[Audit Report on Programs and Operations, Department of Vocational Rehabilitation,  Government of Guam]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 98-I-335

Title: Audit Report on Programs and Operations, Department of Vocational
       Rehabilitation,  Government of Guam

     Date: March 20, 1998




                  **********DISCLAIMER**********

     This file contains an ASCII representation of an OIG report.  No attempt
     has been made to display graphic images or illustrations.  Some tables
     may be included, but may not resemble those in the printed version.

     A printed copy of this report may be obtained by referring to the PDF
     file or by calling the Office of Inspector General, Division of
     Acquisition and Management Operations at (202) 208-4599.

                  ******************************




     U.S. Department of the Interior
     Office of Inspector General
         
         
         
         
         
                                      
     AUDIT REPORT
         
     PROGRAMS AND OPERATIONS,
     DEPARTMENT OF
     VOCATIONAL REHABILITATION,
     GOVERNMENT OF GUAM
                                      
     REPORT NO. 98-I-335
     MARCH 1998
  
  
  
  
     MEMORANDUM
  
     TO:               The Secretary
  
     FROM:             Robert J. Williams
                       Acting Inspector General
  
     SUBJECT SUMMARY:  Final Audit Report for Your Information
                       - "Programs and Operations,
                       Department of Vocational Rehabilitation,
                       Government of Guam" (No. 98-I-335)
  
  
     Attached for your information is a copy of the subject final audit
     report. The objective of the review was to determine whether the
     Department of Vocational Rehabilitation carried out its
     responsibilities effectively in accordance with Title 17, Chapter 41,
     of the Guam Code Annotated and complied with applicable Federal laws
     and regulations for Federal programs.
  
     We found that the Department did not manage its Federal programs in
     accordance with Federal regulations. Specifically, the Department
     provided services to ineligible clients and clients who were not
     periodically evaluated to support continuation, provided services not
     supported by medical recommendations, did not provide needed services
     in a timely manner, inappropriately used Federal funds instead of
     local funds, and did not charge personal services costs based on
     actual work load distribution. These conditions occurred because the
     Department did not have written procedures to ensure that clients
     were eligible to participate in the program and/or that their medical
     progress was evaluated, medical recommendations were complied with,
     and program costs were properly classified and charged to the
     benefiting program. As a result, the Department incurred questioned
     costs totaling $826,007 for program management and an additional
     $311,152 for personal services costs.
  
     Based on the response from the Director of the Department of
     Integrated Services for Individuals with Disabilities (successor
     department to the Department of Vocational Rehabilitation), we
     requested additional information for the report's five
     recommendations.
  
     If you have any questions concerning this matter, please contact me at
     (202) 208-5745.
  
  
     Attachment




     N-IN-GUA-005-94
  
  
     The Honorable Carl T.C. Gutierrez
     Governor of Guam
     Office of the Governor
     Agana, Guam  96910
  
     Subject:       Audit Report on Programs and Operations,
                    Department of Vocational Rehabilitation, 
                    Government of Guam (No. 98-I-335)
  
     Dear Governor Gutierrez:
  
  
     This report presents the results of our review of programs and
     operations of the Department of Vocational Rehabilitation, Government
     of Guam. The objective of the review was to determine whether the
     Department: (1) carried out its responsibilities effectively, as
     specified by Title 17, Chapter 41, of the Guam Code Annotated, and
     (2) complied with applicable laws and regulations. Our review covered
     Federal and local program activities that occurred in fiscal years
     1992, 1993, and 1994.
  
     We found that the Department provided services to ineligible clients,
     provided services that were contrary to medical evaluations, did not
     provide timely services, and inappropriately used Federal grant funds
     instead of local funding. In addition, the Department incorrectly
     charged personal services costs to Federal grant programs. These
     conditions occurred because the Department did not have written
     procedures to ensure that: (1) clients were eligible to participate
     in the program and/or that their medical progress was evaluated; (2)
     medical recommendations were complied with; and (3) program costs
     were properly classified and charged to the benefiting program. As a
     result, we questioned costs of about $1 million charged to the
     Federal grants.
  
     To correct the conditions noted, we recommended that you, as Governor
     of Guam, instruct the Departmental Director to: (1) develop and
     implement written procedures to ensure applicant eligibility and
     client progress evaluation; (2) comply with medical evaluations and
     recommendations for determining client services needed; (3) ensure
     that funding of local programs is not supplanted with Federal grant
     funding; and (4) charge program and personal services costs to the
     correct program.
  
     On October 15, 1997, we transmitted a draft of this report to you,
     requesting your comments by November 21, 1997. On November 20, 1997,
     the Department of Integrated Services for Individuals with
     Disabilities (successor department to the Department of Vocational
     Rehabilitation) delivered its response (see Appendix 3) dated
     November 19, 1997, to our office. On December 10, 1997, we provided
     the Department with requested information on the vocational
     rehabilitation cases and questioned costs discussed in the report.
     Based on the response, which generally concurred with the report's
     five recommendations, we requested additional information on all of
     the recommendations (see Appendix 4).
  
     The Inspector General Act, Public Law 95-452, Section 5(a)(3), as
     amended, requires semiannual reporting to the U.S. Congress on all
     audit reports issued, the monetary impact of audit findings (Appendix
     1), actions taken to implement audit recommendations, and
     identification of each significant recommendation on which corrective
     action has not been taken.
  
     In view of the above, please provide a response, as required by Public
     Law 97-357, to this report by April 3, 1998. The response should be
     addressed to our North Pacific Region, 238 Archbishop F.C. Flores
     Street, Suite 807; Pacific News Building; Agana, Guam 96910. The
     response should provide the information requested in Appendix 4.
  
     We appreciate the assistance of the staff of the Department of
     Vocational Rehabilitation during the conduct of our audit.
  
  
  
                                               Sincerely,
  
                                               Robert J. Williams
                                               Acting Inspector General
  

     cc:  Director, Department of Integrated Services 
             for Individuals with Disabilities
          Acting Director, Bureau of Budget and Management Research
   



                             CONTENTS
  
  
                                                             Page
  
     INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
  
         BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         OBJECTIVE AND SCOPE. . . . . . . . . . . . . . . . . . . . . .  2
         PRIOR AUDIT COVERAGE . . . . . . . . . . . . . . . . . . . . .  2
  
     FINDINGS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . . .  4
  
         A.  PROGRAM MANAGEMENT . . . . . . . . . . . . . . . . . . . .  4
         B.  PERSONAL SERVICES COSTS. . . . . . . . . . . . . . . . . . 12
  
     OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
  
     APPENDICES
  
         1.  CLASSIFICATION OF MONETARY AMOUNTS . . . .  . . . . . . . . 20
         2.  PROGRAM COSTS AND QUESTIONED COSTS
              FOR FISCAL YEARS 1992, 1993, AND 1994. . . . . . . . . . . 21
         3.  DEPARTMENT OF VOCATIONAL REHABILITATION
              RESPONSE TO THE DRAFT REPORT . . . . . . . . . . . . . . . 25
         4.  STATUS OF AUDIT REPORT RECOMMENDATIONS . .  . . . . . . . . 43
  
  
  
  
     INTRODUCTION
  
     BACKGROUND
  
     The Rehabilitation Act of 1973 (U.S. Public Law 99-506, as amended)
     was enacted for the purpose of assisting persons with disabilities to
     maximize employment, economic self- sufficiency, independence, and
     integration into society through vocational rehabilitation programs,
     independent living centers and services, research, and training. In
     order to participate in the programs authorized by the Act, Guam was
     required to submit a state plan for vocational rehabilitation
     services that included the designation of a state agency as the
     entity to administer the plan. Guam submitted its state plan for
     fiscal years 1992 through 1994 on July 15, 1991.
  
