Office of Inspector General—Office of Audit 

 

VETERANS EMPLOYMENT AND 

TRAINING SERVICE 

KANSAS’ CONTROLS OVER JOBS FOR 

VETERAN STATE GRANT CONTRACT 

REPORTING AND MONITORING NEED TO BE 

STRENGTHENED 

This audit was performed by WithumSmith+Brown PC, CPAs, under 

contract to the Office of Inspector General, and by acceptance, it 

becomes a report of the Office of Inspector General. 

____________________________ 

Assistant Inspector General for Audit 

Date Issued: March 31, 2011 

Report Number: 04-11-002-02-201 
U.S. DEPARTMENT OF LABOR 

OFFICE OF INSPECTOR GENERAL 

Office of Audit 

BRIEFLY... 

Highlights of Report Number: 04-11-002-02-201, to the 

Assistant Secretary of Veterans’ Employment and 

Training Service. 

WHY READ THE REPORT 

The OIG conducted a performance audit of the Kansas 

Jobs for Veterans State Grant (JVSG) totaling 

$1,610,000 for the Fiscal Year (FY) ended 

September 30, 2008. The JVSG program assists 

veterans seeking jobs by funding the Disabled 

Veterans’ Outreach Program (DVOP) Specialists, the 

Local Veterans’ Employment Representatives (LVER), 

and the Transitioning Assistance Program (TAP) 

Workshops in the state. DVOP Specialists provide 

intensive services to meet the employment needs of 

disabled and other eligible veterans; LVER’s engage in 

outreach efforts to employers and conduct advocacy 

efforts with hiring executives to increase employment 

opportunities for veterans; and TAP workshops assist 

service members and their spouses make the transition 

to the civilian workplace. 

WHY OIG CONDUCTED THE AUDIT 

Our audit objectives were to answer the following 

questions: 

1. Did errors occur within the Kansas JVSG FY 2008 

financial reports for the DVOP, LVER, and the TAP 

Workshops? 

2. Were the Kansas JVSG’s FY 2008 financial reports 

complete and in accordance with Federal 

requirements? 

The audit covered grant documents, financial and 

programmatic reports submitted to DOL Veterans’ 

Employment and Training Service (VETS); data 

available from the Kansas Department of Commerce 

(DOC), Kansas Workforce Services; relevant 

legislation; and DOL VETS program letter requirements. 

The onsite fieldwork included interviews with State 

employees responsible for program oversight and 

review of documentation to support our random sample 

of various budget categories. 

READ THE FULL REPORT 

To view the report, including the scope, methodology, 

and full agency response, go to:

http:www.oig.dol.gov/public/reports/oa/2011/04-11-002-

02-201.pdf

March 2011 

KANSAS’ CONTROLS OVER JOBS FOR 

VETERAN STATE GRANT CONTRACT 

REPORTING AND MONITORING NEED TO BE 

STRENGTHENED 

WHAT OIG FOUND 

The OIG found the Kansas DOC’s lack of effective 

management controls and appropriate supervisory 

oversight undermined its ability to ensure expenditures 

were properly reported, recorded, and supported. As a 

result, Kansas DOC made frequent errors in the 

financial reports; direct and indirect charges exceeded 

expenditures per the general ledger; indirect costs were 

overcharged; general ledger expenditures exceeded 

program obligation authority in the 4th quarter; and 

expenditures to the “Other” budget line item could not 

be supported. Consequently, the financial reports were 

not complete or in compliance with Federal regulations. 

These deficiencies resulted in $167,065 of questioned 

costs and $124,086 that may not have been put to best 

use. 

We attribute these deficiencies to the lack of Kansas 

DOC policies and procedures to ensure proper controls 

were in place for reporting program expenditures, 

monitoring obligation authority, retaining supporting 

documentation, and recording indirect costs. 

WHAT OIG RECOMMENDED 

We made two recommendations to the Assistant 

Secretary for Veterans’ Employment and Training 

Service (VETS). In summary, we recommended VETS 

direct Kansas DOC to develop and implement internal 

control policies and procedures to improve program 

management and to ensure that JVSG funds are 

properly recorded and reported; and to recover 

unsupported and questioned grant costs. 

In response to our draft report, the Assistant Secretary 

for Veterans’ Employment and Training Service agreed 

with all recommendations. He stated that VETS will 

require the development of internal control policies and 

procedures, report within 60 days, and consider 

recovery of the unsupported and questioned grant 

costs. 

In response to our draft report, the Chief Financial 

Officer of the Kansas DOC partially agreed to our 

recommendations. She stated that internal control 

weaknesses did exist, and certain costs were not 

supported. However, she stated the agency will be able 

to provide the necessary documentation to support 

these costs within the next few weeks. 
Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

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Kansas Jobs for Veterans State Grant 

Report No. 04-11-002-02-201 
Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Table of Contents 

Independent Auditor’s Report...................................................................................... 1

Results in Brief.............................................................................................................. 2

Objective 1 — Did errors occur within the Kansas JVSG for FY 2008 

financial reports for the DVOP, LVER, and TAP Workshops?.......... 3

The Kansas DOC’s lack of effective management controls and appropriate 

supervisory oversight undermined its ability to ensure expenditures were 

properly reported, recorded, and supported. ........................................................ 3

Finding 1 — Weak JVSG Management Controls Resulted in Errors in 

Financial Reporting and Recording .................................................. 3

