Office of Inspector General—Office of Audit

 _____________________________ 

EMPLOYMENT AND 

TRAINING 

ADMINISTRATION 

GRANT TO THE INTERNATIONAL ASSOCIATION OF 

NANOTECHNOLOGY 

This audit was performed by WithumSmith+Brown PC, CPA’s, 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: September 12, 2011 

Report Number: 02-11-203-03-390 
 

 

 

U.S. Department of Labor 

Office of Inspector General 

Office of Audit 

BRIEFLY... 

Highlights of Report Number 02-11-203-03-390, to the 

Assistant Secretary for Employment and Training. 

WHY READ THE REPORT 

The Office of Inspector General (OIG) audited a grant 

awarded by DOL’s Employment and Training 

Administration (ETA) under the authority of the High 

Growth Job Training Initiative (HGJTI) to the 

International Association of Nanotechnology 

(IANANO), a 501(c)(3) non-profit organization located 

in California. HGJTI was a strategic effort to prepare 

workers to take advantage of new and increasing job 

opportunities in high growth, high demand, and 

economically vital sectors of the American economy. 

The grant was for $1.5 million for the period 

November 1, 2006, through October 31, 2009. 

IANANO was to implement an innovative solution to 

address industry-identified challenges by developing 

nanotechnology coursework to meet the needs of 

multiple populations for potential career ladder growth. 

The courses were to target the following four key 

segments of the nanotechnology market: (1) 

Executive and Mid-Level Manager Business Reengineering Training; 2) Training the Trainers from the 

industry; 3) Thirteen-week Nanotechnology 

Technician Certificate Program; and 4) One-Year 

Nanotechnology Technician Pre-Apprenticeship. 

WHY OIG CONDUCTED THE AUDIT 

In response to a request from ETA, OIG conducted 

the audit to answer the following questions: 

1. Were financial transactions and program activities 

in accordance with the grant agreement and 

Federal cost principles? 

2. Was information the grantee reported to ETA 

accurate? 

3. Were grant terms for expenditures and 

deliverables clearly defined? 

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/2011/02-11-

203-03-390.pdf 

September 2011 

GRANT TO THE INTERNATIONAL 

ASSOCIATION OF NANOTECHNOLOGY 

WHAT OIG FOUND 

IANANO reported $1.5 million in grant expenses and 

that it trained 328 participants. However, financial 

transactions and program activities did not comply 

with the grant agreement and Federal cost principles, 

and were not accurately reported to ETA. Moreover, 

the grant lacked clarity regarding the relationship 

between the grantee and training provider, and the 

association between cost categories and deliverables, 

that led to difficulties in monitoring grant performance. 

IANANO charged personnel costs totaling $896,066 

that were unsupported, reported outcome measures 

that were misleading, and required grant deliverables 

were not developed or provided, were incomplete, or 

were otherwise inadequate. Moreover, program 

income of $938,685 was not reported, the approved 

apprenticeship program was not established, and it 

was not clear if $2.6 million of leveraged resources 

was obtained. 

WHAT OIG RECOMMENDED 

We recommend the Assistant Secretary for 

Employment and Training recover questioned costs of 

$1.5 million; ensure that first time grantees have 

systems in place to provide grant products and 

services; and ensure grants are clear in regard to 

entities providing services and cost category 

associated with deliverables. 

IANANO disagreed with our audit findings. However, 

IANANO’s responses were not sufficiently supported 

to change the Findings and Recommendations. 

ETA responded that it will follow its standard audit 

resolution procedures for disallowing and recovering 

questioned costs and indicated that it will review its 

procedures regarding new grantees and its grant 

award and budget process, and will make changes 

where appropriate and feasible. 

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

Prepared by WithumSmith+Brown, P.C. 

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

Table of Contents 

Independent Auditors’ Report...................................................................................... 1
 

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

Objective 1 — Were financial transactions and program activities in 

compliance with the grant agreement and Federal cost 

principles? ............................................................................................ 3
 

IANANO did not demonstrate it expended grant funds to provide key 

services and products to produce career ladder growth. ...................................... 3
 

Finding 2 — Reported results and outcome measures were misleading, and 

required grant deliverables were not developed or provided, were 

Finding 1 — Unsupported Personnel Costs of $896,066 ................................................ 4
 

incomplete, or were inadequate. ................................................................. 6
 

Objective 2 — Was information the grantee reported to ETA accurate? ............... 11
 

Reported information to ETA was incomplete and misleading. .......................... 11
 

Finding 3 — Reported Information to ETA Was Not Accurate....................................... 11
 

Objective 3 — Were grant terms for expenditures and deliverables clearly
 

defined?............................................................................................... 15
 

ETA encountered difficulties in monitoring grant performance because of 

the grant lack of clarity in certain aspects........................................................... 15
 

Finding 4 — Grant terms for expenditures and deliverables were not always 

clearly defined........................................................................................... 15
 

Recommendations ...................................................................................................... 17
 

Appendix A Background................................................................................................ 21
 

Appendix B Objectives, Scope, Methodology, and Criteria ........................................... 23
 

Appendix C Acronyms................................................................................................... 25
 

Appendix D IANANO Response.................................................................................... 27
 

Appendix E ETA Response........................................................................................... 41
 

Grant to IANANO 

Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

PAGE INTENTIONALLY LEFT BLANK 

Grant to IANANO 

Report No. 02-11-203-03-390 
 

 

Independent Auditors’ Report 

 

Prepared by WithumSmith+Brown, P.C. 