     The Department of Vocational Rehabilitation (the designated state
     agency) was established by Title 17, Chapter 41, of the Guam Code
     Annotated for the purpose of evaluating individuals' vocational
     rehabilitation potential, determining the nature and scope of
     services needed, and providing needed services to eligible
     applicants. Pursuant to Title 17, Sections 41103 and 41104, of the
     Code, the activities of the Department are under the overall
     supervision of a Director, who is advised by a Rehabilitation
     Advisory Council. The Council comprises seven individuals involved in
     vocational rehabilitation programs.
  
     Under the Act, the Department administers four programs (Vocational
     Rehabilitation Services, Supported Employment Services, Independent
     Living Services for Older Blind Individuals, and Independent Living
     Rehabilitation Services) for which it receives Federal grant funds
     from the U.S. Department of Education. The Department also
     administers two locally funded programs: the Workshop Center and
     Independent Living Rehabilitation Services. For the six programs, the
     Department reported an average of 306 client cases annually and
     receipts and expenditures of about $2.8 million and $2.4 million,
     respectively, for fiscal year 1992; $3 million and $2.9 million,
     respectively, for fiscal year 1993; and $3.3 million and $1.9
     million, respectively, for fiscal year 1994. (The receipts and
     expenditures are presented for each fiscal year in Appendix 2.)
  
     In addition to the Guam Code Annotated, the Department is required,
     for Federal and related local programs, to comply with Title 34,
     Chapter III, Parts 361, 363, 365, and 367, of the Code of Federal
     Regulations and U.S. Office of Management and Budget Circular A-87,
     "Cost Principles for State and Local Governments." In June 1993, the
     grantor agency performed a review of the Department's operations and
     recommended that the Department's Regulations and Procedures Manual
     (dated October 1986) be completely revised because it was "outdated"
     and contained "vague and conflicting" material. However, the Manual
     had not been completely revised as of the time of our review.
  
       OBJECTIVE AND SCOPE
  
     The objective of our audit was to determine whether the Department (1)
     carried out its responsibilities in accordance with Title 17, Chapter
     41, of the Guam Code Annotated and (2) complied with applicable
     Federal laws and regulations for Federal grant programs. The scope of
     the audit included a review of the Department's activities that
     occurred during fiscal years 1992 through 1994. Audit work was
     conducted at the Departments of Vocational Rehabilitation,
     Administration, and Law and at the offices of five rehabilitative
     services contractors. Our audit work included a review of accounting
     records, financial and program reports, participant files, and other
     supporting documentation.
  
     The audit was conducted, as applicable, in accordance with the
     "Government Auditing Standards," issued by the Comptroller General of
     the United States. Accordingly, we included such tests of records and
     other auditing procedures that were considered necessary under the
     circumstances.
  
     As part of the audit, we evaluated the system of internal controls in
     the areas of program management, cost allocation, and procurement to
     the extent that we considered necessary to accomplish the audit
     objective. Significant internal control weaknesses were identified in
     the areas of program management and cost allocation. These weaknesses
     are discussed in the Findings and Recommendations section of this
     report. Our recommendations, if implemented, should improve the
     internal controls in these areas. Although no significant weaknesses
     were noted in the area of procurement, officials of the Department of
     Law and the Department of Administration's General Services Agency
     stated that the Client Authorization Form used by the Department of
     Vocational Rehabilitation was "not a valid procurement document" for
     obtaining supplies and services. After our review, the Director of
     Vocational Rehabilitation initiated action to conduct procurement
     activities by means of approved Government of Guam forms.
  
     PRIOR AUDIT COVERAGE
  
     During the past 5 years, neither the U.S. General Accounting Office
     nor the Office of Inspector General has issued any reports that
     evaluated the programs and operations of Guam's Department of
     Vocational Rehabilitation. However, an independent public accounting
     firm issued a single audit report on the Government of Guam for the
     fiscal year ended September 30, 1990. The report stated that (1) a
     written rehabilitation program was not prepared for one client; (2)
     financial assistance was not solicited from other sources; (3) eight
     clients did not acknowledge, by signature, the receipt of their
     individual written rehabilitation program; and (4) prior approval was
     not obtained from the grantor agency to purchase a capital asset.
     Based on our review, we determined that the Government's actions were
     sufficient to correct these deficiencies.
  
     In addition, an independent public accounting firm issued single audit
     reports on the Department of Vocational Rehabilitation for the fiscal
     years ended September 30, 1991, and 1992. These reports stated that
     personal services costs were not charged to grants appropriately.
     Further, the 1992 report stated that the financial status reports
     were not submitted timely and that the matching requirement for
     maintenance of effort was not maintained. Based on our review, we
     determined that the Department did not take sufficient action to
     correct these deficiencies. The single audit reports for fiscal years
     1993, 1994, and 1995 did not have findings related to the areas
     included in the objective and scope of our current audit. 
    
     FINDINGS AND RECOMMENDATIONS
  
     A. PROGRAM MANAGEMENT
  
     The Department of Vocational Rehabilitation did not manage its Federal
     grant programs in accordance with the requirements of the Code of
     Federal Regulations. Specifically, the Department (1) provided
     services to clients who were ineligible and who had not been
     periodically evaluated to support continuation; (2) provided services
     that were not supported by medical recommendations; (3) did not
     provide needed services to clients in a timely manner; and (4)
     inappropriately used Federal funding instead of local funding. These
     conditions occurred because the Department had not developed and
     implemented procedures to address these issues. As a result, we
     questioned costs of $826,007 that the Department charged to the
     Federal program during the audit period.
  
     Client Eligibility
  
     Title 34, Chapter III, Section 363.3, of the Code of Federal
     Regulations states that an individual is eligible for the Supported
     Employment Program if "the individual has been determined to be an
     individual with the most severe disabilities." (Emphasis added.) In
     addition, Section 361.1 states that an individual has a severe
     handicap if the person is one "who has a severe physical or mental
     disability that seriously limits one or more functional capacities .
     . . in terms of employability." (Emphasis added.) Also, Section
     361.40 states, "The State plan must assure that an individualized
     written rehabilitation program is initiated and periodically updated
     for each eligible individual." Finally, Section 363.11(g)(3)(ii)
     requires that the individualized written rehabilitation program
     provide for "periodic monitoring to ensure that each individual with
     severe disabilities is making satisfactory progress towards meeting
     the weekly work requirement established in the individualized written
     rehabilitation program."
  