Objective 2 — Were the Kansas JVSG FY 2008 financial reports complete 

and in accordance with Federal requirements? ................................ 5

The Kansas DOC’s lack of internal control policies and procedures 

hampered the grantee’s ability to provide accurate financial reports in 

accordance with Federal requirements................................................................. 5

Finding 2 — Internal Control Deficiencies Resulted in Incomplete Financial 

Reporting.......................................................................................... 6

Recommendations ........................................................................................................ 7

Exhibits 

Exhibit 1 Comparison of General Ledger to Electronic Data Report by Quarter............ 11

Appendices 

Appendix A Background................................................................................................ 15

Appendix B Objectives, Scope, Methodology, and Criteria ........................................... 17

Appendix C Acronyms and Abbreviations ..................................................................... 21

Appendix D VETS and Kansas DOC’s Responses to Draft Report............................... 23

Kansas Jobs for Veterans State Grant 

Report No. 04-11-002-02-201 
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for the U. S. Department of Labor – Office of Inspector General 

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Kansas Jobs for Veterans State Grant 

Report No. 04-11-002-02-201 
Independent Audit’s Report 

WithumSmith+Brown 

A Professional Corporation 

Certified Public Accountants and Consultants 

8403 Colesville Road, Suite 340 

Silver Spring, Maryland 20910 USA 

301.585.7990 . fax 301.585.7975 

www.withum.com 

Additional Offices in New Jersey 

New York and Pennsylvania 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Independent Auditor’s Report 

March 31, 2011 

Mr. Raymond M. Jefferson 

Assistant Secretary 

 of Veterans’ Employment and Training Service 

U.S. Department of Labor 

200 Constitution Avenue, NW 

Washington, D.C. 20210 

The Department of Labor Veterans’ Employment and Training 

Service (DOL VETS) offers assistance to veterans seeking jobs 

through the Jobs for Veterans State Grants (JVSG) Program. The 

purpose of this grant is to fund Disabled Veterans’ Outreach 

Program (DVOP) Specialists, Local Veterans’ Employment 

Representatives (LVER), and Transitioning Assistance Program 

(TAP) Workshops. WithumSmith+Brown, under contract with the 

DOL OIG, audited the Kansas JVSG totaling $1,610,000 for the 

fiscal year (FY) ended September 30, 2008. This period represents 

the annual modification to the multi-year grant period ended 

September 30, 2009. 

Our audit objectives were to determine if (1) errors occurred within 

the Kansas JVSG’s FY 2008 financial reports for the DVOP, LVER, 

and the TAP Workshops, and (2) the Kansas JVSG’s FY 2008 

financial reports were complete and in accordance with Federal 

requirements. 

The audit included a review of grant documents, financial and 

programmatic reports submitted to DOL VETS, and data available 

from the Kansas Department of Commerce (DOC), Kansas 

Workforce Services, as well as external sources. We also reviewed 

relevant legislation and DOL VETS program letter requirements for 

this grant program. The audit included onsite fieldwork at the 

Kansas DOC. The onsite fieldwork included a review of 

documentation to support our random sample of various budget 

categories. The onsite fieldwork also included interviews with 

various State employees responsible for oversight of the JVSG 

grant program. 

A member of HLB International. A world-wide organization of accounting firms and business advisers. 

Kansas Jobs for Veterans State Grant 

1 Report No. 04-11-002-02-201 
Results in Brief 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

WithumSmith+Brown (WS+B) conducted this performance audit in accordance with 

generally accepted government auditing standards. Those standards require that we 

plan and perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit objectives. We 

believe that the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. Our objectives, scope, methodology, and 

criteria are detailed in Appendix B. 

RESULTS IN BRIEF 

The Kansas DOC’s lack of effective management controls and appropriate supervisory 

oversight undermined its ability to ensure expenditures were properly reported, 

recorded, and supported. As a result, Kansas DOC made frequent errors in the financial 

reports, general ledger expenditures exceeded program obligation authority, and 

“Other” budget line item could not be supported. In addition, direct and indirect charges 

exceeded expenditures per the general ledger (GL) and indirect costs were 

overcharged by $14,969. We attribute these deficiencies to the lack of Kansas DOC 

policies and procedures to ensure proper controls were in place for reporting program 

expenditures, monitoring obligation authority, retaining supporting documentation, and 

recording indirect costs. These deficiencies resulted in $167,065 of questioned costs 

and $124,086 that may not have been put to best use. 

The Kansas DOC’s lack of internal control policies and procedures hampered the 

grantees ability to provide accurate financial reports in accordance with Federal 

requirements. Accordingly, financial reports were not complete or in compliance with 

Federal regulations. For example, indirect costs were improperly calculated and 

reported, revisions were made to the financial reports without a corresponding 

correction to the GL, and the financial report program totals did not agree to the GL. 

In summary, we recommend the Assistant Secretary for Veterans’ Employment and 

Training Service (1) recover the questioned unsupported other costs of $152,096 and 

indirect costs of $14,969; and (2) direct the Kansas DOC to develop and implement 

internal control policies and procedures to improve program management and to ensure 

that JVSG funds are properly recorded and reported. 

VETS AND KANSAS DOC RESPONSES 

In response to our draft report, the Assistant Secretary for Veterans’ Employment and 

Training Service (VETS) agreed that the grantee exercised a lack of effective 

management controls and appropriate supervisory oversight. VETS agreed with all 

recommendations and stated that they will require the Kansas DOC to develop internal 

control policies and procedures and report within 60 days. VETS will consider recovery 

of the unsupported and questioned grant costs.

