2000 - Audit Report

U.S. Department of Labor
Office of Inspector General
Office of Audit

AUDIT OF ALLEGED VIOLATIONS AT A MARYLAND JOB SERVICE OFFICE

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Congressman Terry Everett, Chairman of the Subcommittee on Oversight and Investigations, Committee on Veterans' Affairs, U.S. House of Representatives, requested OIG to audit allegations made by a Disabled Veterans' Outreach Program (DVOP) specialist at a Maryland Job Service Office that he was directed by the Job Service Office Manager to perform services for nonveterans in violation of Title 38 U.S. Code, Chapter 41 (Title 38), which restricts DVOP services to only eligible veterans. The DVOP specialist also state alleged that he was subject to reprisal. States administered DVOP through grants provided by DOL Veterans' Employment and Training Service (VETS). The State Department of Labor, Licensing and Regulation (DLLR) administers DVOP in Maryland.(DOL)

Our audit objectives were to determine whether: (1) the allegations of Title 38 violations at the Job Service Office were supported by sufficient evidence; (2) the actions taken by DLLR to address the DVOP specialist's reprisal complaint were adequate; and (3) the controls used by VETS to identify and prevent Title 38 violations were effective.

The results of our audit found that the DVOP specialist provided services to nonveterans in violation of Title 38 at the Job Service Office. While the DVOP specialist alleged that he was directed by the Office Manager to perform services to nonveterans, the DVOP specialist acknowledged that he knew such actions were in violation of Title 38. Additionally, we concluded that although there was no evidence that the Office Manager and Job Service Supervisor directed the DVOP specialist to provide service to nonveterans, there was evidence to show they were aware that it was occurring. The audit also found that DLLR's response to the Title 38 violations was inadequate because no disciplinary action was taken against the employees involved and corrective action has not been implemented to ensure that the violations will not recur. Additionally, the DVOP specialist's reprisal complaint was not formally addressed by DLLR. DLLR took formal action on the compliant after the end of our fieldwork. Finally, the audit found that DLLR's calculation of the amount to be reimbursed to VETS for the costs of providing services to nonveterans was unintentionally understated by $24,000.

The audit also found that the VETS Regional Office needs to be more aggressive in ensuring that Title 38 violations are adequately resolved and changes are needed in VETS' procedures for the Local Employment Service Office (LESO) evaluations to improve its effectiveness to identify Title 38 violations.

We recommended that VETS instruct DLLR to implement its proposed corrective action plan so that reasonable assurance can be provided that the Title 38 violations are not occurring at any Job Service Offices in Maryland. Additionally, we recommended that VETS recover the $24,000 in understated cost. We also recommended that VETS develop policies defining the Federal VETS Regional Administrators' and State Directors' responsibilities in negotiating remedies to State compliance issues and modify its local office evaluation procedures to increase assurances that incidents of serving nonveterans are identified.

Report No. 03-00-009-02-201 (September 28, 2000)

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