     Based on our review of 34 client case files, we determined that 7
     clients were not eligible to participate in the Supported Employment
     Program and 2 additional clients were not eligible to continue to
     participate because the case files did not contain the required
     periodic evaluations supporting such continuation. As a result, for
     these nine clients, we questioned costs of $136,897 that were
     incurred during fiscal years 1992 through 1994. For example, one
     client's case file contained an evaluation by a
     vocational/psychological psychiatrist which concluded that the client
     was functioning at a "mildly retarded level" and was "happy" with his
     job at a fast food restaurant. Since the medical evaluation did not
     indicate that the client met program eligibility requirements for
     "severely handicapped" individuals, we determined that the client was
     not eligible to participate in the Supported Employment Program and
     questioned the related expenditures of $19,265 charged to the Program
     from May 1993 to September 1994.
  
     In another example, the file for a client receiving job training from
     a rehabilitative service contractor contained contractor-prepared
     monthly progress reports. The report for February 1993 stated that
     the client was "ready to work at the private sector." Further, the
     file contained the Vocational Rehabilitation Counselor's comment that
     the client did not need to continue job training and was "job ready."
     Although the documentation indicated that Program participation
     should have been discontinued, the Counselor extended the client's
     participation, and the client continued in the job training through
     September 1994. As a result, the Department incurred $21,729 in
     excess costs from March 1993 through September 1994.
  
     Medical Evaluations/Vocational Rehabilitative Services
  
     Title 34, Section 361.31(b), of the Code of Federal Regulations on
     eligibility requires "the presence of a physical or mental disability
     which for the individual constitutes or results in a substantial
     handicap to employment; and a reasonable expectation that vocational
     rehabilitation services may benefit the individual in terms of
     employability." Further, Title 17, Chapter 41, of the Guam Code
     Annotated states that the Department "shall, as a free public
     service, provide rehab [rehabilitation] services to qualifying
     handicapped individuals." Finally, Title 34, Section 361.33(a), of
     the Code of Federal Regulations states, "When an individual's
     eligibility for vocational rehabilitation has been determined, there
     is a thorough diagnostic study to determine the nature and scope of
     services needed by the individual."
  
     Based on our review of the case files of 34 clients, we identified 8
     clients who received services that were not supported by medical
     evaluations and/or received medical rather than vocational
     rehabilitation services and 14 clients for whom needed services were
     not provided timely. As a result, the Department incurred $67,479 of
     questioned costs and delayed providing needed vocational services to
     eligible persons. For example:
  
     - A client had received hip replacement surgery based on an
     authorization by a Departmental Counselor, who was not a physician.
     However, the file contained a recommendation from the client's
     physician that an alternative medical procedure rather than a hip
     replacement should be performed. In addition, the file contained a
     report from the Department's Medical Consultant (a physician) which
     stated that "medical care was not part of vocational rehabilitation
     services" and recommended that the client be referred to the
     Medically Indigent Program or the Catastrophic Illness Assistance
     Program, both of which are administrated by the Department of Public
     Health and Social Services. The Counselor said that she authorized
     the surgery because the client was enrolled in the Independent Living
     Program and was therefore "entitled to receive services." The
     authorized costs for the hip replacement surgery were $24,000.
  
     - A client was identified in June 1993 as having a behavioral problem.
     An assessment in the client's file stated, "If behavior is not
     modified, he [the client] would not succeed in his goal." However,
     the client was not approved for therapeutic sessions with a
     psychologist until June 1994, or 1-year later.
  
     Local Program Expenditures
  
     Title 34, Section 361.86(b)(1), of the Code of Federal Regulations
     states:
  
      In fiscal year 1990 and each subsequent fiscal year, the Secretary
     reduces amounts otherwise payable to a State under this section for
     that fiscal year if the State's expenditures from non-Federal
     sources, . . . for the prior fiscal year, are less than . . . (2) the
     average of the State's total expenditures from non-Federal sources
     for the three fiscal years preceding that prior fiscal year.
     (Referred to as maintenance of effort.)
  
     The Department did not comply with the "maintenance of effort"
     requirement in that it used Federal grant funds rather than available
     local funds to support its Workshop Center Program. This occurred,
     according to the Acting Administrative Services Officer, because
     there was some "confusion" between the Officer's employees and the
     Vocational Rehabilitation Counselors on the proper use of Federal and
     local program funds. As a result, for fiscal years 1993 and 1994, the
     Department incurred a maintenance of effort deficiency of $621,631
     for not maintaining local expenditures at the level required by the
     grantor. Specifically, the Department's budget submission to the
     Government of Guam for fiscal years 1993 and 1994 contained an impact
     statement for the Workshop Center Program to support its request for
     local funds, which it received. However, clients participating in the
     local program during this time period were paid with funds from the
     Federal Vocational Rehabilitation Services Program, with the locally
     appropriated funds reverting to the General Fund.
  
     Title 34, Section 361.86(e)(1), of the Code of Federal Regulations
     states:
  
      The Secretary may waive or modify any requirement . . . if the
     Secretary determines that a waiver or modification of the State
     maintenance of effort requirement is necessary to permit the State to
     respond to uncontrollable circumstances, such as major natural
     disaster or a serious economic downturn.
  
     On March 21, 1994, the U.S. Department of Education advised the
     Department of Vocational Rehabilitation that a maintenance of effort
     deficiency existed for fiscal year 1993 in the amount of $463,949.
     The Department requested that the U.S. Department of Education grant
     a waiver of the maintenance of effort requirement, as allowed by
     Section 361.86(e)(1). The U.S. Department of Education granted the
     waiver, because, according to the request, Guam had experienced
     "major natural disasters and serious economic downturn that have
     caused significant unanticipated expenditures and reduction in
     revenue." However, the Department did not disclose that local funding
     had been provided for the Workshop Center Program. If this
     information had been made available to U.S. Department of Education
     officials, we believe that the officials may not have approved the
     Department's request for a waiver. Therefore, we questioned costs of
     $463,949 related to the maintenance of effort deficiency. Further,
     during fiscal year 1994, the Department charged an additional
     $157,682 to the same Federal program for clients certified for the
     same local program, which we also questioned.
  
     We discussed these program management issues with a Rehabilitation
     Program Specialist at the U.S. Department of Education and with the
     Director of Vocational Rehabilitation. The Program Specialist said
     that Education's review of operations of the Department of Vocational
     Rehabilitation in 1992 found that the Department was not following
     medical recommendations and was providing medical services unrelated
     to vocational rehabilitation. The Director of Vocational
     Rehabilitation also agreed that Program funds were used for medical
     rather than vocational rehabilitation services and that clients were
     not provided services in a timely manner. This occurred, according to
     the Director, because the Department "did not have policies and
     procedures for the Vocational Rehabilitation Counselors and an
     effective monitoring system to ensure that vocational rehabilitation
     requirements were followed."
  