Kansas Jobs for Veterans State Grant 

2 Report No. 04-11-002-02-201 
Finding 1 — Weak JVSG Management Controls Resulted in Errors in Financial Reporting and Recording

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

In response to our draft report, the Chief Financial Officer (CFO) of the Kansas DOC 

partially agreed to our recommendations. The CFO stated that internal control 

weaknesses did exist, but the Kansas DOC has since implemented substantive and 

systematic reforms designed to improve its processes. The Kansas DOC CFO also 

agreed with our finding that certain costs were unsupported; however, she stated the 

agency will be able to provide the required documentation within the next few weeks. 

The Assistant Secretary’s and Chief Financial Officers entire responses are contained in 

Appendix D. 

The responses did not change the audit’s Findings and Recommendations. Continuous 

communication was maintained throughout the audit concerning the issues 

encountered, providing ample time for the Kansas DOC to provide documentation 

supporting the questioned costs. 

RESULTS AND FINDINGS 

Objective 1 — Did errors occur within the Kansas JVSG for FY 2008 financial 

reports for the DVOP, LVER, and TAP Workshops? 

The Kansas DOC’s lack of effective management controls and appropriate 

supervisory oversight undermined its ability to ensure expenditures were 

properly reported, recorded, and supported. 

Per 29 Code of Federal Regulation (CFR) §97.20, states must maintain effective control 

and accountability for grant assets (i.e. cash). Additionally, procedures must be 

established to enable states to prepare complete and accurate reports to DOL VETS.

Finding 1 — Weak JVSG Management Controls Resulted in Errors in Financial 

Reporting and Recording 

Lack of effective management controls and appropriate supervisory review resulted in 

unsupported cost for about $276,182 of the “Other” budget category. Specifically, we 

question $152,096 related to deficiencies in 135 sampled transactions and calculate 

$124,086 in related funds that may not have been put to best use. In a separate issue, 

we question $14,969 of costs related to an overcharge of indirect costs. 

Kansas DOC did not establish policies and procedures to enable management to 

ensure the preparation of complete and accurate reports. In addition to the questioned 

costs, we found the TAP exceeded the program obligation authority, and the 5th quarter 

grant reports did not agree to the GL due to the lack of effective management controls 

and appropriate supervisory oversight of the grant. 

Based on our testing of a statistical sample of transactions, we estimate with a 95 

percent confidence level that unsupported costs were between $246,078 and $300,656. 

Kansas Jobs for Veterans State Grant 

3 Report No. 04-11-002-02-201 
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for the U. S. Department of Labor – Office of Inspector General 

The unbiased point estimate is $273,367. In addition, we identified $2,815 of cost 

related to the TAP program that was also unsupported in the account balance. 

Therefore the total unsupported cost amounted to about $276,182. Our audit included a 

random selection of 158 transactions totaling $183,069 from the “Other” budget 

category totaling $325,937. The category includes charges for postage, telephone, 

printing, advertising, rent, equipment rental, car repair, honorariums, data processing, 

professional fees, electricity, gas, water, sewage, computer system support, and 

building improvements. 

Our review of the transactions found that approximately 135 of the 158 transactions (or 

85 percent) could not be properly supported. Specifically, $152,096 of the $183,069 (or 

83 percent) was charged using an allocation methodology based on estimated 

employee hours worked by program. However, the auditee was unable to provide 

support for the allocation percentages applied during our audit period; therefore, we 

were unable to substantiate the amounts charged to the “Other” line item for the DVOP, 

LVER, and TAP. As a result, we question $152,096 charged to the grant program. 

In addition, based on the unsupported cost of $276,182 we calculate about $124,086 

($276,182 minus the $152,096 questioned cost) of the funds reported as “Other” may 

not have been put to best use. 

Indirect costs were recorded biweekly and were based on the payroll. At the end of a 

payroll cycle, when all payroll transactions had been recorded in the GL, the accountant 

responsible for recording indirect costs downloaded the payroll information from the 

Statewide Human Resource and Payroll Project (SHARP) system. Per the indirect cost 

rate negotiation agreement, the direct cost base was direct salary and fringe benefits. 

The accountant applied the applicable rate against the applicable salaries and fringes 

by fund and created a Transfer of Funds form to document the accounting entry. The 

accountant then posted the entry to record the indirect cost funds. The accountant 

responsible for recording the indirect cost during our grant period had since left the 

agency, and there were no written policies and procedures documenting this process. 

We noted that the provisional indirect cost rate applicable to the Federal fiscal grant 

year was 16.89%. Documentation to support the final negotiated rate could not be 

provided. Our review of the indirect cost rate by program and quarter noted that rates 

recorded in the GL varied from 5% to 456%. 

Because documentation to support the final negotiated rate could not be provided, using 

the provisional rate of 16.89%, we recalculated the indirect cost applied to the salary 

and fringe benefit base of $1,039,896. The calculation resulted in indirect costs of 

$175,638, which was $14,969 less than the $190,607 recorded in the GL (see Exhibit 1, 

Revised Table). 

In addition, requested revisions made to the reports based on questions and concerns 

raised by DOL VETS resulted in amounts being changed in the reports without a 

corresponding correction to the GL. The lack of confidence in the integrity of the 

Kansas Jobs for Veterans State Grant 

4 Report No. 04-11-002-02-201 
Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

information reported subsequently resulted in DOL VETS requesting an OIG audit of the 

grant funds. 

