type: other

jurisdiction: US

text: b" OFFICE OF JOB CORPS\n\n\n\nOffice of Inspector General\xe2\x80\x94Office of Audit\n\n\n\n\n PERFORMANCE AUDIT FOR RESCARE, INC.,\n JOB CORPS CENTERS\n\n\n\n\n Date: March 3, 2010\n Report: 26-10-002-01-370\n\x0cU.S. Department of Labor March 2010\nOffice of Inspector General\nOffice of Audit\n PERFORMANCE AUDIT FOR RESCARE, INC.,\n JOB CORPS CENTERS\n\nBRIEFLY\xe2\x80\xa6 WHAT OIG FOUND\nHighlights of Report Number 26-10-002-01-370, to the ResCare did not always ensure compliance with Job\nInterim National Director, Office of Job Corps. Corps requirements for managing and reporting\n financial activity for one of three areas tested \xe2\x80\x93 non-\nWHY READ THE REPORT personnel expenses. At Treasure Island, ResCare\nThis report discusses weaknesses related to managing charged unallowable costs to Job Corps for the center\nand reporting financial activity, managing safety and director\xe2\x80\x99s personal housing and travel expenses.\nhealth programs, and reporting performance at two Job Treasure Island and Miami also did not always provide\nCorps Centers operated by ResCare, Incorporated reasonable assurance that other center expenses were\n(ResCare). appropriate. Consequently, unallowable costs were\n charged to Job Corps.\nWHY OIG CONDUCTED THE AUDIT\nOur audit objectives were to answer the following ResCare did not always ensure compliance with Job\nquestions: Corps requirements for safety and health programs in\n each of the three areas reviewed \xe2\x80\x93 student misconduct,\n1. Did ResCare ensure compliance with Job Corps safety inspections, and safety committee meetings.\nrequirements for managing and reporting financial Treasure Island and Miami did not always convene\nactivity? required fact-finding boards (FFB) for students\n suspected of serious misconduct. Miami also did not\n2. Did ResCare ensure compliance with Job Corps have documentation to show all required health and\nrequirements for managing center safety and health safety inspections and committee meetings were\nprograms? conducted.\n\n3. Did ResCare ensure compliance with Job Corps Additionally, ResCare did not always ensure\nrequirements for reporting performance? compliance with Job Corps requirements for reporting\n performance for two of three areas reviewed \xe2\x80\x93 student\nIn addition, in response to hotline complaints, we added CTT completions and student OBS. For CTT\nan objective: completions, ResCare did not ensure completions were\n consistent with Job Corps requirements. For student\n4. Did the hotline complaints alleging improper practices OBS, ResCare did not ensure students were separated\nrelated to student misconduct, Career Technical as required.\nTraining (CTT) completions, student attendance,\nstudent On-Board Strength (OBS) and Outcomes The hotline complaint allegations related to improperly\nMeasurement System (OMS) separations at the completed training records and unsupported leave\nTreasure Island Job Corps center have merit? categories used to prevent students from separating\n and inflate student OBS had some merit.\nOur audit work was conducted at ResCare\nheadquarters in Louisville, Kentucky; Treasure Island WHAT OIG RECOMMENDED\nJob Corps Center (Treasure Island) in San Francisco, We made nine recommendations to the National\nCalifornia; and Miami Job Corps Center (Miami) in Director, Office of Job Corps. In summary, we\nMiami Gardens, Florida. recommended Job Corps direct ResCare to improve\n corporate-level controls and monitoring over all centers\n for financial managing and reporting, improve corporate\nREAD THE FULL REPORT\n oversight procedures and training to ensure compliance\nTo view the report, including the scope, methodology,\n with FFBs and significant incident reporting\nand full agency response, go to:\n requirements, and implement corrective action plans\nhttp://www.oig.dol.gov/public/reports/oa/2010/\n when PRH non-compliance is identified during data\n26-10-002-01-370.pdf\n integrity audits.\n\n The Interim National Director, Office of Job Corps fully\n concurred with six recommendations and concurred-in-\n part with three recommendations.\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n ResCare, Inc. Headquarters\n Louisville, Kentucky\n\n\n\n\n Miami Job Corps Center Treasure Island Job Corps Center\n Miami, Florida San Francisco, California\n\n\n\n\n ResCare\n Resource Center,\n Louisville, KY\n\n\n\n\n Miami Job Corps\n Center, Miami, FL\nTreasure Island Job\nCorps Center,\nSan Francisco, CA\n\n\n\n\n Performance Audit of ResCare, Inc.\n Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\nTable of Contents\nAssistant Inspector General\xe2\x80\x99s Report ......................................................................... 1\n\nResults In Brief .............................................................................................................. 2\n\nObjective 1 \xe2\x80\x94 Did ResCare ensure compliance with Job Corps requirements\nfor managing and reporting financial activity? .......................................................... 4\n Finding 1 \xe2\x80\x94 ResCare did not always ensure compliance with requirements\n for managing and reporting financial activity for one of the\n three areas reviewed \xe2\x80\x94 non-personnel expenses............................ 4\n\nObjective 2 \xe2\x80\x94 Did ResCare ensure compliance with Job Corps requirements\nfor managing center safety and health programs? .................................................... 9\n Finding 2 \xe2\x80\x94 ResCare did not always ensure compliance with Job Corps\n requirements for managing center safety and health programs\n for each of the three areas reviewed \xe2\x80\x94 student misconduct,\n safety inspections and safety committee meetings. .......................... 9\n\nObjective 3 \xe2\x80\x94 Did ResCare ensure compliance with Job Corps requirements\nfor reporting performance?........................................................................................ 15\n Finding 3 \xe2\x80\x94 ResCare did not always ensure compliance with Job Corps\n requirements for reporting performance for two of three areas\n reviewed \xe2\x80\x94 student CTT completions and student OBS. ............... 15\n\nObjective 4 \xe2\x80\x94 Did the hotline complaints alleging improper practices related\nto student misconduct, CTT completions, student attendance and student OBS,\nand OMS separations at the Treasure Island Job Corps center have merit? ........ 22\n Finding 4 \xe2\x80\x94 Five of seven hotline complaint allegations directed at the\n Treasure Island Job Corps Center had some merit. ....................... 22\n\nRecommendations ...................................................................................................... 26\n\nExhibits 29\n Exhibit 1 CYs 2007 \xe2\x80\x93 2008 Imprest Fund Expenses at Treasure Island and\n Miami .............................................................................................. 31\n\nAppendices 33\n Appendix A Background ..................................................................................... 35\n Appendix B Objectives, Scope, Methodology, and Criteria ................................ 37\n Appendix C Acronyms and Abbreviations .......................................................... 47\n Appendix D ResCare Response to Draft Report ................................................ 49\n Appendix E Job Corps Response to Draft Report .............................................. 59\n Appendix F Acknowledgements ......................................................................... 63\n\n Performance Audit of ResCare, Inc.\n Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nU.S. Department of Labor Office of Inspector General\n Washington, D.C. 20210\n\n\n\n\nMarch 3, 2010\n\n Assistant Inspector General\xe2\x80\x99s Report\n\n\nLynn A. Intrepidi\nInterim National Director\nOffice of Job Corps\n200 Constitution Avenue, NW\nWashington, D.C. 20210\n\nThe Office of Inspector General (OIG) conducted a performance audit of ResCare,\nIncorporated (ResCare). ResCare was under contract with Job Corps to operate 17 Job\nCorps centers for the Department of Labor (DOL). 1 Job Corps requires its center\noperators to establish procedures and conduct periodic center audits to ensure integrity,\naccountability, and prevention of fraud and program abuse. We initially planned to\npursue three audit objectives during our audit. However, in response to hotline\ncomplaint allegations, we added a fourth objective to determine the validity of\nallegations that ResCare officials engaged in improper practices at the Treasure Island\nJob Corps Center.\n\nThe audit objectives were to answer the following questions:\n\n 1. Did ResCare ensure compliance with Job Corps requirements for managing and\n reporting financial activity?\n\n 2. Did ResCare ensure compliance with Job Corps requirements for managing\n center safety and health programs?\n\n 3. Did ResCare ensure compliance with Job Corps requirements for reporting\n performance?\n\n 4. Did the hotline complaints alleging improper practices related to student\n misconduct, Career Technical Training (CTT) completions, student attendance,\n student On-Board Strength (OBS) and Outcomes Measurement System (OMS)\n separations at the Treasure Island Job Corps center have merit?\n\nThis report covers our audit work conducted at ResCare\xe2\x80\x99s corporate headquarters in\nLouisville, Kentucky; the Treasure Island Job Corps Center (Treasure Island) in\n\n1\n ResCare lost the bids to operate the Treasure Island and Pittsburgh Job Corps centers (Pittsburgh) in 2009. The\ncontract for Treasure Island expired on May 31, 2009, and the contract for Pittsburgh expired on June 30, 2009. As of\nJuly 1, 2009, ResCare was under contract to operate 15 centers for DOL.\n\n Performance Audit of ResCare, Inc.\n 1 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nSan Francisco, California; and the Miami Job Corps Center (Miami) in Miami Gardens,\nFlorida. Additional background information is contained in Appendix A.\n\nWe conducted this performance audit in accordance with generally accepted\ngovernment auditing standards. Those standards require that we plan and perform the\naudit to obtain sufficient, appropriate evidence to provide a reasonable basis for our\nfindings and conclusions based on our audit objectives. We believe that the evidence\nobtained provides a reasonable basis for our findings and conclusions based on our\naudit objectives. Our audit scope, methodology and criteria are detailed in Appendix B.\n\nRESULTS IN BRIEF\n\nResCare did not ensure compliance with Job Corps requirements for managing and\nreporting financial activity for one of three areas reviewed \xe2\x80\x94 non-personnel expenses.\nDuring contract years (CY) 2007-2008, Treasure Island and Miami charged unallowable\ncosts totaling $116,794 to Job Corps. 2 These costs included $65,553 in compensation\nto the Treasure Island Center Director (CD) for personal housing (25 months) and travel\nexpenses. ResCare did not obtain required Job Corps approvals and reported the costs\nto Job Corps as office and staff travel/training expenses. This occurred despite the fact\nthat in 2005 the OIG reported ResCare overcharged Job Corps for compensation paid\nto a prior Treasure Island CD. Additionally, Treasure Island and Miami could not provide\ndocumentation to support expenses charged to Job Corps totaling $51,241, which\nincluded payments for consultant services and food products. Treasure Island and\nMiami also did not comply with ResCare policy and its center standard operating\nprocedures (SOP) by improperly processing transactions for goods and services\nthrough its imprest funds. These transactions bypassed ResCare\xe2\x80\x99s financial controls,\nwhich included corporate headquarters\xe2\x80\x99 review of purchase transactions.\n\nResCare did not ensure compliance with Job Corps requirements for safety and health\nin each of the three areas we reviewed \xe2\x80\x94 student misconduct, safety inspections, and\nsafety committee meetings. Specifically, Treasure Island and Miami did not always\nconvene fact-finding boards (FFB) as required for students suspected of serious\nmisconduct, such as possession of drugs and sexual harassment on center. Miami also\ndid not always report significant incidents, such as physical assault or possession of a\nweapon on center, to Job Corps as required. Additionally, Miami did not have\ndocumentation to show it conducted all of its required health and safety observations\nand inspections, or committee meetings. Consequently, these actions hindered\nResCare\xe2\x80\x99s and Job Corps\xe2\x80\x99 ability to monitor center safety and ensure significant student\nmisconduct was handled timely and appropriately.\n\nResCare did not ensure compliance with Job Corps requirements for reporting\nperformance for two of the three areas reviewed for Program Year (PY) 2007 \xe2\x80\x94 student\nCTT completions and student OBS, a measure of a center\xe2\x80\x99s ability to operate at full\n\n2\n We reviewed the most recently completed contract years for Treasure Island (February 1, 2008, through January 31,\n2009) and Miami (November 1, 2007, through October 31, 2008). Additionally, we reviewed consultant files and lease\nagreements at Treasure Island, which included transactions from January 1, 2007, through January 31, 2009.\n\n Performance Audit of ResCare, Inc.\n 2 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ncapacity. 3 For CTT completions, Treasure Island and Miami did not ensure all students\nTraining Achievement Records (TAR) were completed as required by Job Corps. For\nstudent OBS, attendance and reported leave were not documented as required by Job\nCorps policy at Treasure Island and Miami. As a result, students should have been\nseparated from the centers at an earlier date and should not have been included in the\nrespective center\xe2\x80\x99s OBS calculation after that date.\n\nFive of seven hotline complaint allegations, all directed to Treasure Island, had some\nmerit. Those five allegations were (1) student TARs were not properly completed; (2)\nstudent security trade TARs were not properly completed; (3) student assistants were\nperforming instructor signoffs on security trade TARs; (4) certain TARs were not always\ncompleted in compliance with ResCare\xe2\x80\x99s early completer policy; and (5) unsupported\nleave categories (e.g., administrative, personal) were used to prevent students from\nseparating at earlier dates and inflate student OBS. The remaining two allegations did\nnot have merit \xe2\x80\x94 (6) Center Safety Officer investigations were manipulated by\nmanagement and (7) new student enrollment delayed until second day on center to\nmanipulate Outcomes Measurement System (OMS) separation numbers.