     Recommendations
  
     We recommend that the Governor of Guam instruct the Director of
     Department of Integrated Services for Individuals with Disabilities
     to:
  
     1. Develop and implement written procedures which ensure compliance
     with the requirements of Title 34, Chapter III, of the Code of
     Federal Regulations and Title 4, Chapter 14, of the Guam Code
     Annotated related to the eligibility of clients, the eligibility of
     the types of services rendered to clients, and the maintenance of
     effort for programs that are locally funded.
  
     2. Advise Region IX, U.S. Department of Education, of the questioned
     costs and either resolve the questioned costs or arrange for
     repayment.
  
     Department of Vocational Rehabilitation Response and Office of
     Inspector General Reply
  
     In the November 19, 1997, response (Appendix 3) to the draft report
     from the Director of the Department of Integrated Services for
     Individuals with Disabilities (formerly the Department of Vocational
     Rehabilitation), the Department generally concurred with the two
     recommendations and indicated that corrective action had been or
     would be taken. However, the Department provided additional comments
     that disagreed with certain aspects of our finding and reserved its
     position pending receipt of further data on questioned costs. Based
     on the response, we are requesting additional information for the two
     recommendations (see Appendix 4).
  
     Recommendation 1. Concurrence.
  
     Department of Vocational Rehabilitation Response. The Department
     stated that it had developed a Policy and Procedures Manual for
     Vocational Rehabilitation Services which was implemented in January
     1996 and that the "maintenance of effort for locally funded programs
     has been resolved" with the grantor agency.
  
     Office of Inspector General Reply. We found that the Manual did not
     include procedures to ensure that the Department met maintenance of
     effort requirements for locally funded programs. Therefore, the
     Department needs to provide our office with a copy of policies and
     procedures developed to address the issue of maintenance of effort.
     Additionally, the Department did not provide documentation that the
     grantor agency was advised of and resolved the reported maintenance
     of effort deficiencies.
  
     Recommendation 2. Concurrence.
  
     Department of Vocational Rehabilitation Response. The Department
     stated that "upon final resolution to the draft audit report
     response," it would advise the grantor agency of any questioned costs
     and resolve them as appropriate.
  
     Office of Inspector General Reply. On December 10, 1997, we provided
     the Department with information on the cases and questioned costs
     discussed in the finding, including client names, case numbers, time
     periods, and calculations of related questioned costs. The Department
     needs to provide our office with appropriate documentation showing
     that the grantor agency has been informed of the reported questioned
     costs for final disposition.
  
     General Comments on Finding
  
     In its response to the draft report, the Department provided comments
     that disagreed with certain aspects of the finding related to
     Recommendation 2. These comments and our replies are as follows:
  
     Department of Vocational Rehabilitation Response. With regard to the
     section of the finding on "Client Eligibility," the Department stated
     that it "agree[d] that in order for an individual to be eligible to
     participate in the Supported Employment Program, such an individual
     must be determined to be an individual with the most severe
     disability and that his/her Individualized Written Rehabilitation
     Program (IWRP) provide for 'periodic' monitoring to ensure that the
     individual is making satisfactory progress towards meeting the weekly
     work requirement established in the IWRP." (Emphasis in original.)
     However, the Department further stated that it could not provide
     specific comments on the alleged ineligible applicants and related
     questioned costs without information such as clients' names or case
     numbers to identify and verify the audit finding.
  
     Office of Inspector General Reply. We provided the Department, on
     December 10, 1997, with information on the cases and questioned costs
     discussed in the finding, including client names, case numbers, time
     periods, and calculations of related questioned costs.
  
     Department of Vocational Rehabilitation Response. Regarding the
     section in the finding entitled "Medical Evaluations/Vocational
     Rehabilitative Services," the Department stated that while it
     "agree[d] that medical evaluations play a major part in the
     assessment process for determining eligibility for VR [Vocational
     Rehabilitation] services," other evaluations must be taken into
     consideration and that "[t]his is the primary reason why VR
     Counselors, on certain circumstances, make decisions contrary to the
     Department's medical consultant's recommendations." Furthermore,
     under the informed choice provision of the Rehabilitation Act of
     1973, as amended in 1992, the choice of services is made jointly by
     the client and the counselor. The Department also said it would "like
     to withhold" its position on the related questioned costs until it
     received information to identify and verify the specific cases cited
     in the finding.
  
     Office of Inspector General Reply. We agree that Vocational
     Rehabilitation Counselors determine client eligibility for services,
     and, under the Rehabilitation Act of 1973, as amended, the choice of
     services is made jointly by the client and the Counselor. However, we
     believe that the Counselors should adequately support (document)
     their determinations and obtain approval for those determinations
     from their supervisors. During our audit, we found no documentation
     as to why the medical consultant's determinations, made on the basis
     of diagnostic studies performed in accordance with the requirements
     of Title 34, Section 361.33(a), of the Code of Federal Regulations,
     were not accepted.
  
     Department of Vocational Rehabilitation Response. The Department said
     that a 1-year delay in approving vocational rehabilitation services
     "may have been too lengthy" but that "circumstances beyond the
     control of the counselor," such as the client being off-island or not
     being able to make the appointment, existed. The Department further
     stated that there were "no set timelines required by either federal
     or local laws" as to when vocational rehabilitation services should
     be provided to consumers. The Department also cited 34 CFR
     361.41(b)(1), which provides a 60 calendar day time frame for making
     client eligibility determinations but allows longer time periods for
     "exceptional and unforeseen circumstances beyond the control of the
     agency" or when the agency "determines that an extended evaluation is
     necessary for an individual." The Department said it would state its
     position on client eligibility and medical evaluation/vocational
     rehabilitation services within 90 days upon the receipt of the
     information requested.
  
     Office of Inspector General Reply. The citation from the Code of
     Federal Regulations pertains to client eligibility and is not
     applicable to the provision of services to clients who have already
     been approved for participation in the Department's vocational
     rehabilitation programs. The 14 cases cited in the report were
     clients who had been determined to be eligible for Departmental
     services but who were delayed at least 1 year for approval of
     specific services. We believe that the clients should be reevaluated
     after a reasonable time period because the clients' situations may
     have changed in a manner that could have affected their eligibility
     or the type of vocational rehabilitation services needed.
  
     Department of Vocational Rehabilitation Response. On the section of
     the finding entitled "Local Program Expenditures," the Department did
     not concur that it "utilized the maintenance of effort funds rather
     than available funds to support its Workshop Center Program,"
     explaining that it met matching fund requirements through "local
     funds directly appropriated for the VR [Vocational Rehabilitation]
     program." The Department also stated that the Workshop Center (now
     called Goodwill) was a "locally funded program," with local funds
     appropriated "to train disabled individuals job skills so that they
     can go out to the work force." The Department further stated that
     although it "concurs that VR [Vocational Rehabilitation] federal
     funds were spent on consumers" who were at the Workshop Center,
     "these expenditures were for consumers who were sent to [the Workshop
     Center] for services such as vocational adjustment training,
     vocational evaluation and work evaluation."
  