Every quarter, the DOL VETS provided a Notification of Obligation Authority (NOA) for 

the DVOP, LVER, and TAP to the State. The notification represented the total 

authorized authority available for obligation, and obligations cannot exceed the 

cumulative total. Kansas DOC’s Fiscal Department did not have written policies and 

procedures in place to ensure cumulative grant obligations did not exceed the NOA. 

WS+B compared the total authority per the NOA by program and quarter to the total 

expenditures per the GL by program and quarter. We found that the total expenditures 

for the TAP program exceeded the authority in the 4th quarter by approximately 

$29,500. 

We found that the total costs reported on the FY 2008 5th quarter and the FY 2009 

1st quarter reports agreed to the total costs recorded in the GL. However, we found that 

the 5th quarter GL per the spreadsheet initially provided for audit did not agree to the 

“revised” 5th quarter financial reports.1

 As a result, costs per the financial reports 

exceeded the GL by approximately $40,000 (see Exhibit 1, Original Table). 

Kansas DOC’s Fiscal Department allocated direct “Other” costs based on hours worked 

on particular projects in an effort to equitably charge certain expenditures to the proper 

funding stream. The allocation percentages were adjusted twice each year. To calculate 

the percentages, each department submitted the estimated hours employees worked by 

program. Once the estimates were received, they were input into a spreadsheet by 

department, and a pro rata percentage of costs for each program was calculated. 

Kansas DOC’s Fiscal Department did not have written policies and procedures 

documenting the allocation methodology nor could the State provide support for the 

allocation calculations applied during our audit period. 

Objective 2 — Were the Kansas JVSG FY 2008 financial reports complete and in 

accordance with Federal requirements? 

The Kansas DOC’s lack of internal control policies and procedures hampered the 

grantee’s ability to provide accurate financial reports in accordance with Federal 

requirements. 

Per 20 CFR §658.601, each State Administrator should, to the maximum extent 

feasible, ensure the accuracy of the data. Furthermore, the State agency must establish 

and maintain a data validation system that accurately reflects the accomplished 

activities and provides actual expenditure data, in accordance with 29 CFR §97.20. 

 

1

Kansas DOC filed two versions of 5th quarter financial reports. The spreadsheet we were provided for audit tied to 

the first set of financial reports submitted. 

Kansas Jobs for Veterans State Grant 

5 Report No. 04-11-002-02-201 
Finding 2 — Internal Control Deficiencies Resulted in Incomplete Financial Reporting 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Finding 2 — Internal Control Deficiencies Resulted in Incomplete Financial 

Reporting 

The lack of proper supervisory review and policies and procedures defining the Kansas 

DOC’s reporting process resulted in errors in the financial reports. We found that 

internal control deficiencies resulted in reporting mistakes, which caused a high error 

rate in the accuracy of the reported data. The supervisory review process both in the 

Fiscal Department and the Workforce Development Office were not adequate to ensure 

errors were identified and corrected before the reports were submitted. Specifically, our 

audit of the FY 2008 financial reports noted that the Federal Financial Report (FFR) and 

Expenditure Detail Reports (EDR) were not complete or in accordance with Federal 

requirements. As a result of the significant internal control deficiencies, the state’s ability 

to comply with Federal regulations was impaired. 

Because DOL VETS could not determine the accuracy of the reports, they were unable 

to certify that the funds were spent in accordance with Federal guidelines. For example, 

improper indirect costs were charged to the grant throughout the year. The TAP 

incurred $48,052 of indirect costs even though the total salary and fringe benefit costs 

for the program were only $40,516 (see Table 1), resulting in an effective indirect cost 

rate of 118.60%2. It was not until DOL VETS identified the error in the quarterly financial 

report that the 5th quarter report was corrected (see Exhibit 1, Revised Table). 

Furthermore, reported charges for the TAP, DVOP, and LVER totaled $55,000, 

$894,000, and $661,000, respectively. Our audit of the expenditures per the GL found 

that the recorded charges for the TAP, DVOP, and LVER were $94,848, $814,436, and 

$660,718, respectively. As a result, Kansas DOC had under reported TAP by $39,848, 

over reported DVOP by $79,564, and over reported LVER $282 (see Table 1). It was 

not until DOL VETS identified the error in the quarterly financial report that the 5th

quarter report was corrected (see Exhibit 1, Revised Table). 

 

2

The provisional indirect cost rate for the period was 16.89%. 

Kansas Jobs for Veterans State Grant 

6 Report No. 04-11-002-02-201 
 

 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 


 

Table No. 1: Comparison of Original GL to EDR Report by Program 

Budget Line Item TAP DVOP LVER Total 

Per GL: 

Salaries $ 35,569 $ 435,224 $ 338,756 $ 809,549 

Fringe 4,947 120,346 75,726 201,019 

Total Salary and Fringe 40,516 555,570 414,482 1,010,568 

Travel 2,650 17,837 17,633 38,120 

Supplies 443 7,602 7,611 15,656 

Other 3,187 160,914 161,836 325,937 

Total Direct Costs 46,796 741,923 601,562 1,390,281 

Indirect Costs 48,052 72,513 59,156 179,721

Grant Total 94,848 814,436 660,718 1,570,002 

Per EDR: 

Direct Costs 47,138 754,808 617,446 1,419,392

Indirect Costs 7,862 139,192 43,554 190,608

Total Costs Reported to DOL 55,000 894,000 661,000 1,610,000 

(Over)/Under Reported 39,848 (79,564) (282) (39,998) 

RECOMMENDATIONS 

We recommend the Assistant Secretary for Veterans’ Employment and Training Service 

to: 

1. Recover the questioned unsupported other costs of $152,096 and indirect costs of 

$14,969. 