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

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 

Independent Auditors’ Report 

September 12, 2011 

Ms. Jane Oates 

Assistant Secretary for Employment and Training 

U.S. Department of Labor 

200 Constitution Avenue, NW 

Washington, D.C. 20210 

In response to a request from the Employment and Training 

Administration (ETA) for an audit of its grant with the 

International Association of Nanotechnology (IANANO), the 

Department of Labor (DOL) Office of Inspector General (OIG), 

entered into a contract with WithumSmith+Brown (WS+B), PC, 

to conduct an audit of IANANO’s $1.5 million High Growth Job 

Training Initiative (HGJTI) grant (Grant Number HG-15852-07-

60-A-6). The grant was awarded for the period of 

November 1, 2006, through October 31, 2009. 

HGJTI was a strategic effort to prepare workers to take 

advantage of new and increasing job opportunities in high 

growth, high demand, and economically vital sectors of the 

American economy. One of the sectors was Advanced 

Manufacturing, in which innovative strategies were needed to 

compete in the global marketplace. Under the grant, IANANO 

was to implement an innovative solution to address industry 

identified challenges by developing nanotechnology coursework 

to meet the needs of multiple populations for potential career 

ladder growth. The courses were to target the following four key 

needs of the nanotechnology labor market: (1) Executive and 

Mid-Level Manager Business-Reengineering Training; (2) 

Training the Trainers from the industry; (3) Nanotechnology 

Technician Certification (a thirteen-week program); and (4) 

One-Year Nanotechnology Technician Pre-Apprenticeship. 

Our audit objectives were to determine if (1) financial 

transactions and program activities were in accordance with the 

grant agreement and Federal cost principles; (2) information 

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

Grant to IANANO 

1 Report No. 02-11-203-03-390 
Results in Brief 

Prepared by WithumSmith+Brown, P.C. 

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

reported by the grantee to ETA was accurate; and (3) grant terms for expenditures and 

deliverables were clearly defined. The audit included a review of IANANO’s policies and 

procedures, grant proposal, grant records, and financial and programmatic reports. 

Interviews of IANANO staff, grant participants and ETA’s National and Regional 

employees were also conducted. Audit work was performed at IANANO’s Office in 

Fremont, Calif.; ETA Headquarters in Washington, D.C.; and ETA’s Region 10 Office in 

San Francisco, CA. 

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 

IANANO reported $1.5 million in grant expenses and that it trained 328 participants. 

However, financial transactions and program activities did not comply with the grant 

agreement and Federal cost principles, and were not accurately reported to ETA. 

Moreover, the grant lacked clarity regarding the relationship between the grantee and 

training provider, and the association between cost categories and deliverables, that led 

to difficulties in monitoring grant performance. Although IANANO did provide some 

services to participants, due to program performance and financial accountability 

deficiencies, IANANO could not demonstrate it provided $2,438,685 worth of benefit to 

ETA ($1.5 million of grant funds and $938,685 of program income which should have 

been committed to the project). Therefore, the entire grant of $1.5 million is questioned. 

Financial transactions and program activities were not in compliance with the grant 

agreement and Federal cost principles. Specifically, $896,066 of personnel costs 

charged to the grant were unsupported; reported outcome measures were misleading; 

and required grant deliverables were not developed or provided, were incomplete, or 

were otherwise inadequate. Moreover, program income of $938,685 was not reported, 

the apprenticeship program was not established, and it was not clear if $2.6 million of 

leveraged resources was obtained. This occurred because IANANO misrepresented 

that it had systems in place to ensure proper planning, management, and completion of 

the project described in the grant agreement. 

We recommend the Assistant Secretary for Employment and Training recover 

questioned costs of $1.5 million, ensure first time grantees have systems in place to 

provide grant products and services, and ensure grants are clear in regard to entities 

providing services and cost category associated with deliverables. 

Grant to IANANO 

2 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

IANANO’S RESPONSE 

In response to draft findings 1-3, IANANO officials disagreed with the audit findings. 

IANANO’s response, exclusive of the attachments to its response, is included in its 

entirety as Appendix D. The complete response, including the attachments, has been 

transmitted to ETA. 

EMPLOYMENT AND TRAINING ADMINISTRATION RESPONSE 

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

agreed to follow their standard audit resolution procedures for disallowing and 

recovering questioned costs. ETA indicated it will review its initial technical assistance 

and training efforts with new grantees and adjust them as appropriate; however, ETA 

cautioned that it is not feasible for ETA to determine that all grantees have all the 

systems they need prior to grant award. ETA also indicated it will review the current 

grant award and performance processes, including the need for clear budget 

justification documents, and will enhance current guidance and provide additional 

training and technical assistance. The Assistant Secretary’s response is included in its 

entirety as Appendix E. 

AUDITORS’ CONCLUSION 

Our analysis of IANANO’s response and additional documentation did not substantively 

change our Findings and Recommendations. For the reasons stated in Results and 

Findings, we disagreed with IANANO’s analysis offered in response to our Findings, 

and IANANO did not provide supporting evidence of many of its statements and 

assertions. 

RESULTS AND FINDINGS 

Objective 1 — Were financial transactions and program activities in compliance 

with the grant agreement and Federal cost principles? 

 IANANO did not demonstrate it expended grant funds to provide key services 

and products to produce career ladder growth. 

IANANO reported $1.5 million in grant expenses and claimed it trained 328 participants. 

However, financial transactions and program activities did not comply with the grant 

agreement and Federal cost principles. Specifically, 1) $896,066 of personnel costs 

charged to the grant were unsupported, and 2) reported outcome measures were 

misleading, and required grant deliverables were not adequate. This occurred because 

IANANO misrepresented that it had systems in place to ensure proper planning, 

management, and completion of the project described in the grant agreement. As a 

result, IANANO did not provide the services and deliverables specified in the grant to 

meet the needs of the participants for potential career ladder growth. 