\n\nWe attributed weaknesses to inadequate corporate and center procedures, staff not\nfollowing established procedures and lack of supervision. Also, ResCare\xe2\x80\x99s corporate\noversight and monitoring did not consistently identify or address the deficient areas\ndiscussed in this report. These control weaknesses compromise program accountability\nin these areas and could impact operational decisions made by ResCare and Job Corps\nfor all centers operated by ResCare.\n\nIn response to our draft report, the Interim National Director, Office of Job Corps, stated\nthat Job Corps will require ResCare to improve corporate-level controls and monitoring\nin the areas of financial management and reporting, safety and health programs, and\nperformance data integrity. Additionally, the Job Corps regional offices will coordinate\nwith the Regional Contracting Officers to determine the extent of any reimbursements\nresulting from the unallowable costs and performance reporting deficiencies we\nidentified.\n\nResCare acknowledged in its response to our draft report that deficiencies did occur in\neach of the areas we reviewed. However, ResCare disagreed with some of the specific\ndeficiencies we identified. We continue to conclude that the deficiencies we identified\nare valid and management controls need improvement because ResCare did not\nprovide us with any additional information that would cause us to revise our\nconclusions.\n\nRecommendations\n\nWe made nine recommendations to the Interim National Director, Office of Job Corps.\nIn summary, we recommended Job Corps direct ResCare to improve corporate-level\n\n\n3\n PY 2007 covers July 1, 2007, through June 30, 2008.\n\n Performance Audit of ResCare, Inc.\n 3 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ncontrols and monitoring over its centers to comply with Job Corps requirements in the\nfollowing areas:\n\n\xe2\x80\xa2 Paying for goods and services,\n\xe2\x80\xa2 Convening FFBs,\n\xe2\x80\xa2 Reporting significant incidents to Job Corps,\n\xe2\x80\xa2 Reporting CTT completions,\n\xe2\x80\xa2 Reporting student leave and\n\xe2\x80\xa2 Separating students.\n\nAdditionally, we recommended that the Interim National Director require ResCare to\nreimburse the government for unallowable costs and liquidated damages (due to\nperformance reporting deficiencies) we identified; and as needed during follow-up\nreviews conducted by Job Corps.\n\nRESULTS AND FINDINGS\n\nObjective 1 \xe2\x80\x94 Did ResCare ensure compliance with Job Corps requirements for\n managing and reporting financial activity?\n\n Finding 1 \xe2\x80\x94 ResCare did not always ensure compliance with requirements\n for managing and reporting financial activity for one of the\n three areas reviewed \xe2\x80\x94 non-personnel expenses.\n\nBased on our audit testing, as described in the scope and methodology in Appendix B,\nwe found ResCare ensured compliance with Job Corps requirements for managing and\nreporting financial activity for two of the three areas we reviewed \xe2\x80\x94 personnel expenses\nand reporting reimbursable expenses to Job Corps. However, ResCare did not always\nensure compliance with Job Corps requirements for the third area \xe2\x80\x94\nnon-personnel expenses. During CYs 2007-2008, Treasure Island and Miami charged\nunallowable costs totaling $116,794 to Job Corps. 4 These costs included compensation\nof $55,474 for the Treasure Island CD\xe2\x80\x99s leased personal residence for 25 months and\n$10,079 in personal travel expenses for the CD and his spouse. Furthermore, ResCare\ndid not solicit Job Corps approval for these specific costs as required and\ninappropriately reported the costs to Job Corps as office and staff travel/training\nexpenses. Job Corps officials told us they would not have approved these costs. This\noccurred despite the fact that in 2005 the OIG reported ResCare overcharged Job\nCorps for compensation paid to a prior Treasure Island CD. In response to our\nrecommendation, ResCare reimbursed Job Corps $38,235 in 2005. Additionally, both\nTreasure Island and Miami could not provide documentation to support expenses\ncharged to Job Corps totaling $51,241, which included payments for consultant services\nand food products.\n\n4\n We reviewed the most recently completed contract years for Treasure Island (February 1, 2008, through\nJanuary 31, 2009) and Miami (November 1, 2007, through October 31, 2008). Additionally, we reviewed consultant\nfiles and lease agreements at Treasure Island, which included transactions from January 1, 2007, through\nJanuary 31, 2009.\n\n Performance Audit of ResCare, Inc.\n 4 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\nTreasure Island and Miami also did not comply with ResCare policy and its center SOP\nby improperly processing transactions for goods and services through its imprest funds.\nThese imprest fund transactions bypassed ResCare\xe2\x80\x99s financial controls, which included\ncorporate headquarters\xe2\x80\x99 review of purchase transactions.\n\nUnallowable Costs Charged for Center Director\xe2\x80\x99s Compensation\n\nResCare charged unallowable costs of $65,553 to Job Corps for the Treasure Island\nCD\xe2\x80\x99s personal housing and travel expenses. ResCare\xe2\x80\x99s operating contract for Treasure\nIsland prohibited payments for rental facilities without Job Corps Regional Office\napproval. 5 Additionally, the Federal Acquisition Regulation (FAR) and the contract did\nnot allow reimbursement for the cost of personal travel. 6\n\nThe CD for Treasure Island served in this position from January 2007 until ResCare\xe2\x80\x99s\ncontract to operate Treasure Island expired in May 2009. During this period, the CD\nmaintained his home in Atlanta, Georgia. For the period January 2007 through\nJanuary 2009, ResCare inappropriately charged Job Corps for the CD\xe2\x80\x99s leased\npersonal residence in San Francisco, California for 25 consecutive months. These\ncosts, which totaled $55,474, were improperly charged and reported as an office\nexpense for Treasure Island. ResCare acknowledged the total amount paid for the CD\xe2\x80\x99s\npersonal housing expenses in San Francisco was unallowable. ResCare informed us\nthat the personal housing expense was charged as an office expense by mistake.\nResCare will also credit $55,474 to Job Corps and increase its review of lease and rent\naccounts to ensure all costs are charged correctly.\n\nResCare also charged $10,079 in personal travel expenses for the CD and his spouse\nto travel to and from their home in Atlanta seven times from May 2008 through January\n2009. ResCare charged and reported these costs as staff travel and training expenses\neven though the CD was not on official business and his spouse was not a Treasure\nIsland employee. These costs of $10,079 for the CD\xe2\x80\x99s personal travel expenses were\nnot allowable charges to Job Corps and were prohibited by the terms of its operating\ncontract and the FAR. ResCare explained that the center was in the last option year of\nthe contract and the CD was reluctant to relocate his family to the San Francisco area\nuntil the contract had been re-awarded. ResCare considered the cost of the trips a\nnecessary business expense in order to retain the CD for Treasure Island. ResCare\nacknowledged it erred in charging these expenses to Job Corps and will credit $10,079\nto Job Corps.\n\nIn addition, ResCare did not obtain Job Corps approval for any of these costs as\nrequired, and Job Corps officials told us they would not have been approved. These\nconditions occurred because ResCare had not established effective controls to ensure\ncompliance with Job Corps requirements, contract provisions, and the FAR, and\nresulted in $65,553 in unallowable costs charged to Job Corps. Moreover, this occurred\n\n5\n DOL Operating Contract DOLJ04SA00001 (February 1, 2004), Section H.23.\n6\n FAR 31.205-46 and DOL Operating Contract DOLJ04SA00001 (February 1, 2004), Section H.5.\n\n Performance Audit of ResCare, Inc.\n 5 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ndespite the fact that in 2005 the OIG previously reported ResCare overcharged Job\nCorps for compensation paid to a prior Treasure Island CD. In response to our\nrecommendation, ResCare reimbursed Job Corps $38,235 in 2005. 7\n\nInadequate Documentation to Support Center Expenses\n\nResCare could not provide documentation to show Treasure Island and Miami received\nall goods and services for certain expenses charged to Job Corps during CYs 2007-\n2008, and whether these expenses were appropriate.\n\nStandards for Internal Control in the Federal Government states that all transactions\nand other significant events need to be clearly documented, and documentation should\nbe readily available. 8 The FAR provides that fees for services rendered are allowable\nonly when supported by evidence of the nature and scope of the service furnished.\nEvidence necessary to determine that work performed is proper and does not violate\nlaw or regulation shall include:\n\n \xe2\x80\xa2 Details of all agreements (e.g., work requirements, rate of compensation, and\n nature and amount of other expenses, if any) with the individuals or organizations\n providing the services and details of actual services performed;\n \xe2\x80\xa2 Invoices or billings submitted by consultants, including sufficient detail as to the\n time expended and nature of the actual services provided; and\n \xe2\x80\xa2 Consultants\xe2\x80\x99 work products and related documents, such as trip reports\n indicating persons visited and subjects discussed, minutes of meetings, and\n collateral memoranda and reports.\xe2\x80\x9d 9\n\nThe FAR further requires adequate support to authorize all invoice payments, including:\n\n \xe2\x80\xa2 Contract number or other authorization for supplies delivered or services\n performed;\n \xe2\x80\xa2 Description of supplies delivered or services performed;\n \xe2\x80\xa2 Quantities of supplies received and accepted or services performed; and\n \xe2\x80\xa2 Date supplies delivered or services performed. 10\n\nWe judgmentally selected 117 of 9,509 non-personnel expense transactions at\nTreasure Island and Miami. This sample represented $801,533 or approximately 7.3\npercent of the aggregate non-personnel expenses reported by these centers for CYs\n2007-2008. 11 Our audit showed ResCare did not have adequate assurance to show\n\n7\n Performance Audit of Job Corps Center Operating Costs, Report No. 03-05-004-03-370, March 31, 2005.\n8\n U.S. Government Accountability Office, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).\n9\n FAR 31.205-33(f).\n10\n FAR 32.905(c).\n11\n For Treasure Island, we selected 63 of 5,292 transactions, representing $455,466 or 5.6 percent of the total\ntransactions, processed for Treasure Island during their tested contract year. Adequate assurance was not provided\nto support 6, or 9.5 percent, of these transactions. For Miami, we selected 54 of 4,217 transactions, representing\n$346,067 or 12.1 percent of the total transactions, processed at Miami during their tested contract year. Adequate\nassurance was not provided to support 4, or 7.4 percent, of these transactions.\n\n Performance Audit of ResCare, Inc.\n 6 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nTreasure Island and Miami received all goods and services for 10, or 8.5 percent, of the\n117 non-personnel transactions tested. These expenses, which excluded the personal\nhousing and travel expenses for the Treasure Island\xe2\x80\x99s CD, totaled $51,241. For\nexample:\n\n \xe2\x80\xa2 Treasure Island inappropriately charged Job Corps $23,995 for consultant fees\n paid to a former center employee. ResCare told us the consultant\xe2\x80\x99s business\n purpose was to provide training and support at the center. However, the\n consultant\xe2\x80\x99s contract and corresponding invoices did not state the actual services\n provided to Treasure Island, including the consultant\xe2\x80\x99s specific duties and\n deliverable work products.\n\n \xe2\x80\xa2 Treasure Island overcharged Job Corps $8,283 for services paid to a contracted\n vendor. Specifically, Treasure Island was invoiced and subsequently charged\n Job Corps $60,311 for professional staff services even though the accompanying\n staffing reports and time sheets supported only $52,028.\n\n \xe2\x80\xa2 Treasure Island and Miami overcharged Job Corps $7,105 for food service costs.\n Both centers were unable to reconcile differences found with the food items\n ordered, food items received, and the invoiced amounts. Using the records\n provided (e.g., purchase orders, receiving reports, and invoices), Treasure Island\n and Miami respectively overcharged Job Corps $4,275 and $2,830 for these\n services.\n\n \xe2\x80\xa2 Treasure Island overcharged Job Corps $7,295 to reimburse petty cash\n expenses. The center was unable to provide documentation (e.g., invoices,\n receipts, student sign-offs) to show the expenses, which included charges for\n student meals, transportation and advances were appropriate.\n\nThese conditions occurred because ResCare lacked the necessary controls to ensure\ncompliance with the FAR requirements, which resulted in unallowable costs of $51,241\ncharged to Job Corps. 12\n\nImproper Use of Imprest Funds at Centers\n\nTreasure Island and Miami also did not comply with ResCare policy and its center SOP\nby improperly processing transactions for goods and services through its imprest funds.\nResCare\xe2\x80\x99s corporate and center SOP restricted the use of imprest funds for expenses\ntoo urgent to wait for the normal accounts payable system such as emergencies,\nstudent separation advances, travel advances, and weekend activities. 13\n\n\n12\n ResCare acknowledged $220 spent on late charges and one purchase transaction that lacked adequate supporting\ndocumentation was unallowable.\n13\n Imprest funds at ResCare centers were established with ResCare funds and not by an advance of funds from DOL.\nAs a result, these funds do not meet the definition of \xe2\x80\x9cimprest funds\xe2\x80\x9d per Part 638.200 of Code of Federal Regulations\nTitle 20 and are not subject to the respective restrictions.