2. Direct Kansas DOC to develop and implement internal control policies and 

procedures to improve program management and to ensure that JVSG funds are 

properly recorded and reported. 

We appreciate the cooperation and courtesies that Kansas DOC and DOL VETS 

personnel extended to WithumSmith+Brown during this audit. 

Kansas Jobs for Veterans State Grant 

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for the U. S. Department of Labor – Office of Inspector General 

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Kansas Jobs for Veterans State Grant 

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for the U. S. Department of Labor – Office of Inspector General 

Exhibits 

Kansas Jobs for Veterans State Grant 

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for the U. S. Department of Labor – Office of Inspector General 

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Kansas Jobs for Veterans State Grant 

10 Report No. 04-11-002-02-201 
Exhibit 1 Comparison of General Ledger to Electronic Data Report by Quarter 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Exhibit 1 

Comparison of General Ledger to Electronic Data Report by Quarter 

Original Table: 

Budget Line 5th FY07 1st 2nd 3rd 4th 5th FY08 Total 

Salaries $ (195,644) $ 222,381 $ 166,217 $ 197,710 $ 181,543 $ 237,343 $ 809,549 

Fringe - 55,039 48,333 49,134 48,513 - 201,019 

Subtotal (195,644) 277,420 214,550 246,844 230,056 237,343 1,010,568 

Travel - 11,148 13,688 7,476 5,808 - 38,120 

Supplies - 1,896 4,358 4,244 5,158 - 15,656 

Other - 114,169 90,368 71,741 49,659 - 325,937 

Total Direct (195,644) 404,633 322,964 330,305 290,681 237,343 1,390,281 

Indirect Costs (28,112) 44,360 32,078 48,399 64,308 18,687 179,720

Grand Total (223,756) 448,993 355,042 378,704 354,989 256,030 1,570,001 

EDR Report Total (223,756) 448,994 355,042 378,486 354,989 296,245 1,610,000

Difference - 1 - (218) - 40,215 39,998 

Revised Table: 

Budget Line 5th FY07 1st 2nd 3rd 4th 5th FY08 Total 

Salaries $ (195,644) $ 222,381 $ 166,217 $ 197,710 $ 181,543 $ 266,670 $ 838,877

Fringe - 55,039 48,333 49,134 48,513 - 201,019 

Subtotal (195,644) 277,420 214,550 246,844 230,056 266,670 1,039,896 

Travel - 11,148 13,688 7,476 5,808 - 38,120 

Supplies - 1,896 4,358 4,244 5,158 - 15,656 

Other - 114,169 90,368 71,741 49,659 - 325,937 

Total Direct (195,644) 404,633 322,964 330,305 290,681 266,670 1,419,609 

Indirect Costs (28,112) 44,360 32,078 48,399 64,308 29,575 190,607

Grand Total (223,756) 448,993 355,042 378,704 354,989 296,244 1,610,216 

EDR Report Total (223,756) 448,994 355,042 378,486 354,989 296,244 1,610,000

Difference - 1 - (218) - - (217) 

 

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Kansas Jobs for Veterans State Grant 

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Appendices 

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Kansas Jobs for Veterans State Grant 

14 Report No. 04-11-002-02-201 
Appendix A Background 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

 Appendix A 

Background 

The DOL VETS offers assistance to veterans seeking jobs through the JVSG program. 

In accordance with 38 USC Section 4102A(b)(5) and 4102A(c), the Assistant Secretary 

for Veterans’ Employment and Training Service makes grant funds available for use in 

each State to support the JVSG. These grants fund state employees that provide 

outreach and assistance to veterans seeking employment under the following programs: 

• DVOP Specialists, 

• LVER, and 

• TAP Workshops. 

DVOP specialists provide intensive services to meet the employment needs of disabled 

veterans and other eligible veterans, with the maximum emphasis directed toward 

serving those who are economically or educationally disadvantaged, including homeless 

veterans, and veterans with barriers to employment. DVOP specialists are actively 

involved in outreach efforts to increase program participation, which may include but 

should not be limited to: outplacement in Department of Veterans' Affairs (DVA) 

Vocational Rehabilitation and Employment Program offices; DVA Medical Centers; 

routine site visits to Veterans' Service Organization meetings; Native American Trust 

Territories; Military installations; and other areas of known concentrations of veterans or 

transitioning service members. 

LVER’s conduct outreach to employers and engage in advocacy efforts with hiring 

executives to increase employment opportunities for veterans, encourage the hiring of 

disabled veterans, and generally assist veterans to gain and retain employment. LVER 

staff conducts seminars for employers and job search workshops for veterans seeking 

employment, and facilitate priority of service in regard to employment, training, and 

placement services furnished to veterans by all staff of the employment service delivery 

system. 

To meet the specific needs of veterans, particularly veterans with barriers to 

employment, DVOP and LVER staff are thoroughly familiar with the full range of job 

development services and training programs available at the State Workforce Agency 

One-Stop Career Centers and Department of Veterans' Affairs Vocational Rehabilitation 

and Employment Program locations. 

TAP employment workshops, mandated by 10 USC Section 1144, are typically 2 to 2 1⁄2 

days and focus on job-search preparation and assistance. The workshops were 

established to assist service members and their spouses make the transition to the 

civilian workplace. 