     Office of Inspector General Reply. In accordance with Federal
     guidelines, "matching fund requirements" and "maintenance of effort
     requirements" are common to Federally funded programs. A "matching
     fund requirement" (or "cost sharing") means that for each dollar
     provided to a program from Federal funds, the local government must
     provide a certain matching percentage (usually 10 to 25 percent) from
     local funds. A "maintenance of effort requirement" (or "level of
     effort") means that the local government must maintain the amount of
     local funding at no less than the same level as in prior years. If
     the local government reduces the level of local funding provided to
     support a program, a greater amount of Federal funds are required to
     maintain a program's operations at the same level as in prior years.
     The issue addressed in our finding is not whether Workshop Center
     clients were referred for vocational rehabilitation services but
     whether the Department maintained a constant "level of effort" in the
     Workshop Center. Our review disclosed that, for fiscal years 1993 and
     1994, funds appropriated for the Workshop Center were not fully
     utilized and reverted to Guam's General Fund, thus reducing the
     "level of effort" funded by the local government.
  
     Department of Vocational Rehabilitation Response. The Department
     stated that "confusion" concerning the maintenance of effort for the
     Workshop Center "was not regarding the proper use of funds," as
     stated in the report. Rather, according to the Department, "when the
     auditor learned of the numerous programs being charged for consumers
     at the Workshop Center," the question was posed "as to whether the
     appropriate account number was being indicated on the authorization
     form[s]" for services to clients. The Department further stated that
     it had changed its procedures "to ensure clarity in identifying the
     appropriate program to be charged."
  
     Office of Inspector General Reply. When our auditor questioned the
     Department's employees concerning the source of funding for services
     provided to clients of the Workshop Center, there was some confusion
     on the part of the employees as to which accounts, Federal or local,
     should have been charged. Because the Department charged certain
     costs related to the locally funded Workshop Center to Federal grant
     accounts, the Department did not maintain the level of effort
     required by the Federal grant requirements.
  
     Department of Vocational Rehabilitation Response. The Department did
     not concur with questioned costs of $463,949 and $157,682 related to
     maintenance of effort deficiencies in fiscal years 1993 and 1994,
     respectively. With regard to the questioned costs of $463,949 for
     fiscal year 1993, the Department stated: "The approval to the
     department's maintenance of effort waiver request was granted [by the
     grantor agency] for the justifications stated on the request. Whether
     or not the Federal officials were aware of the local appropriations
     for the Workshop Center is another matter." With regard to the
     questioned costs of $157,682 for fiscal year 1994, the Department
     stated that it used Federal Basic Support funds for consumers
     participating in the Workshop Center program for services such as
     vocational adjustment training, vocational evaluation, and work
     evaluation and that it "can only respond when provided specific
     caseload numbers or client's name."
  
     Office of Inspector General Reply. We disagree with the Department's
     statement that "whether or not the Federal officials were aware of
     the local appropriations for the Workshop Center is another matter"
     because the grantor agency made its determination on the Department's
     waiver request without having all of the pertinent facts. Had the
     grantor agency known about the local funding that was provided for
     the Workshop Center but that later reverted to the General Fund, the
     grantor agency's decision may have been different. In our opinion, it
     is inappropriate to use Federal funds to supplant a locally funded
     program. Additionally, the Department's statement that the "1993
     Basic Support grant was reduced by $199,321 . . . because [the
     Department] did not meet the criteria established for the granting of
     a waiver" supports our position that the maintenance of effort
     requirements were not met. Therefore, our audit findings should be
     considered by the grantor agency in its decision to approve or
     disapprove the Department's request for a maintenance of effort
     waiver. We provided the Department, on December 10, 1997, with
     information on the specific cases and our calculation of questioned
     costs discussed in the finding. 

     B. PERSONAL SERVICES COSTS
  
     The Department of Vocational Rehabilitation did not charge personal
     services costs to Federal grants based on actual work load
     distribution. The requirements for determining the allowability of
     charges for personal services are contained in Office of Management
     and Budget Circular A-87. However, the Department did not have
     procedures which ensured that charges for personal services costs
     were made in accordance with the Federal requirements. As a result,
     we questioned personal services costs of $294,120 for fiscal years
     1992 through 1994. We also questioned, for the same period, indirect
     costs of $17,032 that were applicable to the questioned direct costs,
     for total questioned costs of $311,152.
  
     Employee Time Distribution
  
     Circular A-87, Attachment B, Section B.10.b, states:
  
      Amounts charged to grant programs for personal services, regardless
     of whether treated as direct or indirect costs, will be based on
     payrolls documented and provided in accordance with generally
     accepted practice of the State, local, or Indian tribal government.
     Payrolls must be supported by time and attendance or equivalent
     records for individual employees. Salaries and wages of employees
     chargeable to more than one grant program or other cost objective
     will be supported by appropriate time distribution records. The
     method used should produce an equitable distribution of time and
     effort. We reviewed all payroll records, together with supporting
     documentation, for fiscal years 1992, 1993, and 1994 and interviewed
     20 of the Department's 34 employees to determine whether the
     Department had correctly charged personal services costs to Federal
     grant programs. We found that personal services costs had been
     incorrectly charged to the Federally funded Vocational Rehabilitation
     Services Program for all 3 fiscal years. Specifically:
  
     - During fiscal year 1992, payroll documentation for 16 of the 20
     employees reviewed showed that 100 percent of their time was charged
     to Rehabilitation Services. However, eight of the employees stated
     that they had worked on other programs. For example, one employee
     stated that she spent only 50 percent of her time working on
     Rehabilitation Services. Therefore, we questioned personal services
     costs of $11,463 (50 percent) that were charged to the grant for this
     employee. Based on our review, we determined that for fiscal year
     1992, the Department improperly charged personal services costs of
     $75,199 to Rehabilitation Services. We also questioned indirect costs
     of $7,377 ($75,199 multiplied by a 9.81 percent indirect cost rate)
     applicable to the questioned direct costs, for total questioned costs
     of $82,576 for fiscal year 1992.
  
     - During fiscal year 1993, payroll documentation for 19 of the 20
     employees showed that 100 percent of their time was charged to
     Rehabilitation Services. However, 13 of the employees stated that
     they had worked on other programs. For example, one employee stated
     that she spent 80 percent of her time working on Rehabilitation
     Services. Therefore, we questioned personal services costs of $6,630
     (20 percent) charged to the grant for this employee. Based on our
     review, we determined that for fiscal year 1993, personal services
     costs of $93,715 were improperly charged to Rehabilitation Services.
     We also questioned indirect costs of $8,586 ($93,715 multiplied by a
     9.14 percent indirect cost rate) applicable to the questioned direct
     costs, for total questioned costs of $102,281 for fiscal year 1993.
  