\n\n Performance Audit of ResCare, Inc.\n 7 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nAs part of our audit of non-personnel expenses, we judgmentally selected 19 imprest\nfund transactions totaling $40,495 or approximately 8.8 percent of the aggregate\nimprest fund expenses of $462,606 processed by both centers for CYs 2007-2008. 14\nWe found 11 of these 19 imprest fund transactions, totaling $37,187, were improperly\nprocessed through both centers\xe2\x80\x99 imprest funds instead of the appropriate financial\nsystems. These transactions were outside the scope of ResCare\xe2\x80\x99s intended use for its\nimprest funds and bypassed ResCare\xe2\x80\x99s financial controls, which included corporate\nheadquarters\xe2\x80\x99 review of purchase transactions and adjusting journal entries. For\nexample:\n\n \xe2\x80\xa2 Reimbursement of staff relocation expenses totaling $4,198, which bypassed\n required corporate approval and use of corporate relocation services;\n\n \xe2\x80\xa2 Payments for staff incentives (e.g., gift purchase cards), cellular phone service,\n past due invoices, late fees, supplies, and other student costs totaling $8,990,\n which bypassed corporate account payable controls; and\n\n \xe2\x80\xa2 Adjusting journal entries totaling $24,000, which bypassed corporate financial\n management controls for approving and making the entries.\n\nThese conditions occurred because of a lack of management emphasis at corporate\nand center levels to ensure compliance with ResCare\xe2\x80\x99s procurement SOP. Processing\ntransactions for goods and services in compliance with its corporate and center SOP,\nwhich would include corporate office reviews of non-urgent purchase expenses, would\nprovide increased assurance that all purchase expenses were reasonable and\nallowable and for goods and services actually received. See Exhibit 1 for detail of\n$462,606 in Imprest Fund expenses processed by both centers.\n\nControls Over Managing and Reporting Financial Activity Need Improvement\n\nThe Standards for Internal Control in the Federal Government state that internal control\nis a major part of managing an organization and provides an overall framework for\nestablishing and maintaining such controls. The standards identify internal control as\nthe first line of defense in safeguarding assets and preventing and detecting errors and\nfraud. The internal control weaknesses we found at the corporate and center levels\nincreased the risk of possible fraud, theft, and misuse of vulnerable negotiable assets\nand resulted in unauthorized disbursements. As such, ResCare needs to improve its\ncontrols over managing and reporting financial activity. The inappropriate costs of\n$116,794 identified in this report and related internal control deficiencies occurred\nbecause ResCare had not established effective controls to ensure center compliance\nwith Federal regulations, contract agreements, Job Corps requirements and ResCare\xe2\x80\x99s\npolicies.\n\n14\n These 19 imprest fund transactions were batched into 5 of the 117 non-personnel expense transactions we\nreviewed. Specifically, we reviewed 3 non-personnel expense transactions, which included 8 imprest fund\ntransactions at Treasure Island, and 2 non-personnel expense transactions, which included 11 imprest fund\ntransactions at Miami.\n\n Performance Audit of ResCare, Inc.\n 8 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\nIn response to our draft report, Job Corps will require ResCare to improve its corporate-\nlevel controls and monitoring for managing and reporting financial activity, adhere to\ncorporate and center policies regarding the use of imprest funds, and ensure\nappropriate financial systems are established. In addition, Job Corps will review the\ncurrent PRH policy to determine if revisions will be needed regarding imprest funds.\nAdditionally, Job Corps will determine the extent of any reimbursements resulting from\nunallowable costs identified in our report and additional unallowable costs at Miami, as\nwell as assess any liquidated damages where necessary.\n\nResCare, in response to our draft report, agreed that the $65,553 charged to Job Corps\nfor the Treasure Island CD\xe2\x80\x99s personal housing and travel expenses were unallowable\nand will credit Job Corps for the unallowable costs. ResCare disagreed with $32,278 of\nthe $51,241 unallowable costs we identified as unsupported center expenses. ResCare\nalso did not agree that its centers improperly used imprest funds; or that controls over\nmanaging and reporting financial activity needed improvement. However, ResCare did\nnot provide sufficient information or documentation to cause us to change our\nconclusions. We continue to conclude that ResCare needs to improve its controls\nbecause of the $116,794 in unallowable charges to Job Corps we identified and to\nprevent future unallowable charges to Job Corps.\n\nObjective 2 \xe2\x80\x94 Did ResCare ensure compliance with Job Corps requirements for\n managing center safety and health programs?\n\n Finding 2 \xe2\x80\x94 ResCare did not always ensure compliance with Job Corps\n requirements for managing center safety and health programs\n for each of the three areas reviewed \xe2\x80\x94 student misconduct,\n safety inspections and safety committee meetings.\n\nResCare can improve its oversight to ensure compliance with Job Corps requirements\nfor safety and health in each of the three areas we reviewed \xe2\x80\x94 student misconduct,\nsafety inspections and safety committee meetings. Specifically, Treasure Island and\nMiami did not always convene FFBs as required for students suspected of serious\nmisconduct, such as possession of drugs and sexual harassment on center. Miami also\ndid not always report significant incidents, such as physical assault or possession of a\nweapon on center to Job Corps as required. We also found Miami did not have\ndocumentation to show it conducted all of its required health and safety observations\nand inspections, or committee meetings.\n\nThese deficiencies occurred, in part, because ResCare did not provide sufficient\noversight to ensure Treasure Island and Miami adhered to corporate and center policies\nto address serious student misconduct, including convening FFBs and reporting\nsignificant incidents, and conduct required safety program activities at each center in\ncompliance with Job Corps requirements. Consequently, ResCare\xe2\x80\x99s and Job Corps\xe2\x80\x99\nability to monitor center safety and ensure significant student misconduct was handled\n\n\n\n Performance Audit of ResCare, Inc.\n 9 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ntimely and appropriately was hindered, potentially placing other students and staff at\nrisk.\n\nAppropriate Actions Not Always Taken to Address Serious Student Misconduct\n\nFFBs Not Convened or Not Convened Timely\n\nTreasure Island and Miami did not always convene FFBs as required for students\nsuspected of serious misconduct, such as possession of drugs and sexual harassment\non center. The students were allowed to stay on center without consideration of\nappropriate disciplinary action, including removal from the center. As a result, problem\nstudents were allowed to stay on center, potentially placing other students and staff at\nrisk.\n\nJob Corps\xe2\x80\x99 Policy and Requirements Handbook (PRH) required center operators to\nconduct FFBs to determine appropriate center actions for Level I and II infractions as\nfollows:\n\n \xe2\x80\xa2 Level I Infractions \xe2\x80\x93 FFBs must be convened within three training days.\n Examples of Level I infractions include drug use, physical assault and sexual\n assault.\n\n \xe2\x80\xa2 Level II Infractions \xe2\x80\x93 FFBs must be convened within five training days. Examples\n of Level II infractions include sexual harassment, fighting, threat of assault and\n pattern of inappropriate behavior. 15\n\nWe reviewed the PY 2007 security logs at Treasure Island and Miami for events\ninvolving potential Level I and II infractions to determine whether FFBs were convened\nfor these security events and judgmentally selected 18 events to test (10 events at\nTreasure Island and 8 events at Miami). Our review showed FFBs were not convened\nfor 7, or 38.9 percent, of 18 events tested as required by the PRH. Specifically, FFBs\nwere not conducted at Treasure Island for 5 of 10 events and at Miami for 2 of 8 events.\nFollowing are examples of security log entries involving potential serious student\nmisconduct:\n\n \xe2\x80\xa2 At Treasure Island, a student was caught using or possessing drugs. The PRH\n classified possession or use of drugs as a Level I infraction. The center did not\n take appropriate action and convene an FFB as required.\n\n \xe2\x80\xa2 At Treasure Island, a student alleged sexual harassment by two other students.\n The PRH classified sexual harassment as a Level II infraction. The center did not\n take appropriate action and convene an FFB as required.\n\nWe also reviewed all reported Level I and II infractions during PY 2007 for Treasure\nIsland and Miami to determine whether the centers convened FFBs within three and five\n15\n PRH Chapter 3, Exhibit 3-1.\n\n Performance Audit of ResCare, Inc.\n 10 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ntraining days, respectively, as required by the PRH. We found FFBs were not convened\ntimely for 64 of 108 reported Level I and II infractions for both centers. 16 As a result, the\ncenters exceeded the established timeframes by an average of 24 days. Job Corps\nnoted similar timeliness concerns related to corrective actions taken to address student\nmisconduct at Treasure Island. Timely FFBs are needed to ensure fair and appropriate\nconsideration of disciplinary action, including removal from the center. Moreover,\nproblem students may be allowed to stay on center, potentially placing other students\nand staff at risk. Our test results are summarized in Table 1 below:\n\n Table 1: FFBs Not Convened Timely\n Number of Students\n (Average Days in Violation)\n Treasure\n PRH Violation Island Miami Totals\n Level I Infraction \xe2\x80\x93 FFB not\n convened within 3 training 7 8 15\n days (48 days) (11 days) (28 days)\n Level II Infraction \xe2\x80\x93 FFB not\n convened within 5 training 44 5 49\n days (24 days) (13 days) (23 days)\n 51 13 64\n Totals (27 days) (12 days) (24 days)\n\nSignificant Incidents Not Always Reported to Job Corps\n\nMiami did not take appropriate actions to ensure all significant incidents were reported\nto Job Corps. The PRH requires centers to report all significant incidents to Job Corps,\nincluding physical assault, indication that a student is a danger to himself/herself or\nothers, and any incidents involving illegal activity. 17\n\nDuring our audit of Level I infractions at both centers, we found three of four significant\nincidents that resulted in disciplinary separations at Miami that were not reported to Job\nCorps as required. These incidents involved a physical assault and weapons on\ncampus. The inaccurate reporting hindered Job Corps\xe2\x80\x99 ability to monitor center safety,\nto ensure significant student misconduct was handled appropriately, and to respond to\nnegative press regarding such incidents.\n\nHotline Complaint Allegations Related to Student Misconduct\n\nDuring the audit, we performed work to address a hotline complaint allegation that\nCenter Safety Officer investigations at Treasure Island were manipulated by\nmanagement. We found no evidence that Treasure Island or ResCare engaged in this\n\n16\n Treasure Island and Miami respectively reported 67 and 41 combined Level I and II infractions.\n17\n PRH Chapter 5.5.\n\n Performance Audit of ResCare, Inc.\n 11 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nimproper practice. Our methodology for validating the merit of this complaint allegation\nis summarized in Appendix B.\n\nImproved Oversight Needed to Ensure Compliance with Student Misconduct\nRequirements\n\nThese deficiencies occurred, in part, because ResCare did not ensure Treasure Island\nand Miami adhered to ResCare\xe2\x80\x99s corporate and center policies to address serious\nstudent misconduct, which included convening FFBs and reporting significant incidents\nin compliance with Job Corps requirements. Our audit indicated a lack of supervisory\noversight performed by center management at both centers. ResCare and both centers\nhad established SOP for addressing student misconduct consistent with PRH\nrequirements. Management for both centers cited staff turnover in key positions and\nlack of training attributed to the deficiencies we identified. Miami officials told us that\ndespite on-going training, center staff sometimes enter intermediate and minor\nmisconduct as serious incidents, which, in some cases, resulted in an over reporting of\nLevel I and II infractions to Job Corps. During our audit, we found two instances of Level\nII infractions incorrectly reported as Level I infractions at Miami. In addition, both centers\ndid not have processes in place to properly close out security log entries to show\npotential student misconduct incidents were addressed appropriately and timely.\nConsequently, these actions hindered the ability of ResCare and Job Corps to monitor\ncenter safety and ensure significant student misconduct was handled timely and\nappropriately, potentially placing other students and staff at risk. Safety weaknesses\nalso impact Job Corps and ResCare management decision-making.\n\nRequired Safety and Health Observations and Inspections Not Always Conducted\n\nMiami did not have documentation to show it conducted all of its required safety and\nhealth observations and inspections, or committee meetings. The PRH requires centers\nto perform and document the following:\n\n \xe2\x80\xa2 Daily Observations of cafeterias, dormitories, snack bars, canteens,\n classrooms/shops, motor vehicles, all equipment to be used by students and\n staff, the gymnasium, exercise equipment and frequently used recreation areas.\n\n \xe2\x80\xa2 Weekly Inspections of all food service facilities, including cafeterias, snack bars\n and canteens, and gymnasiums, exercise equipment and swimming pools during\n times of operation.\n\n \xe2\x80\xa2 Monthly Inspections of dormitories, vocational shops, academic classrooms,\n health services, administrative offices, warehouses and other buildings occupied\n by students and staff.