To monitor the progress in each of these programs, DOL VETS reviews the quarterly 

and fiscal FFR and EDR, program activity (Manager’s Report on Services to Veterans), 

and outcome (Program Activity and Outcome Report and Technical Performance 

Kansas Jobs for Veterans State Grant 

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for the U. S. Department of Labor – Office of Inspector General 

Narrative) reports from the grantee. The quarterly reporting for the JVSG grant consists 

of five quarters. Per the Veterans’ Program Letters (VPL) 02-08 and 07-05, quarterly 

reports are required for each of the four Federal fiscal quarters. In addition, states are 

allowed to submit 5th quarter reports for JVSG funds not obligated by September 30th. 

The 5th quarter consists of funds not obligated or expended that can be carried into the 

1st quarter of the next fiscal year. DOL VETS encourages states to carry this funding 

forward and use it on a first-in first-out (FIFO) basis for staff salaries and expenses. 

The State of Kansas, Workforce Services, which runs the daily operation of the JVSG 

grant, is under the Kansas DOC. Expenditure documentation is provided to the Fiscal 

Department for processing and recording into the State Accounting and Reporting 

System (STARS). 

To complete the first four quarterly reports, the State Federal Grants Program Manager 

requests a download of expenditures from the fiscal group. The expenditures are 

analyzed by program and budget line item to identify anomalies. If the data appears 

proper, the financial reports are completed. The completed reports are given to the 

State VETS Program Coordinator who reviews the reports and provides the 

programmatic information. The completed package is provided to the CFO for signature. 

The signed reports are forwarded to DOL VETS. Questions or concerns about the 

reports by DOL VETS are emailed to the State Program Manager, and report revisions 

are made as necessary. 

To apply the 5th quarter expenditures, Kansas Workforce Services determines the 

remaining funds in each program. The 1st quarter expenditures of the next Federal fiscal 

year are downloaded into a spreadsheet. The 1st quarter is split between the two grant 

years in this multi-year grant. The unexpended funds for the 5th quarter are reported 

separately on 5th quarter reports, and the remaining funds are reported as the 1st

quarter expenditures of the subsequent grant year.

Kansas Jobs for Veterans State Grant 

16 Report No. 04-11-002-02-201 
Appendix B Objectives, Scope, Methodology, and Criteria 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

 Appendix B 

Objectives, Scope, Methodology, and Criteria 

Objectives 

Our audit objectives were to determine if: 

(1) Errors occurred within the Kansas JVSG for FY 2008 financial reports for the 

DVOP, LVER, and TAP Workshops. 

(2) The Kansas JVSG FY 2008 financial reports were complete and in accordance 

with Federal requirements. 

Scope 

WithumSmith+Brown, under contract with the DOL OIG, audited the Kansas JVSG 

totaling $1,610,000 for the year ended September 30, 2008. This period represents the 

annual modification to the multi-year grant period ended September 30, 2009. We 

conducted this performance audit in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for our findings 

and conclusions based on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based on our audit 

objectives. The audit included onsite fieldwork at the Kansas DOC Office in Topeka, 

Kansas. 

A performance audit includes an understanding of internal controls considered 

significant to the audit objective and testing compliance with significant laws, 

regulations, and other requirements. In planning and performing our audit, we 

considered internal controls significant to the audit were properly designed and placed 

in operation. This included reviewing DOL’s policies and procedures for administering 

the JVSG program and reviewing Kansas DOC’s policies and procedures for the JVSG 

program. We confirmed our understanding of these controls and procedures through 

interviews and documentation review. 

In performing the audit, we evaluated internal control used by Kansas DOC for 

reasonable assurance that the reporting of JVSG program was administered and 

conducted in accordance with Federal and internal requirements. Our consideration of 

Kansas DOC’s internal controls for administering and conducting JVSG program would 

not necessarily disclose all matters that might be reportable conditions. Because of 

inherent limitation in internal controls, misstatements, losses, or noncompliance may 

nevertheless occur and may not be detected. 

Our audit focused on the Kansas JVSG financial reporting for FY 2008. The audit 

included a review of grant documents, financial and programmatic reports submitted to 

VETS, Employment and Training Programs (ETP) Division, and data available from the 

Kansas Jobs for Veterans State Grant 

17 Report No. 04-11-002-02-201 
Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Kansas DOC, Kansas Workforce Services, as well as external sources. The audit also 

included a review of the quarterly financial reports submitted for FY 2008, with 

supporting documentation and interviews conducted with various employees at the 

Kansas DOC and Workforce Services. 

Methodology 

To accomplish our audit objectives, we obtained an understanding of the JVSG program 

reporting requirements. We conducted interviews with DOL VETS officials from the 

Office of Workforce Investment, Office of Policy, Development Research, and the 

Office of Regional Management to gain an understanding of the grant award and 

monitoring processes. Policies and procedures followed by DOL VETS during the grant 

selection process were reviewed. 

To gain a better understanding of the reporting process, supporting ledgers and 

subsystems, we interviewed the Federal Grants Program Manager and the Chief 

Financial Officer. We obtained the quarterly financial reports (FFR and EDR) submitted 

for FY 2008 and the GL detail for FY 2008. We performed a data reliability assessment 

to ensure we had complete and accurate data. To determine whether the data was 

reliable to select our sample, we reconciled the financial reports to each other and to the 

GL. We concluded the data to be sufficiently reliable for our purposes. 