     - During fiscal year 1994, payroll documentation for all 20 of the
     employees reviewed showed that 100 percent of their time was charged
     to Rehabilitation Services. However, 12 of the employees stated that
     they had worked on other programs. For example, one employee stated
     that she spent only 50 percent of her time working on Rehabilitation
     Services. Therefore, we questioned personal services costs of $13,482
     (50 percent) charged to the grant for this employee. In addition, we
     found that an employee who was shown as spending 100 percent of her
     time working on Rehabilitation Services had not been at work because
     she had been in an accident. During her absence, the employee
     continued to be paid with grant funds. After the employee used all of
     her leave because of the accident, the Department continued to pay
     the employee and charge the costs to the grant. The employee
     subsequently retired. Therefore, we questioned personal services
     costs of $4,408 incurred while the employee was neither at work nor
     on approved leave. Also, the employee may not have been entitled to
     the payments while not on approved leave because Guam laws do not
     contain these entitlement provisions. Based on our review, we
     determined that for fiscal year 1994, the Department improperly
     charged personal services costs of $125,207 to Rehabilitation
     Services. We also questioned indirect costs of $1,089 ($125,207
     multiplied by an 0.87 percent indirect cost rate) applicable to the
     questioned direct costs, for total questioned costs of $126,296 for
     fiscal year 1994.
  
     In June 1993, officials from Region IX, U.S. Department of Education,
     conducted a program review and advised the Department of Vocational
     Rehabilitation to take appropriate action to ensure that all staff
     salaries, fringe benefits, and administrative costs were charged to
     the appropriate Federal or local programs. In response to that
     review, the Department, in July 1993, implemented a time distribution
     sheet for all employees to complete. However, the Department
     continued to improperly charge all personal services costs to the
     Vocational Rehabilitation Services Program. Departmental officials
     said that the Department's local budget did not include personal
     services costs to administer local programs. Therefore, according to
     the officials, they did not charge personal services costs to local
     programs but rather to the Federal program.
  
     Recommendations
  
     We recommend that the Governor of Guam instruct the Director of the
     Department of Integrated Services for Individuals with Disabilities
     to:
  
     1. Develop and implement written procedures which ensure that personal
     services costs are documented and charged to Federal grants in
     accordance with the requirements of U.S. Office of Management and
     Budget Circular A-87.
  
     2. Advise Region IX, U.S. Department of Education, of the questioned
     costs and either resolve the questioned costs or arrange for
     repayment.
  
     3. Request that the Guam Attorney General determine the propriety of
     the payments made to the employee who was neither at work nor on
     approved leave and, if the payments are determined to have been
     improper, determine whether the Department has a legal basis to seek
     recovery of the funds.
  
     Department of Vocational Rehabilitation Response and Office of
     Inspector General Reply
  
     In the November 19, 1997, response (Appendix 3) to the draft report
     from the Director, Department of Integrated Services for Individuals
     with Disabilities (formerly the Department of Vocational
     Rehabilitation), the Department generally concurred with all three
     recommendations and said that corrective action had been or would be
     taken. However, the Department provided additional comments that
     disagreed with certain aspects of our finding and reserved its
     position pending receipt of further data on questioned costs. Based
     on the response, we are requesting additional information for the
     three recommendations (see Appendix 4).
  
     Recommendation 1. Concurrence.
  
     Department of Vocational Rehabilitation Response. The Department
     stated that it had policies and procedures in place which became
     effective in fiscal year 1994. The Department further stated that
     because it was operating under a 3-year budget from fiscal years
     1993-1995, no costs were allocated for salaries and benefits to be
     paid out of the local programs. However, the Department said that in
     its fiscal year 1996 budget submission, it requested that local funds
     be appropriated for salaries and benefits. The Department stated that
     its staff was currently using time records to report their time
     directly to the individual programs for which time is spent and that
     "only up to 10% of staff spend time on programs other than VR
     [vocational rehabilitation]."
  
     Office of Inspector General Reply. During our audit, our review of
     employee time records for fiscal years 1992, 1993, and 1994 disclosed
     that personal services costs had been incorrectly charged to the
     Federally funded programs. In addition, the Department's response
     confirms our finding that charges were made to the grant programs for
     personal services costs that were outside the scope of the programs
     for fiscal years 1993 and 1994. The Department needs to provide our
     office with a copy of the policies and procedures for personal
     services costs that incorporate the use of time distribution records.
  
     Recommendation 2. Concurrence.
  
     Department of Vocational Rehabilitation Response. The Department said
     that it "will seek resolution to the questioned costs before
     forfeiting any federal dollars."
  
     Office of Inspector General Reply. The Department needs to provide our
     office with appropriate documentation showing that the grantor agency
     has been informed of the reported questioned costs for final
     disposition.
  
     Recommendation 3. Concurrence.
  
     Vocational Rehabilitation Response. The Department stated that it had
     conferred with the Attorney General's Office regarding the propriety
     of payments to the employee who was neither at work nor on leave and
     that it had "communicated" its response regarding the questioned
     personal services costs of $4,408 to the Attorney General's Office.
  
     Office of Inspector General Reply. The Department needs to provide our
     office with a copy of the Attorney General's formal opinion on the
     propriety of the payments to the employee.
  
     General Comments on Finding
  
     In its November 19, 1997, response to the draft report, the Department
     provided comments that disagreed with certain aspects of the finding
     related to Recommendation 2. These comments and our replies are as
     follows:
  
     Department of Vocational Rehabilitation Response. The Department said
     that it is "withholding" its position regarding specific questioned
     costs and requested names and "individual amounts for the 16
     employees with alleged personal services costs improperly charged" to
     the Rehabilitation Services Program for fiscal years 1992, 1993, and
     1994.
  
     Office of Inspector General Reply. Based on the Department's response,
     we provided the Department, on December 10, 1997, with the requested
     employee names, time periods, and calculations of related questioned
     costs.
  
     Department of Vocational Rehabilitation Response. The Department
     stated that, in fiscal year 1993, it had sought assistance from the
     Department of Administration to prepare a cost allocation plan for
     employees who worked for Federal grant programs other than the
     Vocational Rehabilitation Services Program. However, according to the
     response, the Department did not implement the cost allocation plan
     but instead charged all administrative expenses directly to the
     program for which services were rendered. The Department said that in
     fiscal year 1994, it developed a new time sheet and implemented
     policies for all employees to charge their time directly to the
     program for which time was spent. The Department stated that time
     sheets are currently "utilized on a daily basis for all employees to
     charge their time directly to the program of which their time is
     spent." The Department further stated that there was "not a problem
     as far as charging the other federal programs" but that "the problem
     was with the locally funded programs not having funds appropriated to
     capture administrative salaries and benefits." The Department
     said,"This was due to the department having to operate under a three
     -year budget."
  