Grant to IANANO 

3 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Finding 1 — Unsupported Personnel Costs of $896,066 

IANANO reported expenditures of $1.5 million to implement an innovative solution to 

address industry identified challenges by developing nanotechnology coursework to 

meet the needs of multiple populations for potential career ladder growth. IANANO’s 

general ledger contained $896,066 in personnel costs ($772,363 of salaries and 

$123,703 of fringe benefits). However, the timekeeping system was not sufficiently 

reliable to verify the amount of time actually spent by employees working on the grant, 

and IANANO employed family members of the Executive Director in positions that were 

primarily overhead. As a result, the $896,066 in personnel cost is questioned. 

2 Code of Federal Regulations (CFR) 230 Appendix A 2(g) states: 

To be allowable under an award, costs must meet the following criteria ... Be 

adequately documented. 

2 CFR 230 Appendix B 8. (m) states: 

Reports reflecting the distribution of activity of each employee must be 

maintained for all staff members . . . whose compensation is charged, in 

whole or in part, directly to awards. . . . The reports must reflect an after the 

fact determination of the actual activity of each employee. . . . The reports 

must be signed by the individual employee or by a responsible supervisory 

official having firsthand knowledge of the activities performed by the 

employee . . . 

The grant award, signed by the Executive Director, states: 

I certify that the applicant: . . . 1) Has the . . . institutional managerial and 

financial capability . . . to ensure proper planning, management and 

completion of the project described in this application. . . . 2) . . . Will 

establish a proper accounting system in accordance with generally 

accepted accounting standards or agency directives. 3) Will establish 

safeguards to prohibit employees from using their positions for a purpose 

that constitutes or presents the appearance of personal or organizational 

conflict of interest, or personal gain. 

Of the $772,363 of salaries incurred on the DOL grant, $479,571 (almost one-third of 

the $1.5 million grant) relates to salaries paid to the Executive Director ($263,381), his 

wife ($144,166), son ($61,864), and nephew ($10,160). The Executive Director hired his 

wife as Operations Manager, his son as the Management Information Systems Manager 

and Program Assistant, and his nephew as Program Assistant/IT Support Specialist. 

The costs related to these family members were primarily administrative costs (e.g., 

accounting, information technology). 

Grant to IANANO 

4 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

In addition, the Executive Director and his wife owned and operated at least six 

companies in addition to IANANO, including the California Institute of Nanotechnology 

(CINT), Cleantech Institute, Neurobiomed, Inc., Workforce Institute of America, Home 

Again USA, Inc., and Amptran Corporation, out of the same physical location as 

IANANO. The only timesheets maintained, which account for all of their time, were for 

IANANO. IANANO did not provide records to support the allocation of time to the other 

companies. Budget modification no. 6 submitted by IANANO described the percentages 

of time that each employee would be devoting to the grant, which typically was less than 

100 percent of their time. However, the timesheets we observed, with few exceptions, 

had only DOL categories that employees could charge time to, creating another 

inconsistency in the timekeeping system. Moreover, the Executive Director also 

received wages from CINT totaling $45,000 during the grant period. Furthermore, the 

Executive Director and his wife billed CINT for time spent as management consultants 

totaling $132,500 during the grant period. Therefore, the Executive Director and his wife 

earned a total of $177,500 from CINT while also working at IANANO. As a result, the 

Executive Director and his wife received salaries totaling $585,047 from both IANANO 

and CINT during the grant period. 

Furthermore, the timekeeping system used by IANANO was not reliable as observed 

practices did not always adhere to IANANO internal policies. Review of 220 timesheets 

revealed 22 timesheets (10 percent) either contained errors and/or had been 

manipulated after they were originally signed. For example, timesheets were submitted 

and approved for the 1st through the 15th of a month, then another timesheet was 

submitted and approved for the entire month, with a different distribution of the hours 

originally submitted. Three timesheets recorded 8 hours to DOL, and on the same day, 

8 hours to vacation or sick time. These types of errors and manipulations we observed 

were consistent with the allegations of time mischarging described to us by a former 

employee, and with allegations we reviewed from former employees and consultants. 

For example, one former employee indicated he was instructed by the Executive 

Director’s wife to change his timesheets to reflect more DOL hours than he actually 

worked. IANANO officials also explained it was a standard practice for IANANO 

management to complete and sign final timesheets for employees who no longer 

worked for IANANO. 

The IANANO Timekeeping policy states “if corrections or modifications are made to the 

time record, both the employee and HR Director or Operations Director . . . must 

verify the accuracy of the changes by initialing the time record” [emphasis added]. 

Furthermore, the policy states “Tampering, altering, or falsifying time records or 

recording time on another employees’ timesheet is not allowed and may result in 

disciplinary action, up to and including suspension/termination. Under no 

circumstances, is an employee allowed to record time for another employee.” 

Overall we concluded that IANANO neglected to follow its own timekeeping internal 

controls, much less the controls required under Federal grants management 

regulations. This resulted in unsupported personnel costs due to unreliable time 

records, and contradicts the assurances made by the Executive Director that IANANO 

Grant to IANANO 

5 Report No. 02-11-203-03-390 
 

	 

	 

	 

	 

Prepared by WithumSmith+Brown, P.C. 

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

has managerial capability and proper accounting systems. Because the entire 

timekeeping system was unreliable and not in compliance with Federal requirements, 

the personnel costs are unsupported and all personnel costs are questioned. 

Finding 2 — Reported results and outcome measures were misleading, and 

required grant deliverables were not developed or provided, were 

incomplete, or were inadequate. 