For further analysis, we randomly sampled 30 of the 88 employee files and related labor 

allocation documentation for the payroll periods ending January 26, 2008, and 

August 23, 2008. We reviewed the employee files and time records to ensure costs 

were allowable and properly supported. These samples were across the three grant 

programs included in our audit. Based on the sample, we found a zero percent error 

rate and stopped our sampling. We would expect that, had we continued our sample, 

we would have found a similar error rate throughout the universe. 

We developed a stratified random sampling plan to test the 504 transactions included in 

the budget under “Other,” we randomly sampled 158 transactions. We reviewed 

documentation supporting the transactions to ensure costs were allowable and properly 

supported. We found 135 of the 158 transactions tested were allocated transactions and 

were not properly supported. We used variable sampling at a 95 percent confidence 

level to estimate the monetary impact of unsupported transactions. The results of our 

tests of transactions were projected to the respective universe. 

Examples of the audit results and the relevance of the tests to the audits’ objectives are 

provided in the body of the report. 

Kansas Jobs for Veterans State Grant 

18 Report No. 04-11-002-02-201 
Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Criteria 

We used the following criteria to accomplish our audit: 

• Office of Management and Budget (OMB) Circular A-102 – Grants and 

Cooperative Agreements with State and Local Governments; 

• 2 CFR Part 225 Circular A-87 – Cost Principles for State, Local and 

Indian Tribal Governments; and 

• JVSG Program Specific Documents, including: 

o Title 38, USC Chapter 41 – Job Counseling, Training, and 

Placement for Veterans; 

o Grant document; 

o Special Grant Provisions for Jobs for Veterans State Grants, 

dated February 1, 2006; 

o Veterans’ Program Letter No. 02-08 – Jobs for Veterans State 

Grant Reporting; and 

o Veterans’ Program Letter No. 05-05 – Direct and Indirect 

Charges to the Fiscal Year 2005-2009 Jobs for Veterans State 

Grants. 

Kansas Jobs for Veterans State Grant 

19 Report No. 04-11-002-02-201 
Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

PAGE INTENTIONALLY LEFT BLANK 

Kansas Jobs for Veterans State Grant 

20 Report No. 04-11-002-02-201 
Appendix C Acronyms and Abbreviations 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

 Appendix C 

Acronyms and Abbreviations 

CFO Chief Financial Officer 

DOC Department of Commerce 

DOL Department of Labor 

DOL VETS Department of Labor Veterans’ Employment and Training Service 

DVA Department of Veterans' Affairs 

DVOP Disabled Veterans’ Outreach Program 

EDR Expenditure Detail Report 

ETP Employment and Training Programs Division 

FIFO First-In First-Out 

FFR Federal Financial Report 

FY Fiscal Year 

GAGAS Generally Accepted Government Auditing Standards 

GL General Ledger 

JVSG Jobs for Veterans State Grant 

LVER Local Veterans Employment Representative 

NOA Notification of Obligation Authority 

OIG Office of Inspector General 

OMB Office of Management and Budget 

SGA Solicitation for Grant Application 

SHARP Statewide Human Resource and Payroll Project 

STARS State Accounting and Reporting System 

TAP Transitioning Assistance Program Workshops 

USC United States Code 

VPL Veterans’ Program Letter 

WS+B WithumSmith+Brown 

Kansas Jobs for Veterans State Grant 

21 Report No. 04-11-002-02-201 
Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 


 


 

PAGE INTENTIONALLY LEFT BLANK 

Kansas Jobs for Veterans State Grant 

22 Report No. 04-11-002-02-201 
 

U.S. Department of Labor 

MARa I 2011 

Elliot P. Lewis 

Assistant Secretary for 

Veterans' Emptoyment and Training 

Washington. D.C. 20210 

Assistant Inspector General for Audit Office of Inspector General 

U.S . Department of Labor 

200 Constitution Avenue, N.W. 

Washington, D.C. 202 1 0 

Dear Mr. Lewis; 

This is our initial response to recommendations regarding the independent audit of the 

conduct and reponing of the Fiscal Year (FY) 2008 Jobs for Vcterans' State Grant 

(JVSG) by the Kansas Department ofCommeree. This audit was conducted through the 

Office of Audit of the Department of Labor's Office oflnspector General as requested by 

the Veterans' Employment and Training Service (VETS) and perfonned through contract 

with WithumSmith+Brown of Silver Spring, Maryland. This audit was requested since 

VETS noted frequent lateness in reponing and found errors in FY 2008 financial reports 

that were received from the Kansas Department of Commerce, Office of Workforce 

Services. 

This office concurs that the subject JVSG grantee, the Kansas Department of Commerce, 

exercised a lack of effective management controls and appropriate supervisory oversight 

resulting in its ability to ensure expenditures were reported in accordance with required 

time frames and reported properly with supporting documentation. 

We further acknowledge audit find ings that indirect costs were improperly calculated and 

reported; reported expenditures exceeded VETS obligation authority; that $ 152,096 in 

"Other" expenditures could not be substantiated; and, that the FY 2008 JVSG grant was 

overcharged by $ 14,969 resulting in $ 167,065 of questionable costs. 