     Office of Inspector General Reply. We commend the Department for
     including salaries and wages in its local programs for fiscal year
     1996 and subsequent years. However, we found that the Department did
     not take action to make adjustments to correct the salaries and wages
     that were not properly allocated between Federal and/or local
     programs during fiscal years 1992, 1993, and 1994. Therefore, the
     Department's records should be adjusted to reflect what should have
     been charged to each program prior to fiscal year 1996.
  
     Department of Vocational Rehabilitation Response. The Department
     stated that it agreed that for fiscal years 1992 and 1994, one
     employee spent only 50 percent of her time working on the Vocational
     Rehabilitation Services Program, but it also stated that it had an
     agreement with the Social Security Administration for one employee to
     spend 50 percent of her time working on the Vocational Rehabilitation
     Services Program and the other 50 percent on Social Security's
     Disability Determination Services Program. Therefore, according to
     the Department, this employee's time was "captured accordingly." The
     Department also stated, regarding the eight employees who said they
     spent time on other programs during fiscal year 1992, that the
     grantor agency told the Department in fiscal year 1994 that "this was
     an audit exception." The Department said that it "immediately took
     action" to address this matter and that "this matter was corrected"
     with the approval of its budget in fiscal year 1996.
  
     Office of Inspector General Reply. We took no exception to the
     personal services costs that were charged 50 percent to the
     Vocational Rehabilitation Services Program and 50 percent to Social
     Security's program for fiscal years 1993 and 1994. However, we found
     that the employee's time had not been allocated properly for fiscal
     year 1992; therefore, we took exception to those costs.
  
     Department of Vocational Rehabilitation Response. Regarding the
     questioned indirect costs, the Department stated, "This allegation is
     ambiguous and would need further clarification to support the
     auditor's findings." The Department further stated that the indirect
     cost "is captured against the program's expenditures" and that
     "[b]ased on the indirect cost rate for that year, the total is
     deducted and taken out at the end of the year. The Department further
     stated: "This is a function of the Department of Administration,
     Division of Accounts. The indirect cost that is captured is used to
     support only the external government agencies for their time spent on
     the program."
  
     Office of Inspector General Reply. The Department's statement
     regarding the manner in which indirect costs are accounted for is
     correct. However, once direct salaries and wages are questioned, the
     corresponding indirect costs must also be questioned because indirect
     costs are based on a percentage of direct salaries and wages.
     Therefore, we applied the applicable indirect cost rate to questioned
     direct salaries and wages to derive the amount of indirect costs
     questioned.
  
     Department of Vocational Rehabilitation Response. The Department
     stated that the employee who spent 100 percent of her time working on
     the Vocational Rehabilitation Services Program but who had not been
     to work because of an accident was given work assignments to be
     completed at home "for intermittent periods between June 1994 to
     August 1994, which terminated when the employee could no longer
     complete her tasks productively as a result of the injuries she
     received from the accident." The Department said that the employee
     was subsequently placed on leave status and "was loaned additional
     leave" from her coworkers and a relative once all her leave was used.
  
     Office of Inspector General Reply. We questioned the employee's time
     that was charged to the program between the pay periods ending June
     11 to August 6, 1994, because the employee was neither at work nor on
     approved leave during this period. Leave that was donated from her
     coworkers and a relative were for different time periods (from August
     8 to November 25, 1994, and from February 20 to March 3, 1995). In
     addition, the Department provided no documentation to support that
     the employee performed work at home. Further, as a Developmental
     Disability aide, the employee's job duties included client
     interviews, job coaching and development, home visits, and client
     followup visits, none of which could have been performed by the
     employee from home. In addition, although not questioned, we believe
     that personal services costs charged to the Federal program while the
     employee was on donated leave may not have been proper because the
     donated leave was funded by local sources.

     OTHER MATTERS
  
     Title 34, Subpart D, Section 80.23(b), of the Code of Federal
     Regulations states, "A grantee must liquidate all obligations
     incurred under the award not later than 90 days after the end of the
     funding period." Of the 436 outstanding obligations, totaling
     $406,685, from the Department's encumbrance reports for September 30,
     1992, through September 30, 1994, we reviewed 11 obligations, valued
     at $111,864. We noted four instances, totaling $54,173 (all occurring
     in fiscal year 1992), in which the Department had incurred additional
     Vocational Rehabilitation Services Program costs for services that
     were not provided within the required 90-day liquidation period. For
     example, the Department entered into an interagency agreement with a
     local radio station to provide an outreach program for the
     Department. The funds for the agreement were obligated on September
     30, 1992; however, services totaling $28,250 were not provided until
     6 months later, or 3 months after the 90-day liquidation requirement.
  
     A U.S. Department of Education official from Region IX told us that,
     although he had orally given the Department of Vocational
     Rehabilitation permission to carry unliquidated obligations beyond
     the 90-day requirement, he requested that this issue be mentioned in
     our audit report. We therefore suggest that the Department confer
     with Region IX officials regarding the carrying of unliquidated
     obligations beyond the 90-day requirement to determine whether
     subsequent payment of those obligations could be properly charged to
     the Federal funds.
  
     Department of Vocational Rehabilitation Response and Office of
     Inspector General Reply
  
     In the November 19, 1997, response (Appendix 3) to the draft report
     from the Director of the Department of Integrated Services for
     Individuals with Disabilities (formerly the Department of Vocational
     Rehabilitation), the Department included comments on this issue as
     follows:
  
     Vocational Rehabilitation Response. The Department stated that in
     fiscal year 1992, it had obtained approval from the U.S. Department
     of Education to carry unliquidated obligations beyond the 90-day
     requirement because of the nonreceipt of invoices from the various
     vendors who performed services but that in fiscal year 1993 and
     subsequent years, it had "carried over federal dollars into the
     subsequent year." As such, according to the Department, the funds
     were available for obligation for an additional year. The Department
     also stated that it had "gone without" any technical assistance
     regarding financial matters from Region IX, Rehabilitation Services
     Administration, for the past 5 years. Finally, the Department stated
     that in July 1997, its officials and those from Guam's Department of
     Administration met with U.S. Department of Education officials on
     revising Financial Status Reports dating as far back as fiscal year
     1992. As a result of the meeting, the issue was corrected and the
     reports were restructured.
  
     Office of Inspector General Reply. The Department did not provide
     documentation supporting the approval received from the U.S.
     Department of Education for the fiscal year 1992 carryover or provide
     documentation that this action was taken. The Department needs to
     provide the substantiating documents to our office.
  