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 12 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n \xe2\x80\xa2 Quarterly Environmental Health Inspections of food service facilities, residential\n facilities and training facilities. 18\n\nResCare could not provide the necessary documentation to support 2,766, or 98.7\npercent, out of 2,803 required observations and inspections as noted in Table 2 below:\n\nTable 2: Required Safety and Health Observations and Inspections Not\nDocumented\n Number of\n Number of Required\n Required Observations/ Total\n Observation/ Inspections Missing\nPRH Requirement Inspections Documented (%)\n1) Daily (365 days x 7 observation 2,555 0 2,555\n areas) (100%)\n2) Weekly (52 weeks x 2 inspection 104 1 103\n areas) (99%)\n3) Monthly (12 months x 11 inspection 132 28 104\n areas) (78.8%)\n4) Quarterly (4 quarters x 3 inspection 12 8 4\n areas) (33.3%)\n 2,766\nTotals 2,803 37 (98.7%)\n\nJob Corps similarly found Miami was deficient with its required weekly and monthly\ninspections.\n\nThese conditions occurred, in part, because ResCare had not established SOP for\nconducting all required observations and inspections at Miami. While Job Corps does\nnot require SOP for conducting observations and inspections, such SOP would have\nprovided center staff with guidance needed to comply with Job Corps requirements.\nAdditionally, ResCare and center management did not provide adequate monitoring and\nsupervision to ensure the observations and inspections were performed and\ndocumented as required. Consistent inspections and observations will increase the\ncenter\xe2\x80\x99s ability to identify and correct safety and health concerns at the earliest\nopportunity. Without adequate documentation of these activities, ResCare cannot\nprovide adequate assurance that its centers\xe2\x80\x99 safety and health programs are working\neffectively to protect Job Corps students. Safety and health program weaknesses also\nimpact Job Corps and ResCare management decision-making.\n\nResCare agreed it did not have the necessary documentation to show required safety\nand health observations and inspections were performed at Miami. However, ResCare\ntold us that all of the required observations and inspections had been performed at the\ncenter during PY 2007. They said turnover in key personnel hindered Miami\xe2\x80\x99s efforts to\n\n18\n PRH Chapter 5.13 and Appendix 505.\n\n Performance Audit of ResCare, Inc.\n 13 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ndocument these observations and inspections. ResCare agreed with the importance for\nMiami to have effective controls in place to ensure all required safety and health\nobservations and inspections were performed and documented.\n\nRequired Safety Committee Meetings Not Always Conducted\n\nThe PRH required centers to establish a Safety and Health Committee to:\n\n \xe2\x80\xa2 Review reported accidents, injuries and illnesses;\n\n \xe2\x80\xa2 Consider the adequacy of actions to prevent recurrence of such accidents,\n injures or illnesses;\n\n \xe2\x80\xa2 Plan, promote, and implement DOL and Job Corps safety and occupational\n health programs; and\n\n \xe2\x80\xa2 Meet monthly and maintain records of the minutes for at least three years. 19\n\nResCare was not able to provide documentation to show required monthly Safety and\nHealth Committee meetings were consistently conducted at Miami during PY 2007. The\ncenter did not maintain the required Safety and Health Committee meeting minutes for\n3, or 25 percent, of the 12 months. These conditions occurred, in part, because\nResCare had not established SOP for conducting and documenting the meetings at\nMiami. While Job Corps does not require SOP for committee meetings, SOP at Miami\nwould have provided center staff with the guidance needed to comply with the Job\nCorps requirements. Additionally, ResCare corporate and center management did not\nprovide adequate monitoring to ensure the committee meetings were held and\ndocumented as required. ResCare told us that the required meetings were held; but not\nalways documented and maintained. Regular Safety and Health Committee meetings\nwill increase the center\xe2\x80\x99s ability to identify and correct safety and health concerns at the\nearliest opportunity. Without adequate documentation of these activities, ResCare\ncannot provide adequate assurance that its centers\xe2\x80\x99 safety and health programs are\nworking effectively to protect Job Corps students. Safety and health program\nweaknesses also impact Job Corps and ResCare management decision-making.\n\nIn response to our draft report, Job Corps will require ResCare to improve safety and\nhealth program controls and monitoring over all ResCare centers and periodically\nvalidate the management of the safety and health program. ResCare will also be\nadvised to submit revised SOPs for Job Corps review and approval to improve controls\nand monitoring for convening FFBs for Level I and II infractions, reporting significant\nincidents, and recording of safety inspections and committee meeting minutes. In\naddition, Job Corps will instruct ResCare to periodically validate Miami\xe2\x80\x99s safety and\nhealth program and request training verification and SOPs from Miami to reflect\nimprovements in these areas.\n\n19\n PRH Appendix 505.\n\n Performance Audit of ResCare, Inc.\n 14 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\nResCare disagreed appropriate actions were not always taken to address serious\nstudent misconduct at Treasure Island and Miami. Specifically, ResCare asserted FFBs\nwere conducted timely and the security log entries used as examples in the report were\nadequately addressed. ResCare also disagreed with our conclusion that required safety\nand health observations, inspections and committee meetings were not always\nconducted. However, ResCare did not provide any additional information or\ndocumentation that caused us to change our conclusions.\n\nObjective 3 \xe2\x80\x94 Did ResCare ensure compliance with Job Corps requirements for\n reporting performance?\n\n Finding 3 \xe2\x80\x94 ResCare did not always ensure compliance with Job Corps\n requirements for reporting performance for two of three areas\n reviewed \xe2\x80\x94 student CTT completions and student OBS.\n\nBased on our audit testing, ResCare ensured compliance for one of three reporting\nareas reviewed \xe2\x80\x94 General Educational Development (GED)/High School Diploma\n(HSD) attainment. However, ResCare can improve its centers\xe2\x80\x99 performance reporting\nfor the other two areas reviewed for Treasure Island and Miami \xe2\x80\x94 student CTT\ncompletions and student OBS, a measure of a center\xe2\x80\x99s ability to operate at full capacity.\n\nFor CTT completions, students at Treasure Island and Miami did not complete all of the\ntraining tasks required by Job Corps. In addition, student OBS at both centers was\noverstated because students were placed on unsupported leave and students were not\nseparated as required. Incomplete tasks could impact a student\xe2\x80\x99s ability to obtain and\nmaintain employment in the vocation in which the student was trained. Inaccurate\nperformance reporting could also impact management decision-making, incentive\npayments and option years awarded to contracted center operators. Furthermore,\nResCare may owe DOL liquidated damages of $24,750 for the CTT completions that\nwere in non-compliance with Job Corps policy and $7,786.44 for the overstatement of\nstudent OBS. See Finding 4 for additional liquidated damages as a result of work\nperformed in response to hotline complaints alleging improper practices related to\nstudent CTT completions, attendance and OBS.\n\nThese deficiencies occurred because ResCare\xe2\x80\x99s controls over these areas need\nimprovement. The control weaknesses included inadequate center procedures and lack\nof supervision. Additionally, ResCare\xe2\x80\x99s corporate oversight did not effectively address\nthe deficiencies we identified in these areas.\n\nCTT Completions Not Always in Compliance\n\nTreasure Island and Miami reported students with incomplete TARs as CTT completers\nin their reported performance for PY 2007. The PRH requires centers to (1) document\nthat students are proficient at all tasks listed on TARs, (2) ensure student progress is\n\n\n\n Performance Audit of ResCare, Inc.\n 15 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ndocumented on TARs as progress occurs and (3) obtain approval for changes to tasks\nlisted on the TARs from the Job Corps National Director. 20\n\nWe reviewed a random statistical sample of 118 out of the 816 students reported by\nboth centers as CTT completers during PY 2007. Our review showed 33, or 28 percent,\nof the 118 TARs tested in our statistical sample were not consistent with PRH\nrequirements because one or more tasks were not completed or annotated correctly.\nThe TAR deficiencies found included tasks not documented as having been completed\n(e.g., lacked required instructor/student sign-offs, completion dates, and proficient\nperformance ratings); and tasks were excluded without proper approval from Job Corps.\n\nFor example:\n\n \xe2\x80\xa2 At Miami, one TAR had 81 tasks left blank and another TAR had 29 tasks with\n missing performance ratings.\n\n \xe2\x80\xa2 At Treasure Island, two painter TARs showed students watched an instructional\n video instead of demonstrating the safe use of scaffold equipment as required by\n Job Corps. Treasure Island did not obtain Job Corps approval for eliminating the\n hands-on training as required.\n\n \xe2\x80\xa2 At Miami, five landscape technician TARs each contained a required task that\n was not completed because the center did not have the necessary equipment for\n the students to complete the task. In lieu of providing the training, the instructors\n indicated these tasks were not applicable. Miami did not obtain Job Corps\n approval for eliminating the task as required by Job Corps.\n\nIncomplete tasks could impact a student\xe2\x80\x99s ability to obtain and maintain employment in\nthe vocation in which the student was trained. The PRH stipulated liquidated damages\nof $750 be assessed for each improper vocational completion. 21 However, the PRH\nalso allowed Job Corps discretion when assessing liquidated damages. 22 As such\nResCare may owe $24,750 for the 33 students we identified as having incomplete TARs\nduring our statistical sample review. Table 3 below summarizes the incomplete TARs\nand number of deficiencies we found, as well as our calculation of potential liquidated\ndamages:\n\n\n\n\n20\n PRH Chapter 3.13.\n21\n PRH Chapter 5.1.\n22\n PRH Chapter 5.1.\n\n Performance Audit of ResCare, Inc.\n 16 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nTable 3: 33 TARs Were Not in Compliance (Statistical Sample)\n Number of Students with Incomplete\nNumber of TARs Liquidated\nIncomplete Treasure Damages\nTasks Island Miami Totals (Totals x $750)\n1\xe2\x80\x932 6 12 18 $ 13,500\n3\xe2\x80\x934 0 3 3 $ 2,250\n5 \xe2\x80\x93 10 0 3 3 $ 2,250\n11 or more 4 5 9 $ 6,750\nTotals 10 23 33 $ 24,750\n\nProjecting these statistical sample results to the 816 CTT completions reported for PY\n2007, we are 90 percent confident that between 136 and 230 of the 816 students did\nnot complete the vocation as required and between $102,000 and $172,500 may be\nowed to DOL for Treasure Island and Miami students with incomplete TARs. 23\n\nJob Corps and ResCare also identified CTT reporting deficiencies at Treasure Island\nand Miami. At Treasure Island, Job Corps and ResCare found student TARs were not\ncompleted in compliance with the PRH. At Miami, ResCare found student TARs were\nnot monitored for quality assurance.\n\nHotline Complaint Allegations Related to CTT Completions\n\nIn response to hotline complaint allegations that student TARs were not always\ncompleted properly or in compliance with ResCare\xe2\x80\x99s early completer policy, we\nreviewed an additional 62 judgmentally selected CTT completions at Treasure Island.\nOur review showed 38 TARs were not completed as required by Job Corps and an\nadditional $28,500 in liquidated damages may be warranted. See Finding 4 for the\ndetailed discussion of the complaint allegations and test results.\n\nControls Over CTT Completions Need Improvement\n\nWhile ResCare had internal controls to ensure data reliability at both centers, the\ncontrols were not always working effectively. For example, even though ResCare\nestablished corporate policies to perform audits of completed TARs and those policies\nalso required center management to provide justifications for early CTT completions,\nthose corporate policies were not always followed at both centers. In addition, while\nboth centers established processes via center SOP for instructors and managers to\naudit TARs for completeness and accuracy, ResCare did not distribute a standard TAR\naudit checklist for centers to use until January 2008. Additionally, the policy to use the\nTAR checklist was not put into effect until August 2008. The use of a standardized TAR\n\n\n23\n The point estimate is 183 students and $137,250.\n\n Performance Audit of ResCare, Inc.\n 17 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\naudit checklist would have reduced TAR deficiencies found during our audit and added\naccountability to the TAR audit process.\n\nDuring the audit, Job Corps revised its CTT completions policy to ensure students\nreceived the required training while reducing the documentation requirements. Given\nJob Corps\xe2\x80\x99 discretion in assessing liquidated damages, and the new policy, Job Corps\nneeds to determine the amount of liquidated damages ResCare owes the government.\n\nStudent OBS Overstated\n\nTreasure Island and Miami overstated student OBS because students were not\nseparated as required. The PRH established criteria for student attendance and leave,\nwhich included providing assurance that student leave was documented and approved\nas required by Job Corps. 24 The PRH further required students to be separated from\nthe program if unauthorized leave exceeds certain standards. 25\n\nStudent attendance was recorded in the Job Corps Center Information System (CIS),\nwhich calculated center OBS. Job Corps defined OBS as an efficiency measure of a\ncenter\xe2\x80\x99s ability to operate at full capacity. The PRH also required center operators to\nseparate students from the program if the students were absent from training in excess\nof certain standards. 