IANANO reported grant outcome performance measures such as the number of 

participants trained and percentage of participants that found or retained employment 

as a result of the training. However, IANANO reported misleading employment 

outcomes, and the required grant deliverables provided were not adequate. This 

occurred because IANANO inflated the impact training had on participants’ ability to 

secure employment in the nanotechnology field, and incorrectly believed grant 

deliverables produced were satisfactory. As a result, IANANO claimed credit for results 

it did not achieve. 

Reported Outcomes 

The grant required the following outcomes to be reported: 

	 Business Re-engineering Training – the number of participants entering and 

completing the course, certificates awarded, and promotions obtained, 

organizational changes, and average 6-month income increased. 

	 Training the Trainers – the number of participants entering the program, certified, 

professional development hours completed, institutions adopting IANANO’s 

curriculum, number of classes and number of students trained using IANANO’s 

curriculum. 

	 Certified Nanotech and Cleantech Professional (CNCP) – number of participants 

entering and completing the program, participants receiving an internship, 

participants employed at a nanotechnology firm, participants employed after 6 

months, and average earnings over a 6-month period. 

	 Certified Nanotech Technicians Pre-Apprenticeship Training Program – The 

measures used for recruitment and completion of the federally-approved 

apprenticeship program will be adopted. 

IANANO’s final report claimed 3281

 participants completed nanotechnology training 

including Business Re-engineering (111), Train-the-Trainers (80), CNCP (122), and 

Apprenticeship Training Program (15) programs. 

Regarding grant outcomes, IANANO reported that the employment rates of the 

Business Re-engineering participants exceeded 80 percent, and more than 85 percent 

of the Train-the-Trainers participants retained or found new employment within the 

scope of the training programs. However, these statistics are misleading and incomplete 

1

 During our audit fieldwork, IANANO revised the number of pre-apprentices trained to 14, resulting in a total of 327 

participants claimed. 

Grant to IANANO 

6 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

because some of the key outcomes required to be reported, such as promotions 

obtained and number of institutions adopting the IANANO’s curriculum, were not 

tracked and reported. 

For the CNCP program, the grant required IANANO to track the number of participants 

employed in a nanotechnology firm at the conclusion of the training, with a targeted 

placement rate of 90 percent in the nanotechnology industry. IANANO reported that 46 

CNCP participants found employment; however, the relationship of the CNCP training to 

the types of jobs found by its participants is unknown, as IANANO was unable to 

successfully track this information. As a result, the employment rates reported by 

IANANO reflecting actual employment as an outcome of the training received was 

unsupported. 

The Executive Director disagreed with this finding and responded that the actual 

outcomes exceeded the projected outcomes. The Executive Director stated that most of 

the participants retained or found new employment within the scope of the training, but 

that the employment rates for CNCP graduates were lower than what was hoped for 

due to the recession. 

We disagree with the Executive Director’s assertions, since he did not provide 

documentation to support his assertions. Therefore, our finding remains unchanged. 

Grant Deliverables 

IANANO did not produce grant deliverables required in the Statement of Work (SOW) 

including the course curriculum, training certificate, and online distance learning 

program. The HGJTI grants were awarded not solely to train a certain number of 

participants, but to invest in demonstration projects that would model the power of 

partnerships at the national level and help the workforce system build their capacity to 

respond to employers’ workforce needs. 

Course Curricula Was Incomplete 

IANANO’s Executive Director provided draft curricula to ETA. However, as 

provided, the curricula were incomplete (did not include the Certified Nanotech 

Technicians Apprenticeship Curriculum/Course Materials), and according to ETA 

did not meet ETA’s requirements for dissemination. The Executive Director 

promised to deliver the final curricula to ETA but this was never done. ETA 

deferred pursuing this issue pending the results of our audit. As a result, IANANO 

did not develop nanotechnology coursework to meet the needs of multiple 

populations for potential career ladder growth. 

The SOW required the following course materials to be developed under the 

grant: 

 Nanotech Business Re-engineering Curriculum/Course Materials 

Grant to IANANO 

7 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

 Nanotech Train the Trainers Curriculum/Course Materials 

 CNCP Curriculum/Course Materials 

 Certified Nanotech Technicians Apprenticeship Curriculum/Course 

Materials 

The SOW stated that the curricula were to be designed to be a replicable solution 

that would enable expanding these training programs across a larger geographic 

area. 

IANANO reported that a copy of the compact disc (CD) containing the curricula 

was given to the ETA on October 12, 2009. It also reported it planned to submit 

updated curricula products to ETA by May 15, 2010. However, an updated 

version was not provided, and IANANO Executive Director stated that the original 

CD provided served as the final curricula. 

One of the critical elements of the HGJTI grants defined in the Solicitation for 

Grant Agreement (SGA) was the replication of successful models for broad 

distribution. The SGA states: 

HGJTI grantees are expected to develop the learning and achievement 

that result from their projects into solution models that can be shared 

with and implemented by the workforce investment system, industry 

leaders, and education and training community. . . . By supporting 

replicable proposals that can be implemented in multiple areas and 

industries, ETA is able to maximize the investment by expanding the 

grant’s impact beyond the initial grant site and helping additional 

workers in other areas and industries. 

ETA reviewed the provided curricula to determine suitability for dissemination to 

the public and to other stakeholders and deemed the curricula unsuitable. ETA 

officials stated the Certified Nanotech Technicians Apprenticeship 

Curriculum/Course Material was not included on the CD provided. ETA didn’t 

disseminate the curricula as it believed that sharing this program with job seekers 

would mislead them about its substance and value. 