  
  
                                                                        APPENDIX 1
  
  
                CLASSIFICATION OF MONETARY AMOUNTS
  
  
                                                  Questioned Costs                
                                   Federal         Local
               Finding Areas                            Funds          Funds           Total    
  
  A. Program Management
       Client Eligibility                    $121,813     $15,084     $136,897
       Medical Evaluations                  10,288     57,191        67,479
       Local Program Expenditures              621,631                       621,631
  
       Subtotal                           753,732      72,275      826,007
  
  B.  Personal Services Costs                  233,364       77,788           311,152
  
        Total                           $987,096    $150,063   $1,137,159
  
  
                                                                APPENDIX 2
                                                            Page 1 of 4


                  PROGRAM COSTS AND QUESTIONED COSTS
                 FOR FISCAL YEARS 1992, 1993, AND 1994




                                Programs              


     Receipts     

Total
      Costs      

Total
    Audited    

Questioned
     Costs     


Federal Funds:

Vocational Rehabilitation
  Services

Supported Employment

Independent Living for
  the Older Blind

Independent Living

  Subtotal - Federal Funds

Local Funds:

Vocational Rehabilitation
  Services (Federal Program)

Workshop Center

Independent Living

  Subtotal - Local Funds

  Total


$5,248,109


130,310


580,380

      59,057

$6,017,856



$1,820,910


586,418

     556,925

$2,964,253

$8,982,109


$5,047,893


83,786


231,968

      43,944

$5,407,591



$1,065,726


541,289

      84,296

 $1,691,311

$7,098,902


$1,975,368


76,565


2,025

          230

$2,054,188



$204,736


229,711

    30,002

 $464,449

$2,518,637
  

    $910,535   

   
        76,561




                  

   $987,096


   
     $92,872


       30,375
 
       26,816

    $150,063

 $1,137,159



                                                              APPENDIX 2
                                                            Page 2 of 4


                  Program Costs and Questioned Costs
                         for Fiscal Year 1992




                                Programs              


     Receipts     

Total
      Costs      

Total
    Audited    

Questioned
     Costs     


Federal Funds:

Vocational Rehabilitation
  Services

Supported Employment

Independent Living for
  the Older Blind

Independent Living

  Subtotal - Federal Funds

Local Funds:

Vocational Rehabilitation
  Services (Federal Program)

Workshop Center

Independent Living

  Subtotal - Local Funds

  Total


$1,764,771


 47,202


193,460

      17,750

$2,023,183



$449,647


289,418

                 

   $739,065

$2,762,248


$1,687,508


 4,549


 78,139

        8,000

$1,778,196



$295,488


289,418

                  

   $584,906

$2,363,102


$542,593


 




              

$542,593



$106,970




              

$106,970

$649,563
  

      $86,248

   
    




                  

     $86,248


   
     $25,320


       
 
                  
 
      $25,320

    $111,568



                                                              APPENDIX 2
                                                            Page 3 of 4


                  Program Costs and Questioned Costs
                         for Fiscal Year 1993




                                Programs              


     Receipts     

Total
      Costs      

Total
    Audited    

Questioned
     Costs     


Federal Funds:

Vocational Rehabilitation
  Services

Supported Employment

Independent Living for
  the Older Blind

Independent Living

  Subtotal - Federal Funds

Local Funds:

Vocational Rehabilitation
  Services (Federal Program)

Workshop Center

Independent Living

  Subtotal - Local Funds

  Total


$1,603,566


39,938


193,460

      19,028

$1,855,992



$699,624


150,000

    281,275

$1,130,899

$2,986,891


$2,026,754


39,927


67,997

      17,432

$2,152,110



$589,902


105,662

      19,427

  $714,991

$2,867,101


$823,637


37,755




              80

   $861,472



$59,522


102,420

        7,714

  $169,656

$1,031,128
  

   $559,133   

   
       37,751




                

 $596,884


   
$31,728


  16,200
 
       7,714

   $55,642

 $652,526



                                                              APPENDIX 2
                                                            Page 4 of 4


                  Program Costs and Questioned Costs
                         for Fiscal Year 1994
                                   



                                Programs              


     Receipts     

Total
      Costs      

Total
    Audited    

Questioned
     Costs     


Federal Funds:

Vocational Rehabilitation
  Services

Supported Employment

Independent Living for
  the Older Blind

Independent Living

  Subtotal - Federal Funds

Local Funds:

Vocational Rehabilitation
  Services (Federal Program)

Workshop Center

Independent Living

  Subtotal - Local Funds

  Total


$1,879,772


43,170


193,460

      22,279

$2,138,681



$671,639


147,000

     275,650

$1,094,289

$3,232,970


$1,333,631


39,310


85,832

      18,512

$1,477,285



$180,336


146,209

       64,869

   $391,414

$1,868,699


$609,138


38,810


2,025

        150

$650,123



$38,244


127,291

    22,288

$187,823

$837,946
  

   $265,154   

   
     38,810




                 

 $303,964


   
 $35,824


   14,175
 
     19,102

   $69,101

 $373,065


                                                              APPENDIX 3
                                                           Page 1 of 18


           DEPARTMENT OF VOCATIONAL REHABILITATION RESPONSE

                        (Insert Response Here)

                                                              APPENDIX 4


                STATUS OF AUDIT REPORT RECOMMENDATIONS



Finding/Recommendation
           Reference            

A.1





A.2 and B.2





B.1





B.3

     Status     

Management
concurs;
additional
information
needed.

Management
concurs;
additional
information
needed.

Management
concurs;
additional
information
needed.

Management
concurs;
additional
information
needed.


  
  
  
  
  
     Action Required
  
     Provide a copy of the policy and procedures relating to the
     maintenance of effort and of grantor agency resolution of the
     maintenance of effort deficiencies for locally funded programs.
  
     Provide documentation that Region IX, U.S. Department of Education,
     has been advised of the questioned costs and the target date to
     either resolve the questioned costs or arrange for repayment.
  
     Provide a copy of policy and procedures relating to personal services
     costs.
  
     Provide a copy of the Guam Attorney General's opinion regarding
     payments made to the employee who was neither at work nor on approved
     leave.




    ILLEGAL OR WASTEFUL ACTIVITIES SHOULD BE REPORTED TO THE OFFICE OF
    INSPECTOR GENERAL BY:

    Sending written documents to:                 



    Within the Continental United States
    
    U.S. Department of the Interior
    Office of Inspector General 
    1849 C Street,N~.W.
    ~Mail Stop 5341
    Washington, D.C. 20240

    Calling:

    Our 24~hour
    Telephone HOTLINE
    1-800-424-5081 or
    (202) 208-5300
    
    TDD for hearing impaired                                                  
    (202) 208-2420 or
    1-800-354-0996



    Outside the Continental United States

    
    Caribbean Region
    
    U.S. Department of the Interior
    Off~ce of Inspector General
    Eastern Division- Investigations
    1550 Wilson Boulevard
    Suite 410
    Arlington, Virginia 22209

    Calling:
    (703) 235-9221


    North Pacific Region

    U.S. Department of the Interior
    Office of Inspector General
    North Pacific Region
    238 Archbishop F.C. F'lores Street
    Suite 807, PDN Building
    Agana, Guam 96910

    
    Calling:
    (700) 550-7428 or 
    COMM 9-011-671-472-7279