U.S. Department of Labor Office of Inspector General

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Report Title: Internal Controls Implemented by ETA to Prevent Excessive Cash Drawdowns

Report Number: 18-94-017-03-310

Issue Date: August 19, 1994

ETA has taken a significant step to address a problem we noted during a recent audit. During that audit OIG discovered that the grantee had been drawing down an excessive amount of funds for a number of years without any substantive ETA intervention. At times they had 4 to 5 months worth of cash on hand. It appeared that the Employment and Training Administration (ETA) lacked procedures to avoid excessive and unnecessary cash drawdowns by grantees. This was confirmed when the grantees management staff and ETA staff stated there were no such internal controls in place to prevent the drawdown of any amount which did not exceed the total grant award. While we did not know how widespread the problem was, we believed it occurred because internal controls (a computerized edit check, etc.) were lacking which would alert ETA of excessive drawdowns by grantees. Accelerated cash drawdowns deprive the Federal government of the use of these funds.

We recommended to ETA that a computerized alert edit check could be programmed into the system which would alert ETA staff that grantees may be accelerating cash drawdowns. As a result ETA requested HHS's Payment Management System staff to implement a computerized drawdown filter. This filter will flag a grantee's monthly drawdowns which are in excess of a certain percentage of its monthly average.