26\n\nRandom Statistical Sample of Reported AWOL Separations\n\nWe reviewed a random statistical sample of 110 out of 417 students with reported\nAbsent Without Leave (AWOL) separations during PY 2007 for both centers. The PRH\npermitted students to be AWOL for no more than 6 consecutive training days, or 12\ntraining days within a 180-day period. Of the 110 student files reviewed, the attendance\nand reported leave for 13, or 11.8 percent, were not documented as required by the\nPRH. 27 We reviewed the attendance history of AWOL-separated students for\nquestionable leave patterns (e.g., multiple status changes within a short duration) and\ntested the periods of leave for supporting leave documentation. We also determined if\nstudents should have been AWOL-separated from the program at an earlier date for\nhaving unsupported leave. If so, those students should not have been included in the\nrespective center\xe2\x80\x99s OBS calculation after that date. We determined both Treasure Island\nand Miami retained these 13 students 153 days beyond their required termination dates,\nin violation of the PRH, which overstated OBS.\n\nSeven or More Consecutive Leave Days Prior to Separation\n\nWe reviewed all 42 students with reported leave of seven or more consecutive days\nprior to separation during PY 2007 for both centers, as well as 2 students reported with\n24\n PRH Chapter 6.1.\n25\n PRH Exhibit 6-1.\n26\n PRH Chapter 6.4.\n27\n Review of 110 AWOL separations found 11 students at Treasure Island and 2 students at Miami with leave not\ndocumented as required by the PRH.\n\n Performance Audit of ResCare, Inc.\n 18 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nexcessive AWOL days at Treasure Island. Of the 42 student files reviewed, the\nattendance and reported leave for 7, or 16.7 percent, were not documented as required\nby the PRH. 28 Based on our review, four of these students should have been separated\nat an earlier date because their leave was not supported in accordance with the PRH\nand should not have been included in their respective center\xe2\x80\x99s OBS calculation after\nthat date. We determined that both centers retained these 4 students 32 days beyond\ntheir required termination dates, in violation of the PRH, which overstated OBS. Of the\ntwo students reviewed for excessive AWOL days, the attendance and reported leave for\none was not documented as required by the PRH. 29 Moreover, that student should have\nbeen separated at an earlier date and should not have been included in the respective\ncenter\xe2\x80\x99s OBS calculation after that date. We determined Treasure Island retained this\nstudent 10 days beyond their required termination date, which also overstated OBS.\n\nSeparations for Student Misconduct\n\nWe also reviewed all 108 Level I and II infractions reported during PY 2007 for Treasure\nIsland and Miami. The FFBs at both centers determined serious misconduct occurred\nand recommended immediate separation for 38 of these students. We determined that\n14, or 36.8 percent, of these 38 students were retained 538 days beyond their required\ntermination dates, in violation of the PRH, which overstated OBS. As a result, Treasure\nIsland and Miami exceeded the established timeframes by an average of 38.4 days.\n\nPotential Liquidated Damages\n\nThe PRH requires the assessment of liquidated damages for failure to comply with\nrequirements for separating students. ResCare may need to pay a refundable cost to\nDOL for each day a student is retained in violation of Job Corps requirements. The daily\nrefundable costs were calculated using 15 percent of the refundable cost per student\nper day, which was $74.20 for Treasure Island and $61.87 for Miami. As a result,\nexcessive leave day costs (liquidated damages) amounted to $11.13 ($74.20 x 15\npercent) and $9.28 ($61.87 x 15 percent) for Treasure Island and Miami, respectively.\nThe PRH violations and our liquidated damages calculations for the 32 students with\nseparation violations are summarized in Table 4 below.\n\n\n\n\n28\n We found leave used for 9 of the 42 students did not comply with PRH requirements. One of these students was\nincluded in our statistical sample review results and one student was included in our review of student misconduct. As\nsuch, we reduced the number of exceptions found from nine to seven.\n29\n We found two students with leave that did not comply with the PRH. One of these students was included in our\nstatistical sample. As such, we reduced the number of exceptions found from two to one.\n\n Performance Audit of ResCare, Inc.\n 19 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nTable 4: 32 Students Not Separated as Required\n Liquidated Damages\n (Number of Days x\n Number of Students Excessive Leave Day\n (Days in Violation) Cost)\n Treasure\n Treasure Island Miami\nPRH Violation Island Miami ($11.13) ($9.28)\nStudent missing supporting 7 1\nverification for leave (108 days) (11 days) $1,202.04 $102.08\nStudent not placed on 3\nleave for valid reason (30 days) -- $333.90 --\nStudent not separated\nimmediately after decision\nby FFB, Behavior Review\nPanel and/or Center 2 17\nDirector (383 days) (190 days) $4,262.79 $1,763.20\nStudent exceeded PRH\nallowable AWOL training 2\ndays (11 days) -- $122.43 --\n 14 18\nTotals (532 days) (201 days) $5,921.16 $1,865.28\n\nIn total, ResCare may owe DOL $7,786.44 ($5,921.16 + $1,865.28) for the 32 students\nwith separation violations. Projecting our statistical sample results of our AWOL\nseparation violations (13 of 110) to the 417 students with reported AWOL separations,\nwe are 90 percent confident that between 37 and 83 of the 417 students did not have\nleave documented as required by the PRH and between $4,344 and $9,745 may be\nowed to DOL for Treasure Island and Miami students not separated as required by the\nPRH. 30\n\nIn addition to the liquidated damages, inaccurate performance reporting could also\nimpact management decision-making, incentive payments and option years awarded to\ncontracted center operators.\n\nHotline Complaint Allegations Regarding Unsupported Leave Used at Treasure Island\n\nWe also reviewed a hotline complaint allegation directed at Treasure Island related to\nstudent leave and attendance and OBS. Specifically, Treasure Island allegedly used\nunsupported administrative leave for family compassion and hardship purposes to\nprevent students from separating at earlier dates and inflating OBS. We reviewed\nsupporting documentation for 34 of 231 students granted administrative leave for family\n\n30\n The point estimate is 60 students and $7,045.\n\n Performance Audit of ResCare, Inc.\n 20 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\ncompassion or hardship purposes at Treasure Island. We found leave granted for 8 of\nthe 34 students did not adhere to PRH requirements. See Finding 4 for detailed test\nresults.\n\nControls Over Student OBS Need Improvement\n\nOur audit indicated a lack of supervisory oversight performed by center management at\nboth centers. ResCare and both centers had established SOP for leave requirements\nconsistent with PRH requirements. Despite corporate and center level controls, our\naudit found that students at both centers did not always have proper supporting\ndocumentation for leave. At Treasure Island, leave for family compassion or hardship\npurposes was required to be approved by the center director or designee. Unsupported\nor illegitimate family compassion or hardship leaves was the result of center\nmanagement at Treasure Island failing to coordinate with records department staff\nresponsible for processing leave and counseling staff responsible for requesting leave,\nto ensure student leave was for valid reasons and properly supported. At Miami,\ncorporate and center SOP were established for properly separating students following\nFFB recommendations for termination. However, as noted above, the students in our\naudit recommended for termination by FFB were not always separated in a timely\nmanner.\n\nJob Corps and ResCare also identified student leave and OBS deficiencies at Treasure\nIsland and Miami. At Treasure Island, Job Corps found inadequate documentation to\nsupport student leave and instances where students exceeded PRH AWOL limitations.\nResCare identified similar concerns regarding student leave at both centers.\n\nIn response to our draft report, Job Corps will ensure ResCare provides a corrective\nactions plan when PRH non-compliance is identified during data integrity audits.\nAdditionally, Job Corps, in coordination with the Regional Contracting Officers, will\ndetermine the extent of any overstated OBS and CTT completions at Treasure Island\nand Miami. 31\n\nResCare acknowledged several TARs contained errors made by the instructor updating\nthe TARs and it did not always have the required documentation to support student\nleave. ResCare did not agree all of our TAR examples were non-compliant and that\nunsupported leave categories prevented students from separating at earlier dates.\nHowever, ResCare did not provide documentation supporting that students were trained\nand accounted for as required. As such, we continue to affirm all of our exceptions.\n\n\n\n\n31\n Job Corps\xe2\x80\x99 plan to determine the extent of any overstated OBS and CTT completions at Treasure Island and Miami\nwas not fully responsive to our recommendation to determine the extent of similar liquidated damages at all ResCare\noperated Job Corps centers. We will continue to work with Job Corps to reach agreement on the appropriate\ncorrective action during the Audit Resolution process.\n\n Performance Audit of ResCare, Inc.\n 21 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nObjective 4 \xe2\x80\x94 Did the hotline complaints alleging improper practices related to\n student misconduct, CTT completions, student attendance and\n student OBS, and OMS separations at the Treasure Island Job\n Corps center have merit?\n\n Finding 4 \xe2\x80\x94 Five of seven hotline complaint allegations directed at the\n Treasure Island Job Corps Center had some merit.\n\nFive of seven hotline complaint allegations, all directed to Treasure Island, had some\nmerit. Those five allegations were (1) student TARs were not properly completed; (2)\nstudent security trade TARs were not properly completed; (3) student assistants were\nperforming instructor signoffs on security trade TARs; (4) certain TARs were not always\ncompleted in compliance with ResCare\xe2\x80\x99s early completer policy; and (5) unsupported\nleave categories (e.g., administrative, personal) used to prevent students from\nseparating at earlier dates and inflate student OBS. The remaining two allegations did\nnot have merit \xe2\x80\x94 (6) Center Safety Officer investigations were manipulated by\nmanagement and (7) new student enrollment delayed until second day on center to\nmanipulate OMS separation numbers.\n\nStudent TARs Improperly Completed\n\nThe allegation that student TARs were not properly completed at Treasure Island had\nsome merit. As part of our CTT completion testing discussed in Finding 3, we reviewed\na total of 127 out of 611 student TARs supporting CTT completion at Treasure Island\nduring PY 2007. Our review showed 48, or 37.8 percent, of the 127 TARs tested were\nnot consistent with PRH requirements because one or more tasks were not completed\nor annotated correctly.\n\nSecurity Trade TARs Improperly Completed\n\nAllegations that student security trade TARs were not properly completed and student\nassistants were performing instructor signoffs on security trade TARs had some merit.\nWe reviewed all of the 62 security trade completers reported during PY 2007. 32 Our\nreview showed 37, or 59.7 percent, of the 62 TARs tested were not consistent with PRH\nrequirements because one or more tasks were not completed or annotated correctly.\nFor example:\n\n \xe2\x80\xa2 Six security trade TARs each contained required tasks that were not completed\n because the center did not have the resources to provide cardiopulmonary\n resuscitation (CPR) and first-aid instruction and certifications. ResCare noted the\n center staff did not have current CPR and first-aid certifications necessary to\n instruct the students during its on-site assessment. In addition, we found 13 other\n security trade TARs completed during this period where the center indicated the\n students completed these tasks. However, ResCare and the center were not able\n\n32\n Six of these 62 security trade students were included in our statistical sample of CTT completers.\n\n Performance Audit of ResCare, Inc.\n 22 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n to provide assurance these students received CPR and first-aid instruction and\n certifications as required.\n\n \xe2\x80\xa2 Thirteen security trade TARs contained irregularities related to instructor sign-offs\n for 470 required tasks. We found the same instructor\xe2\x80\x99s signed initials for certain\n tasks varied greatly throughout the TAR or in comparison to other TARs. We also\n found instances where the instructor\xe2\x80\x99s signed initials for certain tasks were\n similar to the student\xe2\x80\x99s signed initials.\n\n \xe2\x80\xa2 Four security trade TARs were missing at least one page and another security\n trade TAR had one task missing a required student signoff.\n\nTable 5 below summarizes the number of deficiencies we found for the 37 incomplete\nTARs we identified, as well as our calculation of potential liquidated damages.\n\nTable 5: 37 Security Trade TARs Were Not in Compliance\n Treasure Island Security\nNumber of Trade Students with Liquidated Damages\nIncomplete Tasks Incomplete TAR (Totals x $750)\n1\xe2\x80\x932 13 $ 9,750\n3\xe2\x80\x934 4 $ 3,000\n5 \xe2\x80\x93 10 6 $ 4,500\n11 or more 14 $ 10,500\nSub Total 37 $ 27,750\nTotals 33 35 $ 26,250\n\nBased on our results, ResCare may owe $26,250 in liquidated damages for the 37\nstudents identified above as incomplete security trade TARs at Treasure Island. 34\n\nResCare Policy for Early Completers Not Always Followed\n\nAllegations that certain TARs were not always completed in compliance with ResCare\xe2\x80\x99s\nearly completer policy had some merit. We reviewed a judgmental sample of 60 out of\n142 early CTT completions per ResCare\xe2\x80\x99s policy at Treasure Island. 