The curricula/course materials provided primarily consisted of copies of 

presentation slides. For example, Business Re-engineering consisted of seven 

presentations, an outline, and a project proposal. The slides present, in bullet 

format, presentation highlights. They do not present detailed course content. For 

Train-the-Trainers, the materials did not include descriptions of the competencies 

addressed, the knowledge, skills and abilities that should result, the learning 

objectives or methods of delivery, and the method of measurement of attainment 

of the competencies. 

The Executive Director disagreed with this finding and stated a local community 

college district was able to follow and replicate the training programs. However, 

Grant to IANANO 

8 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

he did not provide any evidence to support his claims that a local community 

college was able to follow and replicate the program as provided. Therefore, our 

finding remains unchanged. 

Industry-Recognized Training Certificate Not Provided 

At the completion of the CNCP training, IANANO provided participants with 

certificates. However, IANANO did not demonstrate the CNCP training course 

was an industry-recognized course that indicated a level of mastery and 

competence as required by the grant agreement. This occurred because the 

IANANO Executive Director overstated IANANO’s affiliations with third-parties 

and IANANO did not have the managerial capacity to properly establish a 

certificate program. As a result, IANANO misled ETA and participants as to the 

substance and value of the CNCP training. 

The SGA states that all grants funded must include direct provision of training to 

individual participants. It also states that the training must: 

(R)esult in an industry-recognized certificate, degree, or license that 

indicates a level of mastery and competence in a given field or 

function. 

The certificate awarded to participants was not recognized by industry 

stakeholders other than IANANO and its related parties and affiliates. It was not 

based on defined knowledge and skill requirements and was not performance 

based. In addition, the entities that IANANO stated they consulted with did not 

include nanotechnology related professional organizations, such as the 

International Council on Nanotechnology or the National Nanotechnology 

Initiative. 

Participants stated the certificates were not viable to obtain employment within 

the nanotechnology industry. Three participants we interviewed stated the 

certificate is worthless, not recognized by companies they talked to, and/or did 

not provide any benefit when seeking employment. The certificate itself is labeled 

simply a “Certificate of Completion.” 

The Executive Director disagreed with this finding and provided a response with 

several statements about CNCP training recognition. However, the Executive 

Director did not provide documentation that demonstrated the curriculum was 

approved by industry partners, or would provide a level of mastery and 

competence in the nanotechnology field. Therefore, the finding remains 

unchanged. 

Grant to IANANO 

9 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Online Distance Learning Program Not Developed 

For training purposes, IANANO incorporated a web portal to facilitate homework 

submissions and some instructors used an online meeting application to conduct 

some presentations. However, an online distance learning program (E-learning) 

was not developed and implemented to link participants to prospective employers 

in nanotechnology and provide access to the course work 24/7. 

The SOW states: 

CINT will develop a web portal serving as an on-line 

communication network to link job seekers and prospective 

employers in nanotechnology. In supplement to the 

classroom setting training, CINT will develop an on-line 

distance learning program to enable students and trainees 

access to the course work 24/7. 

The Executive Director responded he did not agree with this finding. The 

Executive Director indicated that IANANO developed and implemented an online 

distance-learning program for CNCP and that the system was used to broadcast 

training programs and the general sessions of the International Congress of 

Nano Bio Clean Tech in 2008. The Executive Director stated online participants 

from many states and overseas were not allowed to participate as they were 

outside the scope of work of the DOL grant. In addition, IANANO stated it 

submitted costs of the online distance learning for reimbursement to DOL in 

September 2009, but it was rejected by ETA. Finally, IANANO claimed that ETA 

representatives viewed the online learning program in October 2009 but told 

IANANO that DOL did not expect to pay the high costs of implementing the 

online program and that it was beyond the scope of the program deliverables. 

We disagree with the Executive Director’s analysis and conclusions; therefore, 

our finding remains unchanged. We note that the classroom training courses 

were held from June 2007 to April 2009. However, in a July 2009 submission to 

ETA, well after the last training class was held, IANANO states “IANANO will 

soon submit a request to purchase an e-learning computer and video camera 

system including hardware and software to enable the e-learning program.” 

Additionally, in an October 21, 2009, letter to ETA, 10 days before the grant 

expiration, IANANO states “we have developed and [are] now implementing the 

state of the art web-based webinar with video conference live in real time to 

enable the e-learning . . .” These statements contradict the Executive Director’s 

assertion that the online distance learning program was being used in the CNCP 

program. Finally, broadcasting sessions of the International Congress and Nano 

Bio Clean Tech events, which were not part of the DOL grant, are more of a 

marketing activity for the organization, rather than a training program for 

participants. 

Grant to IANANO 

10 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Objective 2 — Was information the grantee reported to ETA accurate? 

 Reported information to ETA was incomplete and misleading. 

Finding 3 — Reported Information to ETA Was Not Accurate 

IANANO submitted the final financial and programmatic reports to ETA outlining grant 

expenditures and outcomes. However, IANANO did not accurately report the 

information to ETA. Specifically, IANANO did not 1) report $938,685 of program income; 

2) establish an apprenticeship program; or 3) support $2.6 million of proposed 

leveraged resources. This occurred because IANANO did not believe it had to report 

income collected by CINT and misrepresented its partnerships. As a result, IANANO 

cannot support it provided additional allowable grant activities or assisted in the training 

of participants totaling $938,685. Furthermore, apprenticeship participants did not gain 

training opportunities with nanotechnology companies to increase their employability in 

the nanotechnology field. 

Unreported Program Income of $938,685 

IANANO did not report program income of $938,685. Program income included 

$425,394 for two training contracts, $292,252 for event management activities, and 

$221,039 for CNCP training courses. This occurred because IANANO did not believe it 

had to report income collected by CINT for the training of IANANO’s participants. A total 

of $1.5 million of Federal funds was reported as expended, without performing $938,685 

in additional services. 

