APPENDIX B
 
 
DINAP'S RESPONSE TO THE TENTATIVE FINDINGS
 
 
 

U.S. Department of Labor         Employment and Training Administration
                                                      200 Constitution Avenue, NW
                                                      Washington, D.C. 20210
 
 

February 20, 1 998
 
 
 

MEMORANDUM FOR JEROME J. SUBKOW
                                         Director, Office of Grant
                                          and Contract Audits
 
                                            / s /
FROM:                         THOMAS M. DOWD
                                       Chief, Division of Indian
                                           and Native American Programs

SUBJECT:                 UNITED SIOUX TRIBES OF SOUTH DAKOTA
                                           DEVELOPMENT CORPORATION
                                       Response to Draft Audit Report

The Division of Indian and Native American Programs (DINAP) submits the following response to the United Sioux Tribes of South Dakota Development Corporation (UST) Draft Audit Report. We appreciate the opportunity to review and comment on the draft report. It is our understanding that our comments will be incorporated into the appropriate sections of the final audit report.

Findings and Recommendations -

Page 1 2, last paragraph: According to UST's Executive Director, ...UST assumed it could exceed the 20 percent limit in the current years because in the past UST had stayed under the 20 percent limit and had not collected all of its indirect costs. In accordance with Section 401 regulations, INA grantees may expend no more than 20 percent of all available funds each program year for administrative costs.

Page 15, last paragraph: the draft report states... the Administration costs and the Training Assistance costs were extremely high when compared to the costs spent on the participants. Although there is no limit on the amount of funds that can be spent under the training assistance category, UST should explain how it justifies its high training assistance costs relative to the benefits received by program participants.
 


Finding 3. Supportive Services Payments Are Not Supported ($13,086 Questioned)

DINAP is distressed by the apparent inadequacy of past independent audits paid for by UST. On page 23, last paragraph, it is reported that the Executive Director stated... UST has never asked for such documentation from the participants, with regard to supportive services provided by UST. The fact that past audits conducted by independent auditors failed to recognize that supporting documentation did not exist for supportive services provided by UST provokes concern. Are UST's past independent audits reliable?

General comments: DINAP concurs with the findings outlined in the draft report as being consistent with the interpretation and application of the Section 401 regulations by the program office in its administration of the 401 program.

The fact that UST staff did not know that certain expenditures were unallowable demonstrates administrative weakness and serious management deficiency. Specifically, the use of JTPA funds to pay for costs associated with non-JTPA program activities is a clear violation of the Section 401 regulations. The fact that basic management fundamentals have not been adhered to rigorously by an organization that has been awarded JTPA, Section 401 grant funds for several years causes profound anxiety.
 


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