35 ResCare policy\nrequired center management to justify and document its justification for students who\ncomplete their CTT in 150 enrollment days of training or less. ResCare was unable to\nprovide documentation to justify early completions for 29, or 48.3 percent, of the 60\nTARs tested. ResCare noted similar concerns at Treasure Island regarding the lack of\nrequired documentation to support early completions.\n\n\n33\n Two of the 37 incomplete security trade TARs were included in our statistical sample results. While we included\nthese two incomplete TARs in both test results to reflect the deficiencies, we did not use these TARs to calculate\npotential liquidated damages for our review of security trade TARs.\n34\n Ibid.\n35\n Fifty four of these 60 early completers were included in our statistical or security trade samples.\n\n Performance Audit of ResCare, Inc.\n 23 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nWhile these TARs did not comply with ResCare policy, completing CTT in a short period\nof time is not a deficiency and does not result in potential liquidated damages. However,\nwe found three early CTT completions that were not consistent with PRH requirements\nbecause one or more tasks were not completed as required. As such, ResCare may\nowe $2,250 for these three students identified as having incomplete TARs.\n\nAs previously noted in Finding 3, ResCare did not provide sufficient emphasis to ensure\ncontrols over data reliability worked effectively to prevent TAR deficiencies. In addition,\na lack of center supervisory oversight contributed to the TAR deficiencies identified.\n\nInadequate Support for Hardship Leave\n\nThe allegation that Treasure Island used unsupported administrative leave for family\ncompassion or hardship purposes to prevent students from separating at earlier dates\nand inflate student OBS had some merit. In response to the allegation, we reviewed all\ngranted requests for Administrative Leave Without Pay for family compassion or\nhardship purposes granted for 3 of the 6 months this improper activity allegedly\noccurred, as well as all requests made for one month outside the allegations scope, or\n34 of 231 students. The PRH limited Administrative Leave Without Pay to 30 days or\nless per year and required authorization by the center director or designee, as well as\nverification prior to or within one working day of granting leave.\n\nWe found leave granted for 8 of the 34 students\xe2\x80\x99 leave tested did not adhere to the PRH\nrequirements. 36 For example:\n\n \xe2\x80\xa2 Three students were granted leave for family compassion or hardship purposes\n because they were dissatisfied with their CTT trade placements. Job Corps\n program staff indicated this was not a valid reason for granting hardship leave.\n\n \xe2\x80\xa2 One student was granted leave for family compassion or hardship purposes on\n two occasions without required supporting documentation.\n\nWe considered unsupported or non-compliant student leave days as AWOL days. When\ncounting unsupported or illegitimate leave days as AWOL, we determined that five of\nthe eight students should have been separated at an earlier date and should not have\nbeen included in Treasure Island\xe2\x80\x99s OBS calculation after that date. We determined that\nTreasure Island retained the five students 72 days beyond their required termination\ndates, which overstated OBS, and is considered a violation of the PRH.\n\nBased on our results, ResCare may owe $801.36 in liquidated damages for the 5\nstudents with separation violations. The PRH violations and our liquidated damages\ncalculations for the 5 students with separation violations are summarized in Table 6\nbelow.\n\n\n36\n We found 10 of 34 hardship leaves reviewed were not in compliance with PRH. Two of the 10 students were\nincluded in our statistical sample. As such, we reduced the number of exceptions found from 10 to 8.\n\n Performance Audit of ResCare, Inc.\n 24 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nTable 6: 5 Students Not Separated as Required at Treasure Island\n\n Liquidated Damages\n (Number of Days x\n Number of Students Excessive Leave Day\nPRH Violation (Days in Violation) Cost of $11.13)\nMissing supporting\nverification for leave 2 (20 days) $222.60\nStudent not placed on\nleave for valid reason 3 (52 days) $578.76\nTotals 5 (72 days) $801.36\n\nTwo Allegations Did Not Have Merit\n\nThe remaining two hotline complaint allegations were not substantiated. The specific\nallegations were as follows:\n\n \xe2\x80\xa2 Center Safety Officer investigations were manipulated by Treasure Island center\n management.\n\n \xe2\x80\xa2 New student enrollments were delayed until the second day on center to\n manipulate OMS separation numbers.\n\nDuring the audit, we found no evidence that Treasure Island or ResCare engaged in\nthese two alleged improper practices. Our methodology for validating the merit of the\ncomplaint allegations is summarized in Appendix B.\n\nJob Corps\xe2\x80\x99 response to our draft report did not comment on Finding 4 because we did\nnot make recommendations to Job Corps that were specific to Finding 4.\n\nResCare stated in its response to our draft report that it disagreed with one of the five\nallegations we identified as having some merit. ResCare disagreed unsupported leave\ncategories were used to prevent students from separating at earlier dates and inflate\nOBS. We continue to believe the allegation had some merit because the unsupported\nleave we identified resulted in students not being separated at an earlier date, which\noverstated OBS. Additionally, ResCare partially agreed with the number of exceptions\nwe identified relating to the allegation that student security trade TARs were not\nproperly completed. We continue to affirm all of the exceptions identified because the\ncenter did not maintain the required documentation.\n\nResCare agreed with the allegation that TARs were not always completed in\ncompliance with its fast completer policy. ResCare did not indicate agreement or\ndisagreement with the remaining two allegations that we concluded had some merit.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 25 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nRECOMMENDATIONS\n\nWe recommend the Interim National Director, Office of Job Corps, require ResCare to:\n\n 1. Improve corporate-level controls and monitoring over all centers to identify and\n correct any non-compliance with applicable Federal regulations, contract\n agreements, Job Corps requirements and ResCare policies for managing and\n reporting financial activity.\n\n 2. Reimburse $116,794 in unallowable costs charged to Job Corps for the Treasure\n Island CD\xe2\x80\x99s personal housing ($55,474) and travel expenses ($10,079) and other\n goods and services for both centers ($51,241).\n\n 3. Adhere to ResCare\xe2\x80\x99s corporate and center policies regarding the use of imprest\n funds to purchase goods and services.\n\n 4. Improve controls and monitoring over all centers to identify and correct any non-\n compliance with Job Corps safety and health program requirements and\n periodically test those controls to determine effectiveness. The controls and\n monitoring should ensure FFBs are convened, all significant incidents are\n reported to Job Corps, all safety and health observations, inspections, and\n committee meetings are conducted and documented as required.\n\n 5. Periodically validate whether the safety and health program at its centers are\n managed in accordance with Job Corps requirements.\n\n 6. Improve the effectiveness of training and supervisory oversight to staff\n responsible for complying with Job Corps safety and health program.\n\n 7. Implement corrective action plans when PRH non-compliance is identified during\n data integrity audits. The corrective action should include providing Job Corps\n with any adjustments to previously reported performance.\n\nAlso, we recommend that the Interim National Director:\n\n 8. Determine whether additional unallowable costs were charged without the\n required approvals and support, and require reimbursement as appropriate.\n\n 9. Determine the extent of any liquidated damages resulting from overstated CTT\n completions and OBS at all ResCare operated Job Corps centers and require\n ResCare to pay liquidated damages for any overstatements at the conclusion of\n Job Corps next two year cycle of regional office center assessments. This\n includes liquidated damages at the two centers audited totaling $53,250 ($24,750\n + $26,250 + $2,250) for incomplete CTT completions and $8,587.80 ($7,786.44 +\n $801.36) for not separating students as required by Job Corps.\n\n\n\n Performance Audit of ResCare, Inc.\n 26 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nWe appreciate the cooperation and courtesies that Job Corps and ResCare personnel\nextended the Office of Inspector General during this audit. OIG personnel who made\nmajor contributions to this report are listed in Appendix F.\n\n\n\n\nElliot P. Lewis\nAssistant Inspector General\n for Audit\n\n\n\n\n Performance Audit of ResCare, Inc.\n 27 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 28 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nExhibits\n\n\n\n\n Performance Audit of ResCare, Inc.\n 29 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 30 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n Exhibit 1\n CYs 2007 \xe2\x80\x93 2008 Imprest Fund Expenses at Treasure Island and Miami\n\n Treasure Island Miami\n Number of Number of Total\nG/L Category Description Amount Transactions Amount Transactions Amount\nFood $ 71,842 36 $ 14,450 23 $ 86,292\nOther Social Skills Expense 45,246 91 39,543 67 84,789\nTravel and Training 40,734 84 22,421 57 63,155\nOther Administrative Expense 37,561 66 13,077 50 50,638\nConstruction/Rehabilitation 49,221 5 - - 49,221\nOther Support Service Expense 23,847 35 6,710 35 30,557\nOther Vocational Expense 17,391 39 2,364 21 19,755\nOther Academic Expense 9,478 26 4,997 25 14,475\nOther Facilities Maintenance Expense 8,477 22 3,451 10 11,928\nEquipment 200 1 9,144 24 9,344\nOther Security Expense 50 1 7,981 21 8,031\nPlacement Travel and Training 3,824 11 1,209 2 5,033\nOutreach and Admissions Travel and Training 2,970 1 1,899 14 4,869\nOther Medical Expense 904 12 3,322 29 4,226\nOutreach and Admissions Other Expense 835 2 3,030 22 3,865\nMedical Personnel Expense 450 1 3,340 2 3,790\nCommunications - - 3,548 15 3,548\nVocational Personnel Expense 3,378 1 - - 3,378\nPlacement Other Expense 50 1 2,595 15 2,645\nClothing 1,993 3 460 2 2,453\nOutreach and Admissions Media Advertising - - 200 1 200\nVocational Skills Training 150 1 - - 150\nMotor Vehicle Expense 61 2 65 3 126\nPlacement Media Advertising 98 2 - - 98\nGeneral Services Administration - Repair - - 40 2 40\n\nTotals $ 318,760 443 $ 143,846 440 $ 462,606\nSource: OIG analysis of ResCare financial records.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 31 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 32 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nAppendices\n\n\n\n\n Performance Audit of ResCare, Inc.\n 33 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 34 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n Appendix A\nBackground\n\nJob Corps is authorized by Title I-C of the Workforce Investment Act (WIA) of 1998 and\nis administered by the Department of Labor, Office of the Secretary, Office of Job\nCorps, under the leadership of the National Director, supported by a National Office\nstaff and a field network of regional offices.\n\nThe purpose of Job Corps is to assist at-promise young women and men, ages 16\nthrough 24, who need and can benefit from a comprehensive program, operated\nprimarily in the residential setting of a Job Corps Center, to become more responsible,\nemployable, and productive citizens.\n\nAs a national, primarily residential training program, Job Corps' mission is to attract\neligible young adults, teach them the skills they need to become employable and\nindependent, and place them in meaningful jobs or further education.\n\nEducation, training, and support services are provided to students at Job Corps center\ncampuses located throughout the United States and Puerto Rico. Job Corps Centers\nare operated for the DOL through competitive contracting processes, and by other\nFederal Agencies through inter-agency agreements.\n\nThe WIA legislation authorizing Job Corps requires the Secretary of Labor to provide a\nlevel of review of contractors and service providers over a 3-year period. The Code of\nFederal Regulations states all Job Corps centers are to be reviewed over the 3-year\nperiod.\n\nResCare\xe2\x80\x99s headquarters is located in Louisville, Kentucky. ResCare provides CTT and\njob placement services to more than 9,200 students annually. As of July 1, 2009,\nResCare operated 15 centers under contract with DOL. ResCare lost the bids to\noperate the Treasure Island and the Pittsburgh Job Corps centers (Pittsburgh) in 2009.\nThe contracts for Treasure Island expired on May 31, 2009, and Pittsburgh on\nJune 30, 2009. The two centers included in our audit (Treasure Island and Miami) have\ntraining capacities (authorized OBS) of 800 and 300 students, respectively.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 35 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 36 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n Appendix B\nObjectives, Scope, Methodology, and Criteria\n\nOur audit objectives were to answer the following questions:\n\n 1. Did ResCare ensure compliance with Job Corps requirements for managing and\n reporting financial activity?\n\n 2. Did ResCare ensure compliance with Job Corps requirements for managing\n center safety and health programs?\n\n 3. Did ResCare ensure compliance with Job Corps requirements for reporting\n performance?\n\n 4. Did the hotline complaints alleging improper practices related to student\n misconduct, Career Technical Training (CTT) completions, student attendance,\n student On-Board Strength (OBS), and Outcomes Measurement System (OMS)\n separations at the Treasure Island Job Corps center have merit?