors hard copy a copy of EDC and

EDe requests, as a result of the documentation we have provided, that the $111,381 inquestioned consultant costs be considered allowable.

$991 unsupported costs

Management Response: EDC that all travel costs should be adequately supporteddocumented. $991 in travel costs were associated with round-trip automobile travel foran employee between Minnesota Oklahoma an authorized visit. Prior tothe site visit, staff carried out a cost-benefit of the most methodmaking trip and that travelling by automobile rather by airplane wouldresult in a of over $600 for the 2006Although the audit report states that travel costs were by a consultant, were, infact, incurred by an EDC employee. Also to clarify, 13 of the draft audit report states thatthe travel costs were for "a 2007 award funding conference," but the travel costs wereactually the project of the 2006 (TYP) to travel to from an on site visitto Ponca Tribe of Oklahoma, one of

Minnesotaand gnn. tT I r .> airport and


II I
http:///reader/full/1,800.00http:///reader/full/1,800.00


42/65


City (a two-hour roundtrip was $1,200 and cost of the carrental the three-day visit was $420, in total costs of $1 by contrast,the project director determined that driving her own car to and from the visit would costthan $1,000 (in fact it cost $991). Thus, by driving over 1,700 miles flying, thisstaff member 2006 more than $600. Please see the documentation of the visitin Exhibit 17.EDC that the $991 be considered allowable, supported costs.

====== " ' - - = Ensure officials establish adequate internal controls for budgetmanagement to include the design and implementation procedures that enable separateidentification and accounting each budget category In award, and allow for anversus actual cost comparison.

EDC Management Response: report addressand control. strongly with the auditor's misunderstanding that themaintained the were not applications toOJP. EDC tracks its expenditures by approved OJP budget EDC monitors thebudget versus actual In we provided auditors with testimony andconfirming that EDC is compliant in both areas.displays the exact same information as the OJP-approved budget butformat. When EDC an we uploadwhich allows for careful

this point, the detailed linethat appear in the OJJDP-approved budgetSupplies, Consultants/Contacts, Other Costs, Indirect Costs),face meeting with the auditors in the of 10, we explained detail how thecorresponds to the OJJDP budget. Additionally, on April 10, 2010, providedwith an example in writing of how we roll-up detailed expenses from the accountingsystem into OJJDP budget categories. Exhibit 18 shows a sample of the available andthe and rollup versions. Exhibit 19 is an email string evidencing the difficulty the auditorshad with reading spreadsheets into which the financial information was uploaded fortheir review. data was and would be to information oncemore, in person. toPage 18 of audit implies that allows awardees to make changes to their budgetswithout complying with the 10 approval requirement. is fully aware that OJJDPrequires prior approval before moving funds between approved budget in excess of 10

of the total award. Our project and accounting staff monitor OJJDP budgets with thatunderstanding; if a line item is overspent or several line items in a are theproject's Financial Manager reviews the entire roll-up to determine if is a tocontact OJJDP to request a budget modification. ensure compliance, the project's FinancialManager reviews the budget with the Project Director once month.- 37



43/65


Page 19 the audit report states never provided athat we could reconcile to expenditures EDe's accounting "",,,,pmincorrect. noted above, provided the auditors with a clearhow we monitor ongoing expenditures against the budget on April 1EDe requests that this recommendation be removed and pages 18 and 19 be correc ted.