29 CFR Part 95 Subsection 24(a) states: 

Program income earned during the project period shall be retained by the 

recipient and added to funds committed to the project by DOL and 

recipient, and used to further eligible project or program objectives. The 

awardee is allowed to deduct costs incidental to generating program 

income to arrive at net program income. 

CINT also had contracts with two institutions to train Business Re-engineering and 

Train-the-Trainers (BE/TT) participants. The participants trained under these two 

contracts were included as participants of the grant program reported to ETA. CINT 

recorded, but did not report program income of $425,394 for these two contracts. 

In addition, IANANO held various conferences, lunches and other events for those in 

the nanotechnology and clean technology fields and received $292,252 in income 

related to these events. A significant portion of IANANO’s time and resources were 

spent on these events. IANANO allocated employee wages for time spent on event 

management activities to the DOL grant. 

Grant to IANANO 

11 Report No. 02-11-203-03-390 
	 

	 

	 

	 

Prepared by WithumSmith+Brown, P.C. 

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

Furthermore, review of financial records provided by IANANO officials revealed 

additional income generated from its HGJTI grant. For example, IANANO’s training arm, 

CINT, charged each participant $3,995 to take the CNCP training course. Participants 

had to sign a promissory note and make monthly payments with interest. CINT’s 

general ledger shows a total of $221,039 of CNCP income received; however, this was 

not reported on the final report submitted to ETA. Charging CNCP student fees also 

was not part of the final approved grant SOW or budget. 

ETA noted IANANO did not track, report, and spend program income on allowable grant 

activities in its March 31, 2009, Onsite Monitoring Report, and issued four specific 

corrective actions needed for the grantee to comply with program income requirements. 

The grantee had not implemented any of the four corrective actions as of the date of our 

fieldwork. 

The Executive Director disagreed with the finding and responded that program income 

is zero because $954,158 of costs were required to generate the $938,685 of program 

income, and therefore there was no net income. However, we disagree with the amount 

of the offsetting costs claimed by the Executive Director based on the following: 

	 The general ledgers of the two organizations only have a total of $865,740 of 

costs recorded to these three activities, including $274,990 for BE/TT, $302,690 

for CNCP, and $288,060 for Event Management. This is $88,418 less than the 

amount of costs claimed by the Executive Director. 

	 CINT’s general ledger shows that even when the costs are taken into account, 

the net income for the BE/TT program totaled $149,604. 

	 Review of CINT’s general ledger revealed costs indicated by the Executive 

Director as offsetting the program income, including costs that were not 

allowable, reasonable, or allocable to the grant. For example, the following costs 

were included in the costs claimed by the Executive Director as offsetting 

program income: 

o	 As noted previously (Finding 1), the Executive Director and his wife 

earned $177,500 from CINT while at the same time collecting salaries 

from IANANO, which were charged to the DOL grant. The Executive 

Director signed an employment agreement with IANANO stating that 

IANANO employs the Executive Director “to render exclusive and full-time 

service in an executive capacity.” Therefore, the Executive Director’s 

compensation working for the for-profit organization, CINT, while also 

working full time and exclusively for IANANO is not reasonable and 

violates the terms of his own employment agreement. 

Grant to IANANO 

12 Report No. 02-11-203-03-390 
 

 

	 

	 

Prepared by WithumSmith+Brown, P.C. 

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

o Legal fees of $24,520 were charged to the CNCP program. Included in 

these legal fees were fees paid to a law firm, which were not an allowable 

cost to the program, involved in litigation against CNCP participants. 

o	 Approximately $62,000 of costs charged to the CNCP training program, 

including shared costs with IANANO, that are outside the period of the 

actual trainings held (June 2008 to April 2009); and therefore, do not 

appear to be in furtherance of the CNCP training. 

As a result, our finding remains unchanged. 

Pre-Apprenticeship Program Not Established 

IANANO reported to ETA that it trained 15 apprentices in the nanotechnology and clean 

tech industry. However, IANANO did not establish an approved apprenticeship program 

with nanotechnology companies. This occurred because IANANO misrepresented its 

ability to gain business partners willing to employ participants. As a result, participants 

did not gain exposure to nanotechnology companies, which were to increase their 

employability in the nanotechnology field. 

The grant SOW stated “IANANO plans to register this program as an approved 

Pre-Apprenticeship model with the U.S. Department of Labor, Office of Apprenticeship, 

with a subsequent application to the State of California for corresponding approvals.” 

The grant also stated “the Pre-Apprentice program will include up to 144 hours of 

classroom course work and 1,000 to 2,000 hours apprentice work at the employer 

workplace...” for 15 participants. 

There were no records indicating IANANO registered this program as an approved 

Pre-Apprenticeship model with the U.S. Department of Labor, Office of Apprenticeship 

or the State of California. In support of its grant application, the Executive Director 

provided six signed letters of support in which individuals agreed to provide 

apprenticeship and/or internship opportunities. However, IANANO did not provide 

documentation that these partnerships were satisfied. The Executive Director 

responded that prospective employers indicated they would require funding from DOL to 

cover the extra work that would be required to participate in an apprentice program and 

DOL would not provide the funding. However, no support for this claim was provided 

and it contradicts the information submitted in the grant application, where several 

employers indicated they would provide apprenticeships as part of IANANO’s leveraged 

resources. 