\n\nScope\n\nThis report reflects the audit work conducted to determine ResCare\xe2\x80\x99s overall corporate\ninternal control structure as it relates to all ResCare operated Job Corp centers and the\nspecific controls and results for two of those centers \xe2\x80\x94 Treasure Island and Miami. We\nconducted our work at ResCare\xe2\x80\x99s corporate headquarters in Louisville, Kentucky;\nTreasure Island in San Francisco, California; Miami in Miami Gardens, Florida; and Job\nCorps Regional Office in San Francisco, California. We reviewed center financial data\nfor the last fully completed contract year at each center. For Miami, we reviewed CY\n2007 (November 1, 2007, through October 31, 2008), and for Treasure Island we\nreviewed CY 2008 (February 1, 2008, through January 31, 2009). Additionally, we\nreviewed consultant files and lease agreements at Treasure Island, which included\ntransactions from January 1, 2007, through January 31, 2009. We reviewed center\nsafety and performance data for PY 2007 (July 1, 2007, through June 30, 2008). Our\naudit work at Treasure Island was limited to validating the hotline complaint allegations\ndirected at Treasure Island, as well as ensuring compliance with Job Corps\nrequirements for managing and reporting financial activity.\n\nThe relationship between the population and the items tested and the kinds and sources\nof evidence are fully described in the Methodology section below.\n\nWe conducted this performance audit in accordance with generally accepted\ngovernment auditing standards. Those standards require that we plan and perform the\naudit to obtain sufficient, appropriate evidence to provide a reasonable basis for our\nfindings and conclusions based on our audit objectives. We believe that the evidence\nobtained provides a reasonable basis for our findings and conclusions based on our\naudit objectives.\n\n\n Performance Audit of ResCare, Inc.\n 37 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nMethodology\n\nTo accomplish our audit objectives, we obtained an understanding of applicable laws,\nregulations and Job Corps policies and procedures. We also obtained an understanding\nof ResCare\xe2\x80\x99s processes, policies, and procedures for managing center safety and\nhealth, and reporting financial and performance information to Job Corps. We\ninterviewed ResCare\xe2\x80\x99s corporate officials at ResCare\xe2\x80\x99s corporate headquarters in\nLouisville, Kentucky and interviewed both ResCare\xe2\x80\x99s corporate officials and center\nofficials at Treasure Island and Miami.\n\nAt the headquarters offices, we identified and evaluated ResCare\xe2\x80\x99s internal controls\nover center safety and health, and financial and performance reporting. We assessed\nrisks related to financial and performance misstatement and evaluated ResCare\xe2\x80\x99s\noverall control environment. We selected two ResCare center locations for detailed\ntesting \xe2\x80\x94 Treasure Island and Miami. We selected these centers based on a risk\nassessment that considered a number of variables, including OBS, relevant complaint\nallegations, turnover in key center staff, prior OIG audit history, and OIG and Job Corps\nmanagement concerns. We assessed the reliability of related data for the applicable\naudit period and determined the data was sufficiently reliable to accomplish our audit\nobjectives. We used a combination of statistical and judgmental sampling to select the\nitems tested at these centers. Judgmentally selected items, which cannot be projected\nto the intended population(s) were chosen based on a number of factors including\nknown deficiencies (i.e., related audit concerns identified in prior OIG, DOL and\nResCare reports); inquiries of and information provided by Job Corps, ResCare, and\ncenter personnel; and the nature of certain transactions (e.g., high dollar value,\nsusceptibility to theft or manipulation). Our methodology for each center is described\nbelow.\n\nTreasure Island\n\nConsidering the expiration of ResCare\xe2\x80\x99s contract to operate Treasure Island on\nMay 31, 2009, and seven hotline complaint allegations directed at Treasure Island, we\nlimited our testing to determining the validity of the complaint allegations and Treasure\nIsland\xe2\x80\x99s non-personnel expenses.\n\nManaging and Reporting Financial Activity\n\nTo gain a better understanding of the center\xe2\x80\x99s system for financial reporting, we\ninterviewed key ResCare and center officials and staff, reviewed applicable policies and\nprocedures, and analyzed prior audit and Job Corps monitoring reports to gain a better\nunderstanding of the center\xe2\x80\x99s system for managing and reporting financial activity. We\nidentified and evaluated the center\xe2\x80\x99s internal controls over managing and reporting\nfinancial activity, assessed related risks, and evaluated the center\xe2\x80\x99s overall control\nenvironment for managing and reporting financial activity.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 38 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nFor non-personnel expenses, we reviewed a judgmental sample of 63 transactions\ntotaling $455,466 out of $8,158,638 from Treasure Island\xe2\x80\x99s CY 2008 accounts payable,\ncheck register, and general ledger activity records. Using a risk-based approach, we\nscanned all transactions for payments to employees and unusual vendors, payments for\nvaluable and attractive items, payments for unallowable or unusual goods and services,\nand high dollar purchases ($25,000 or more) and judgmentally selected transactions to\ntest. We reviewed transactions for allowability, reasonableness, compliance with\napplicable procurements laws, regulations, and policies, and adequate supporting\ndocumentation. We also reviewed 3 non-personnel expense transactions, which\nincluded 8 batched imprest fund transactions totaling $35,493, or 11.1 percent of the\ncenter\xe2\x80\x99s imprest fund transactions, for compliance with ResCare policy and its center\nSOP. These 3 transactions were included in our judgmental sample of 63 non-\npersonnel expense transactions.\n\nBased on the results of our initial testing, which identified unallowable charges for the\nCD\xe2\x80\x99s personal housing and travel expenses, we expanded our testing to include a\nreview of the CD\xe2\x80\x99s compensation for CYs 2007 and 2008.\n\nCenter Safety and Health Program\n\nTo gain a better understanding of the center\xe2\x80\x99s safety and health program, we\ninterviewed key ResCare and center officials and staff, reviewed applicable policies and\nprocedures and also evaluated the results of corporate and DOL regional office\nassessments of center safety processes. We identified and evaluated the center\xe2\x80\x99s\ninternal controls over safety and health, assessed related risks, and evaluated the\ncenter\xe2\x80\x99s overall control environment for safety and health.\n\nTo address hotline complaint allegations regarding manipulation of the center safety\nofficer\xe2\x80\x99s investigations, we reviewed all security log book entries and Level I and II\ninfractions reported to Job Cops during PY 2007 to determine whether Treasure Island\nappropriately addressed incidents involving serious student misconduct.\n\nWe reviewed all security log book entries for PY 2007 and judgmentally selected 10\nevents involving potential Level I and II infractions to determine whether the event was\nreported in Job Corps\xe2\x80\x99 CIS, the center maintained adequate supporting documentation\nof the event, and the center addressed the event timely, appropriately, and in\naccordance with the PRH.\n\nWe obtained a CIS report of all Level I and II infractions and corresponding FFB\ndecisions. We reviewed all reported Level I infractions (19 students) and Level II\ninfractions (48 students) to determine whether the center convened FFBs and\nseparated students in accordance with PRH timeframes. The PRH required centers to\nconvene FFBs within 3 to 5 training days for Level I and II infractions, respectively.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 39 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nReporting Performance\n\nWe interviewed key ResCare and center officials and staff, reviewed applicable policies\nand procedures, reviewed prior audit reports, and performed walkthroughs to gain a\nbetter understanding of Treasure Island\xe2\x80\x99s system for collecting, recording, processing,\nand reporting performance data. We used a combination of statistical and non-statistical\nsampling to examine performance reporting. We identified and evaluated the center\xe2\x80\x99s\ninternal controls over performance reporting, assessed related risks, and evaluated the\ncenter\xe2\x80\x99s overall control environment for performance reporting.\n\nTo determine whether Treasure Island properly reported CTT completions, we used\nstatistical and non-statistical sampling to review a total of 127 out of 611 students\nreported as CTT completers by Treasure Island during PY 2007. Our review included a\nrandom statistical sample of 65 students and 62 security trade completers reported\nduring PY 2007, as well as a judgmental sample of 60 out of 142 students reported as\nearly CTT completers, at Treasure Island. Six of these 62 security trade students were\nincluded in our statistical sample of CTT completers. Fifty four of the 60 early\ncompleters were included in our statistical or security trade samples.\n\nWe reviewed each student TAR for a number of attributes, including tasks not\ndocumented as having been completed (i.e., lacked required instructor/student signoffs,\ncompletion dates, proficient performance ratings); task completion dates occurring\noutside of student\xe2\x80\x99s TAR enrollment; tasks excluded without proper approval; and the\nreasonableness of time noted to complete tasks. In addition, security trade TARs were\nreviewed for hotline complaint specific allegations (see Methodology for testing\nperformed for security trade TARs).\n\nTo determine if controls over student leave and attendance were in place, we reviewed\na random statistical sample of 58 out of the 289 students who AWOL-separated from\nTreasure Island during PY 2007 (i.e., students with six consecutive training days\nrecorded as AWOL or 12 training days recorded as AWOL within a 180-day period).\n\nIn addition, we reviewed all of the 30 students separated during PY 2007 whose records\nindicated 7 days or more leave and AWOL immediately prior to separation and all of the\n2 students identified in CIS reports as exceeding PRH mandated limits (had in excess of\n6 consecutive AWOL training days or 12 AWOL training days within a 180-day period).\nWe assessed whether there were questionable patterns of leave taken, such as unpaid\nleave followed by AWOL status, before separation from the center and whether\nstudents had excessive amounts of leave taken. We reviewed student records to\nidentify (1) whether a student placed on leave had a leave request form completed, (2)\nwhether student leave request forms had proper signature approvals as required by the\nPRH, and (3) whether approved students\xe2\x80\x99 leave was supported by adequate\ndocumentation as required by the PRH. 37 We calculated the leave days taken over\ndesignated limits identified in the PRH and determined if students should have been\n\n\n37\n PRH Chapter 6.1.\n\n Performance Audit of ResCare, Inc.\n 40 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nseparated from the centers at an earlier date and should not have been included in the\nrespective center\xe2\x80\x99s OBS calculation after that date. 38\n\nHotline Complaints\n\nWe received seven hotline complaint allegations, all directed to Treasure Island. Those\nseven allegations were (1) student TARs were not properly completed; (2) student\nsecurity trade TARs were not properly completed; (3) student assistants were\nperforming instructor signoffs on security trade TARs; (4) certain TARs were not always\ncompleted in compliance with ResCare\xe2\x80\x99s early completer policy; and (5) unsupported\nleave categories (e.g., administrative, personal) used to prevent students from\nseparating at earlier dates and inflate student OBS; (6) Center Safety Officer\ninvestigations were manipulated by management; and (7) new student enrollment\ndelayed until second day on center to manipulate OMS separation numbers.\n\nTo determine whether the hotline complainant\xe2\x80\x99s allegation that student TARs were not\nproperly completed, we interviewed ResCare corporate personnel and Treasure Island\ncenter management and staff employed during the scope of the allegation. In addition,\nwe used a combination of statistical and non-statistical sampling to review a total of 127\nout of 611 students reported as CTT completers by Treasure Island during PY 2007.\nWe reviewed each student TAR for a number of attributes, including tasks not\ndocumented as having been completed (i.e., lacked required instructor/student signoffs,\ncompletion dates, proficient performance ratings); task completion dates occurring\noutside of student\xe2\x80\x99s enrollment date; tasks excluded without proper approval; and the\nreasonableness of time noted to complete tasks. In addition, security trade TARs were\nreviewed for hotline complaint specific allegations (see Methodology for testing\nperformed for security trade TARs).\n\nTo determine whether the complainant\xe2\x80\x99s allegations that student security trade TARs\nwere not properly completed and student assistants were performing instructor signoffs\non TARs, we interviewed ResCare corporate personnel and Treasure Island center\nmanagement and staff employed during the scope of the allegation. We also reviewed\nall of the 62 students reported as security CTT completers by Treasure Island during PY\n2007. Six of these 62 security trade students were included in our statistical sample of\nCTT completers. In addition to the criteria used in our statistical and judgmental TAR\ntesting at Treasure Island and Miami, we reviewed each student\xe2\x80\x99s TAR for specific\nallegations made in the complaint, including tasks requiring CPR and first-aide\ncertification not completed; completion dates of tasks requiring CPR and first-aide\ncertification before the center had a reliable certification program; and signoffs being\nmade by student assistants in place of instructor.\n\nTo determine whether the complainant\xe2\x80\x99s allegations that certain TARs were not always\ncompleted in compliance with ResCare\xe2\x80\x99s early completer policy, we interviewed\nResCare corporate personnel to obtain an understanding of the policy and Treasure\nIsland center management and staff employed during the scope of the allegation to\n38\n PRH Chapter 6.4.\n\n Performance Audit of ResCare, Inc.