Recommendation 6. Ensure EDe complies with aU of the Training and TechnicalAssistance for Mentoring System Involved Youth grant awards' special conditions.EDe Management Response: and 21 of the audit report state that EDC didnot comply with special conditions included in the 2006 (MSIY) grant award. EDCdisagrees with this we did comply with all of the MSIY special conditions. Belowwe list each of the and how when met

EDe's application to OJJDP indicated that we would produce eight products with MSIY grantthree 12 bulletins ( 1 each), one describingthe of the 4 MSIY grantees and best system-involved youth,and one inventory listing contact infolmation for U.S. programs that serveinvolved youth. We delivered final copies (including an electronic copy) five the eightproducts on or before June 15,2010 (the project was funded through June 30, 2010). Below wedescribe the time line by which the remaining three products were completed: On April 21, 2010, we submitted text the third brief (on youth in fostercare) to the OJJDP Program Manager (PM) for review and comments. The final version ofbrief was submitted to OJJDP on July 6,20 10-less than one week the conclusion of the One June 16,2010, we submitted the text for the mentoring monograph to the OJJDP PM.The PM shared his feedback on the monograph with our on June 29, 2010. We submittedthe final version monograph to OJJDP on August] 0,2010. In our report submitted in July 2009, we included a document thatcontained all ofthe text to be included in the mentoring inventory_ On September 29,2010, wesubmitted the final version the inventory to OJJOP.It is important to note although our application indicated we would onlywe to our OJJDP PM that we would like to develop an additional briefon mentoring youth reentering the community following detention. Our PM approved thedevelopment this brief. We submitted the text to him on June 30, 2010, and the final versionof brief on July 2010, than one after the conclusion of the grant.



44/65


Thus, all eight required products-and one additional product-have heen completed andsubmitted to OJJDP.

does not deviate from a project's approved timeline without prior approval fromfunding agency, At point where a modification to the project's approved timeline wasneeded, MSIY project staff telephoned the OJJDP PM and received approval beforemoving ahead with any changes. always works closely with funders when it isnecessary to adjust a project timeline or amend scope and/or nature a project deliverable.out and follow the Project at

response to audit recommendation #9 below, which addresses the same

OJJDP PM for review and commentour response to Special Condition 1,three bulletins, one monograph, and oneinventory that serve system-involved youth. We submitted productsto the OJJDP PM for his rp",pu[ and comment on the followingApril ,2010: Submitted three draft briefs and three bulletins to the OJJDP PMreview and comment,

17,2010: Submitted monograph to OJJDP PM for and comment.July 2009: In our semi-annual progress to OJJDP, we included a document that containedall of the draft text to be included in mentoring inventory.EDC met this special condition by submitting all the reports products toOJJDP prior to publication.



45/65


Consolidated Federal Regulations 22 requires protection of confidentiality and privacyin that involves youth. JJ ' - ' , " ,U ' ' ; ' ' ' ' ' MSIY collected no data on or about youth, Partdoes not apply to our work.

OJJDP standards and technical providers appear in the 1998 publication"Training, Technical Assistance, and Evaluation Protocols: A Primer for OJJDP Training andTechnical Assistance Providers." introduction to this document states:"These protocols are intended to guide and contractors to develop protocolsOJJDP and as well as to provide training andlortechnical assistance. OJJDP further acknowledges that many and contractors havealready developed and implemented protocols in these areas. should be used toassess protocols against professional best practice, which may enhance already establishedprotocols" (p.

10 EDC, an internationally renowned nonprofit and development hasas a training and technical assistance (TTA) provider in U.S. and internationally formost of 50+ We currently operate dozens of national centers, many ofwhich aresupported by Federal funding; we have served thousands of federally funded grantees thatoperate at the local pioneer in the field, EDC has developed its own uniquelyapproach to providing TTA, which is based on research and Our application toOJJDP for the MSfY summarized approach for implementing theapproach. We have consulted OJJOP to n p " ~ r r n standards and protocols align with those of OJJDP. Notprotocols align spirit and specifics to those containedEOC's TTA standards and practices exceed the expectations set forth inCorrection requested on page 21: The draft audit report states (on page 21): "We asked EDCofficials and OJP's Program to provide that complied with specialconditions noted above but we received no to our requests for information."This statement is and we ask that it removed. The auditors fordocumentation related only to the first fourth conditio

Documents

Audit of the Office of Justice Programs Office of Juvenile Justice and Delinquency Prevention Awards to the Education Development Center, Inc., Newton, Massachusetts