IANANO reported on its final program report (ETA 9134), dated December 31, 2009, it 

“trained 15 apprentices who have an opportunity to work on the job training in the 

emerging field of nanotechnology and clean tech industry. This has met the goal of 

training 15 apprentices.” However, 13 of the apprentices were placed in two start-up 

companies owned or controlled by the IANANO’s Executive Director. The job functions 

of the participants did not provide job training in the emerging field of nanotechnology 

Grant to IANANO 

13 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

and clean tech industry. Instead, participants worked on grant writing activities to gain 

additional funds for the Executive Director’s start-up companies. 

Five of the apprentices we contacted stated that the apprenticeships were performed 

primarily off-site, rather than at the employer workplace. The apprentices were offered 

the opportunity to have any balances remaining on their promissory notes reduced or 

eliminated if they worked in the apprenticeship program. 

During our audit fieldwork, the Executive Director stated that they encountered great 

difficulties in convincing employers to hire the apprentices due to the economy and 

some CNCP graduates wanted to set up their own consulting firms. He indicated that 

while he started an enterprise and several CNCP graduates got involved, he did not 

control or manage it. However, five of the apprentices we interviewed believed that the 

Executive Director, his wife, and/or his related company, CINT, owned or controlled the 

two consulting firms. Additionally, a domain name search of one of the companies 

revealed the Executive Director controls the domain, which provides further evidence he 

exerts control over the company. The domain of the second firm was registered using a 

proxy service designed to hide the identity of the domain owner. 

In his response, the Executive Director stated two CNCP graduates started consulting 

firms and agreed to accept apprentices as a trial to test the concept of having a start-up 

company involved in the apprentice program; and the Executive Director does not own 

these companies, but provided guidance and support. However, the Executive Director 

did not provide any evidence that the two CNCP graduates own and control the 

consulting start-up companies, rather than the Executive Director of IANANO. In fact, 

the Executive Director of IANANO represents himself as a Director of one of the 

consulting firms in question on a presentation he gave in the name of the consulting 

firm, and represents himself as the Chairman of the second consulting firm on a 

presentation he gave in the name of the second firm. 

Unsupported Leveraged Resources of $2.6 Million 

IANANO reported in their final programmatic narrative report dated December 31, 2009, 

total leveraged resources of $2,606,170 including $765,486 from Federal sources, 

$1,644,165 from non-Federal sources and $196,519 contribution from employees. 

However, IANANO could not demonstrate that leveraged resources were obtained. This 

occurred because IANANO did not have an adequate system of tracking the leveraged 

resources. As a result, IANANO did not provide the full services intended, which in turn, 

compromised the $1.5 million that was spent by ETA because it did not benefit from the 

full amount of leveraged resources and partnerships, reducing the impact of this $4.1 

million initiative. 

2 CFR 95.23 requires in-kind contributions to be verifiable from the recipient’s records. 

Also, 2 CFR 230 Appendix B 8.(m)(4) states that salaries and wages of employees used 

in meeting cost sharing or matching requirements on awards must be supported in the 

Grant to IANANO 

14 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

same manner as salaries and wages claimed for reimbursement from awarding 

agencies. 

The total $2,606,170 of leveraged resources was classified as in-kind contributions from 

IANANO employees and third-parties. For $697,787 of this amount, IANANO 

management provided a listing of the names, providers, and amounts. However, 

management explained the amounts were based on estimated number of hours and an 

hourly rate. The hourly rate used was an unsupported estimate developed by the 

grantee for different categories of services. For example, a Legal Advisor was assigned 

a rate of $400/hour. For $780,000 of this amount, IANANO provided only the name of 

an event, the number of speakers, and a total dollar amount. For one item totaling 

$471,200, the support consisted of estimates of donated office space ($392,000) and 

estimates of time spent for shared landlord employees. For one item totaling $460,665, 

no support was provided. 

In addition, IANANO claimed $196,519 in leveraged resources related to its employees. 

IANANO Executive Director explained this is the difference between what employees 

were actually being paid and what they should be paid if they weren’t working for a 

non-profit organization. IANANO’s Executive Director claimed ETA told them this cost 

could be claimed, but IANANO could not identify the ETA official. 

ETA noted in its March 31, 2009, Onsite Monitoring Report that IANANO does not have 

in place a system to calculate, document, and track accurately leveraged resources; 

and that corrective actions be taken to include developing a tracking system to account 

for and support leveraged resources; and appropriate supporting documentation should 

be retained. However, IANANO did not implement these recommendations. 

The Executive Director disagreed with this finding and provided a response with several 

statements about how its calculations for leveraged resources are valid. However, the 

Executive Director did not provide sufficient documentation that supported his claims, 

and we disagreed with the Executive Director’s analysis and methodology in his 

response. Therefore, the finding remains unchanged. 

Objective 3 — Were grant terms for expenditures and deliverables clearly 

defined? 

 ETA encountered difficulties in monitoring grant performance because of the 

grant lack of clarity in certain aspects. 

Finding 4 — Grant terms for expenditures and deliverables were not always 

clearly defined. 

Generally, the grant terms for expenditures and deliverables were clearly defined. 

However, the grant lacked clarity regarding the relationship between IANANO and CINT 

and between the budget and program activities. This occurred because ETA accepted 

Grant to IANANO 

15 Report No. 02-11-203-03-390 
 

Prepared by WithumSmith+Brown, P.C. 

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

the proposed SOW and budget information without ensuring it was clear. As a result, 

ETA encountered difficulties in monitoring grant performance. 

Relationship between IANANO and CINT Was Not Clearly Disclosed 

The grant agreement outlined the activities that were expected from the grantee. 