As the Assistant Secretary for Veterans' Employment and Training, I intend to provide 

the audit findings to the Grant Officer for the JVSG to take the necessary actions to 

consider rccovering the questioned unsupported "other" costs o r $ 152,096 and indirect 

costs of$1 4,969, and require the Kansas Department of Commerce to take and report 

their remedial efforts to develop sufficient internal control policies and procedures to 

improve program management and to ensure that JVSG funds are properly recorded and 

reported accurately and in a timely manner. VETS believes that sufficient internal 

controls can be reasonably implemented within sixty days from notification and will 

request another audit of the program be conducted in the future as coordinated with the 

Office of the Inspector General. 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Appendix D 

VETS and Kansas DOC’s Responses to Draft Report 

Appendix D VETS and Kansas DOC’s Responses to Draft Report 

VETS Response: 

Kansas Jobs for Veterans State Grant 

23 Report No. 04-11-002-02-201 
 

I appreciate the elTorts of all those who participated in the discussion, investigation and 

preparation of these audit findings and reconunendations. 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Kansas Jobs for Veterans State Grant 

24 Report No. 04-11-002-02-201 
 

1O00 SW Jackson St , Suite 100 

Topeka, KS 66612-1354 

Pat George, Secretary 

March 31, 2011 

Michael Yarborough 

CPA, Audit Director 

Department of Commerce 

Phone (785) 296-3481 

Fax (785) 296-5055 TTY 711 

admin@<ansascommerce.com 

KansasCommerce.com 

SamBrownback, GWe!1lOC 

RE: Draft Report #04-11-002-02-201 - Kansas Controls Over Jobs for Veteran State Grant Contract 

Reporting and Monitoring 

Dear Mr. Yarborough: 

This letter will serve as an ''informal response" to your proposed statement of facts and audit 

recommendations pertaining to certain fiscal practices of the Kansas Department of Commerce 

(Commerce). With respect to the Jobs for Veterans State Grants Program (JVSG), Commerce is 

appreciative of the auditor's efforts and believes the review will lead to better practices. However, 

Commerce has not had adequate time to fully respond for the reasons set forth below. We are actively 

seeking additional support to better respond to the findings. If provided additional time, it appears many 

of the questioned costs could be supported. 

On March 4, 2011, the auditors provided Commerce with a proposed statement of facts concerning the 

audit. In the email that accompanied the letter, it was acknowledged that "Commerce was still working 

on providing supporting documentation for some of the issues noted. That documentation can be 

provided as part of your informal response and will be considered when drafting the audit report." 

Due to a lack of adequate time, the agency is still in the process of preparing the documentation the 

auditors acknowledged is necessary to determine the appropriate [mdings in this review. Commerce 

believes it will be able to adequately accOlmt for most, if not all, of the $152,096.00 that is referenced as 

''lmsupported'' and the $14,969.00 of ''indirect costs." We have informed 01 G of our desire to provide 

the documentation within the next few weeks but were unable to get additional time. Contributing to 

our need for more time to locate supporting documents for these costs are the facts that, since the fiscal 

year in question, we have a relatively new Chief Fiscal Officer, new fiscal staff with responsibility for 

this program, a new financial reporting system, and different leadership over our veterans' programs. 

All of these factors have made more difficult the process oflocating the supporting documentation for 

many of the questioned transactions. 

The second recommendation is that Commerce be directed ''to develop and implement internal control 

policies and procedures to improve program management and to ensure that JVSG funds are properly 

recorded and reported." 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Kansas DOC Response: 

Kansas Jobs for Veterans State Grant 

25 Report No. 04-11-002-02-201 
 

As noted above, Conunerce has already implemented a new financial reporting system and is in 

agreement their policies and procedures needed to be improved. Given that over two years have elapsed 

since FY 2008, many of those improvements have already been implemented. We have acknowledged 

that certain practices may have been inadequate and lead to confusion surrOlmding the "questionable" 

expenses. Could the reconunendation inform the JVSG that significant reforms have been implemented 

to correct those past practices? These reforms include doclllTIenting and implementing procedures to 

assure accurate and complete reporting to DOL VETS. Expenditures are now tracked regularly using a 

standardized process and template. In addition, procedures are being doclllTIented and followed for the 

indirect charges to the VETS grant as well as doclllTIenting the methodology used in the allocation of 

"Other" charges. Lastly, Commerce has developed a process to ensure that clllTIulative grant obligations 

do not exceed the VETS NOA. These processes are monitored frequently to ensure timeliness and 

accuracy. 

In order for the audit [mdings to be comprehensive and have the appropriate context, a complete 

statement of facts supported by proper doclllTIentation should be included. All parties involved appear to 

agree the report is incomplete in that it does not have doclllTIentation that we are actively working to 

provide as soon as practicable. Commerce has already implemented substantive and systemic reforms 

designed to improve our fiscal reporting processes. We sincerely hope the u.S. Department of Labor 

will give full consideration to our acknowledgment of certain opporhmities to improve and our 

continuing efforts to improve our internal controls and fiscal practices. 

Thank you for your consideration of our request to supplement this response prior to the issuance of any 

findings by the USDOL. 

Sincerely, 

Traci Hemck 

Chief Fiscal Officer 

cc: Maureen Wagner 

Prepared by WithumSmith+Brown, PC 

for the U. S. Department of Labor – Office of Inspector General 

Kansas Jobs for Veterans State Grant 

26 Report No. 04-11-002-02-201 
TO REPORT FRAUD, WASTE, OR ABUSE, PLEASE CONTACT: 

Online: http://www.oig.dol.gov/hotlineform.htm 

Email: hotline@oig.dol.gov 

Telephone: 1-800-347-3756 

202-693-6999 

Fax: 202-693-7020 

Address: Office of Inspector General 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Room S-5506 

Washington, D.C. 20210