\n 41 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nobtain an understanding of processes used to follow the policy. In addition, we used\nstatistical and non-statistical sampling to review a total of 60 out of 142 students who\nmeet ResCare\xe2\x80\x99s definition of being an early completer\xe2\x80\x94 completing CTT training in 150\ndays in trade or less. These 60 early completers were included in our review of 127\nstudents at Treasure Island that completed CTT training during PY 2007. The 142 total\nearly completers were included in our population of 611 students reported as CTT\ncompleters reported at Treasure Island during PY 2007. Fifty four of these 60 early\ncompleters were included in our statistical or security trade samples. We reviewed\napplicable student files for having an Early Completer Justification Form to support the\nstudent\xe2\x80\x99s completion of CTT.\n\nTo determine whether the complainant\xe2\x80\x99s allegations that students were placed on\nunsupported leave categories (e.g., administrative leave without pay for family\ncompassion or hardship purposes) to prevent students from separating at earlier dates\nand inflate student OBS, we interviewed ResCare corporate staff and Treasure Island\ncenter management and staff employed during the scope of the allegation to obtain an\noverview of the process for granting leave and collecting supporting documentation for\nleave at the center. The scope of the allegation was April 2007 through September\n2007, or six months. We judgmentally selected 3 of the 6 months (July 2007 through\nSeptember 2007) to test all students granted Administrative Leave without pay for family\ncompassion or hardship purposes, or 27 of 156 students. In addition we selected one\nmonth outside the scope of the allegation to test all students granted the leave, or 8 of\n78 students (three students, including one selected for testing, were granted leave\nduring both periods).\n\nTo determine whether the complainant\xe2\x80\x99s allegations that Center Safety Officer\ninvestigations were manipulated by management, we interviewed Treasure Island\ncenter management employed during the scope of the allegation to obtain an\nunderstanding of the investigation processes. In addition, we obtained a CIS report of all\nFFB determinations and reviewed for instances of management overturning FFB\ndecisions to separate students for disciplinary actions. We also reviewed all security log\nbook entries and Level I and II infractions reported to Job Cops during PY 2007 to\ndetermine whether Treasure Island appropriately addressed incidents involving serious\nstudent misconduct (see methodology for Center Safety and Health Program above for\ndetails).\n\nTo determine whether the complainant\xe2\x80\x99s allegations that new student enrollments were\ndelayed until the second day on center to manipulate OMS separation numbers, we\nreviewed center policy and procedures to obtain an understanding of the enrollment\nprocess. In addition, we judgmentally selected two months of new student enrollments,\nand compared expected enrollment dates to enrollment dates in Job Corps CIS.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 42 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nMiami\n\nManaging and Reporting Financial Activity\n\nWe interviewed key ResCare and Miami officials and staff, reviewed applicable policies\nand procedures, analyzed prior audit and Job Corps monitoring reports, and performed\na walkthrough of selected transactions to gain a better understanding of the center\xe2\x80\x99s\nsystem for managing and reporting financial activity. We identified and evaluated the\ncenter\xe2\x80\x99s internal controls over managing and reporting financial activity, assessed\nrelated risks, and evaluated the center\xe2\x80\x99s overall control environment for managing and\nreporting financial activity.\n\nFor non-personnel expenses, we reviewed a judgmental sample of 54 transactions\ntotaling $346,067 out of $2,849,402 from Miami\xe2\x80\x99s CY 2007 accounts payable, check\nregister, and general ledger activity records. Using a risk-based approach, we scanned\nall transactions for payments to employees and unusual vendors, payments for valuable\nand attractive items, payments for unallowable or unusual goods and services, and high\ndollar purchases ($25,000 or more) and judgmentally selected transactions to test. We\nreviewed transactions for allowability, reasonableness, compliance with applicable\nprocurements laws, regulations, and policies, and adequate supporting documentation.\nWe also reviewed 2 non-personnel expense transactions, which included 11 batched\nimprest fund transactions totaling $5,002, or 3.5 percent of the center\xe2\x80\x99s imprest fund\ntransactions, for compliance with ResCare policy and its center SOP. These 2\ntransactions were included in the judgmental sample of 54 non-personnel expense\ntransactions.\n\nFor personnel expenses, we performed an analytical review of payroll expenses and\njudgmentally selected and reviewed payroll records for 12 employees at Miami. Using a\nrisk-based approach, we judgmentally selected payments to personnel authorized to\nmake changes directly to the payroll system, payments to personnel made for overtime\nand bonuses, and payments to personnel who had a unique earnings classification, as\nwell as management personnel. The review was to determine if expenses were for\nactual and allowable work done by valid employees at their authorized rates. This\nincluded tracing the selected expenses to authorized timesheets, leave, and pay rates.\n\nTo determine compliance with PRH requirements for reporting reimbursable expenses\nwe examined the monthly Employment and Training Administration Form 2110, Job\nCorps Contract Center Financial Report, reporting reimbursable expenses and the bi-\nweekly Form 1034, Public Voucher, requesting reimbursement for center expenses for\nCY 2007 at Miami. Furthermore, we identified variances from budgeted expenses, and\nreviewed significant variances to determine whether the variances were reasonable.\n\nCenter Safety and Health\n\nTo gain a better understanding of the center\xe2\x80\x99s safety and health program, we\ninterviewed key ResCare and center officials and staff, reviewed applicable policies and\n\n\n Performance Audit of ResCare, Inc.\n 43 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nprocedures, performed walkthroughs, and conducted a physical review of the center\xe2\x80\x99s\nfacilities. We also evaluated the results of corporate and DOL regional office\nassessments of center safety and health processes, Safety and Occupational Health\nCommittee meeting minutes, inspection reports, and toured the center to ensure there\nwere no apparent facility safety and health issues and to ensure that problems identified\nby center, corporate, and DOL reviews were corrected. We identified and evaluated the\ncenter\xe2\x80\x99s internal controls over safety and health, assessed related risks, and evaluated\nthe center\xe2\x80\x99s overall control environment for safety and health.\n\nWe obtained a CIS report of all FFB determinations during PY 2007 and reviewed all 35\ninstances of management overturning FFB recommendations. To determine whether\nmanagement appropriately overturned FFB recommendations we reviewed instances\nfor management explanations and supporting documentation.\n\nWe reviewed all security log book entries for PY 2007 and judgmentally selected 8\nLevel I or Level II events to determine whether the event was reported in Job Corps\xe2\x80\x99\nCIS, the center maintained adequate supporting documentation of the event, and the\ncenter addressed the event timely, appropriately, and in accordance with the PRH.\n\nWe obtained a CIS report of all Level I and II infractions and corresponding FFB\ndecisions. We reviewed all reported Level I infractions (13 students) and Level II\ninfractions (28 students) to determine whether the center convened FFBs and\nseparated students in accordance with PRH timeframes. The PRH required centers to\nconvene FFBs within 3 to 5 training days for Level I and II infractions, respectively.\n\nPerformance Reporting\n\nWe interviewed key ResCare and center officials and staff, reviewed applicable policies\nand procedures, reviewed prior audit reports, and performed walkthroughs to gain a\nbetter understanding of Miami\xe2\x80\x99s system for collecting, recording, processing, and\nreporting performance data. We used a combination of statistical and non-statistical\nsampling to examine performance reporting. We identified and evaluated the center\xe2\x80\x99s\ninternal controls over performance reporting, assessed related risks, and evaluated the\ncenter\xe2\x80\x99s overall control environment for performance reporting.\n\nTo determine if reported CTT completers had supporting TAR documentation in\ncompliance with PRH requirements, we reviewed a statistical sample of 53 out of the\n205 students reported by Miami as CTT completers.\n\nWe reviewed each student TAR for a number of attributes, including tasks not\ndocumented as having been completed (i.e., lacked required instructor/student signoffs,\ncompletion dates, proficient performance ratings); task completion dates occurring\noutside of student\xe2\x80\x99s trade enrollment; tasks excluded without proper approval; and the\nreasonableness of time noted to complete tasks.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 44 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\nTo determine if controls over student leave and attendance were in place, we reviewed\na random statistical sample of 52 out of the 128 students who AWOL-separated from\nMiami during PY 2007 (had six consecutive training days recorded as AWOL or 12\ntraining days recorded as AWOL within a 180-day period).\n\nIn addition, we reviewed all of the 12 students separated during PY 2007 whose records\nindicated 7 days or more leave and AWOL immediately prior to separation. We\nassessed whether there were questionable patterns of leave taken, such as unpaid\nleave followed by AWOL status, before separation from the center and whether\nstudents had excessive amounts of leave taken. We reviewed student records to\nidentify (1) whether a student placed on leave had a leave request form completed, (2)\nwhether student leave request forms had proper signature approvals as required by the\nPRH, and (3) whether approved students\xe2\x80\x99 leave was supported by adequate\ndocumentation as required by the PRH. We calculated the leave days taken over\ndesignated limits identified in the PRH and determined if students should have been\nseparated from the centers at an earlier date and should not have been included in the\nrespective center\xe2\x80\x99s OBS calculation after that date.\n\nTo determine if students reported as GED/HSD completers were accurately reported,\nwe reviewed a statistical sample of 30 out of 130 students claimed as earning GED\ncertificates and High School Diplomas during PY 2007 at Miami. To verify GED/HSD\nattainment, we reviewed each student file for copies of certificates/diplomas and score\nreports/transcripts.\n\nCriteria\n\nWe used the following criteria to perform this audit:\n\n \xe2\x80\xa2 Code of Federal Regulations,\n \xe2\x80\xa2 Federal Acquisition Regulations,\n \xe2\x80\xa2 Job Corps Policy and Requirements Handbook,\n \xe2\x80\xa2 Center Operating Contracts,\n \xe2\x80\xa2 ResCare Standard Operating Procedures,\n \xe2\x80\xa2 Center Standard Operating Procedures,\n \xe2\x80\xa2 GAO Government Auditing Standards and\n \xe2\x80\xa2 GAO Standards for Internal Control in the Federal Government.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 45 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 46 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n Appendix C\nAcronyms and Abbreviations\n\n\nAWOL Absent Without Leave\nCD Center Director\nCIS Center Information System\nCPR Cardiopulm onary resuscitation\nCTT Career Technical Training\nCY Contract Year\nDOL Department of Labor\nFAR Federal Acquisition Regulations\nFFB Fact Finding Board\nGED General Educational Development\nHSD High School Diploma\nMiami Miami Job Corps Center\nOIG Office of Inspector General\nOBS On-Board Strength\nOMS Outcomes Measurement System\nPittsburgh Pittsburgh Job Corps Center\nPRH Policy and Requirements Handbook\nPY Program Year\nResCare ResCare Incorporated\nSOP Standard Operating Procedures\nTAR Training Achievement Record\nTreasure Island Treasure Island Job Corps Center\nWIA Workforce Investment Act\n\n\n\n\n Performance Audit of ResCare, Inc.\n 47 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 48 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n Appendix D\nResCare Response to Draft Report\n\n\n\n\n Performance Audit of ResCare, Inc.\n 49 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 50 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 51 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 52 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 53 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 54 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 55 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 56 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 57 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\nPAGE INTENTIONALLY LEFT BLANK\n\n\n\n\n Performance Audit of ResCare, Inc.\n 58 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n Appendix E\nJob Corps Response to Draft Report\n\n\n\n\n Performance Audit of ResCare, Inc.\n 59 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 60 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 61 Report No. 26-10-002-01-370\n\x0cU. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n\n\n Performance Audit of ResCare, Inc.\n 62 Report No. 26-10-002-01-370\n\x0c U. S. Department of Labor \xe2\x80\x93 Office of Inspector General\n\n\n Appendix F\nAcknowledgements\n\nKey contributors to this report were Ray Armada (Audit Director),\nJon Ling (Audit Manager), Michael Elliott, Arijit Bandyopadhyay, Steven Grubb,\nCatherine Christian, and Ajit Buttar.\n\n\n\n\n Performance Audit of ResCare, Inc.\n 63 Report No. 26-10-002-01-370\n\x0cTO REPORT FRAUD, WASTE, OR ABUSE, PLEASE CONTACT:\n\nOnline: http://www.oig.dol.gov/ hotlineform.htm\nEmail: hotline@ oig.dol.gov\n\nTelephone: 1-800-347-3756\n202-693-6999\n\nFax: 202-693-7020\n\nAddress: Office of Inspector General\n U.S. Department of Labor\n 200 Constitution Avenue, N.W.\n Room S-5506\n Washington, D.C. 20210\n\x0c"