However, the relationship between IANANO and CINT was not clearly disclosed. The 

SOW described the relationship in the following four ways: 

1. “Under the proposed grant, IANANO will implement . . . by establishing the 

California Institute of Nanotechnology (CINT) . . .;” 

2. “IANANO has established the California Institute of Nanotechnology in June 

2006,” 

3. “(IANANO) – as the fiscal agent in the nanotechnology training consortium created 

within this proposal – will serve as the training provider and coordinating 

entity . . .;” and 

4. “(IANANO) is a non-profit organization” and “IANANO has 3 divisions: Event 

Management (Nanotech Congress), Education and Training (California Institute 

of Nanotechnology), and the Publication Division (NanoHerald).” [emphasis 

added] 

It is unclear whether CINT was a product of the grant, a preexisting organization, or a 

division of IANANO. Review of documents provided by IANANO’s Executive Director 

indicated that IANANO and CINT are legally, separate organizations owned and/or 

controlled by the IANANO Executive Director and his wife. The Executive Director 

stated that CINT was established before the grant was awarded. In addition, review of 

the training activities revealed IANANO’s Executive Director charged training cost to the 

grant in addition to also getting paid by CINT and charging CINT consulting fees, while 

CINT conducted all the training and recorded all the training revenues. 

In October 2008, ETA conducted an onsite review. IANANO initially did not allow ETA 

access to the CINT records. ETA noted that it was unable to determine the accuracy of 

the financial results of the grant without access to CINT records. If ETA had been able 

to clarify this relationship prior to the award, ETA may have been in a better position to 

provide technical assistance from the outset of the award. Although this may not have 

ultimately prevented the problems ETA experienced on this award, ETA may have been 

able to take action sooner. 

Grant to IANANO 

16 Report No. 02-11-203-03-390 
 

 

 

 

 

 

 

 

 

 

Prepared by WithumSmith+Brown, P.C. 

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

Relationship between Budget and Grant Activities Was Not Clearly Identified 

The grant provided budgeted cost for each of the required cost categories. The grant 

terms included a budget, which provided detail as to how the grantee would spend the 

$1.5 million of the award. The grant budget was modified twice, and the original and final 

budgets are as follows: 

Table 1: Grant Budget 

Cost Category Original Budget Final Budget 

Personnel $ 97,500 $ 680,293 

Fringe Benefits 9,750 123,701 

Travel 10,800 11,438 

Equipment 26,400 16,329 

Supplies 5,550 73,391 

Contractual 1,350,000 163,567 

Other 216,657 

Indirect 214,624 

Total 1,500,000 $ 1,500,000 

Program Income $ 108,500 

The grant did not describe how the budgeted cost would be used to provide key products 

and services. For example, the original budget narrative did not specify how the 

$1,350,000 of contractual funding would be spent to produce key services and products 

required by the grant, such as classroom training and curriculum development. Review of 

the ETA grant selection process revealed that two of the three panelists who reviewed 

IANANO’s application identified the same weakness. In addition, IANANO’s final request 

for budget modification reflected a significant shift in use of the grant funds without 

providing how reallocation was used for grant purposes. 

ETA officials stated they require grantees to use the Federal Standard Form (SF) 424A 

for budgets. They explained the SF 424A does not allow for breakouts by project, rather 

by standard budget categories used for all grants. ETA said it would need to obtain 

Office of Management and Budget (OMB) approval for use of a non-standard grant form 

to request grantees to breakout costs by project. However, grantees are required to 

provide a budget narrative describing how cost categories were derived. If ETA would 

have requested the grantee to provide additional explanation for the budget, ETA may 

not have encountered the amount of difficulties in monitoring grant performance. In 

addition, ETA may have been able to provide better technical assistance to the grantee. 

Recommendations 

We recommend the Assistant Secretary for Employment and Training: 

1. Recover questioned costs of $1.5 million; 

Grant to IANANO 

17 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

2. Ensure first time grantees have systems in place to provide grant products and 

services; and 

3. Ensure grants are clear in regard to which entities provide services and cost 

categories associated with deliverables. 

We appreciate the cooperation and courtesies that ETA and IANANO personnel, former 

personnel, and program participants extended to WithumSmith+Brown during this audit. 

WithumSmith+Brown P.C. 

Grant to IANANO 

18 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Appendices 

Grant to IANANO 

19 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

PAGE INTENTIONALLY LEFT BLANK 

Grant to IANANO 

20 Report No. 02-11-203-03-390 
Appendix A Background 

	 

	 

	 

	 

	 

	 

	 

Prepared by WithumSmith+Brown, P.C. 

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

Appendix A 

Background 

HGJTI was a strategic effort to prepare workers to take advantage of new and 

increasing job opportunities in high growth, high demand, and economically vital sectors 

of the American economy. One of the sectors is Advanced Manufacturing, in which 

innovative strategies are needed to compete in the global marketplace. The 

Employment and Training Administration awarded HGJTI Grant No. HG-15852-07-60-

A-6 to IANANO for a project titled “High Growth Job Training Initiative Grants for the 

Advanced Manufacturing Industry” for $1.5 million. The period of performance was from 

November 1, 2006, to October 31, 2009. 

The purpose of the grant was to address the challenges posed by the manufacturing 

revolution driven by nanotechnology, including the lack of acceptable standards for 

developing nanotechnology curricula, and the lack of a talent pipeline and defined 

career pathways. The grant was intended to support IANANO’s four solutions, including: 

	 an Executive and Mid-Level Manager Business Re-engineering training course to 

provide insight on fundamental applications of nanoscience and nanotechnology; 

	 a Train the Trainers session for those who need advanced levels of technical 

training in nano-fabrication and nano-manufacturing, who will then in turn train 

additional workers in their companies; 

 a 13-week CNCP program targeted to dislocated, unemployed, and 

underemployed workers; and 

 the development of a Pre-Apprenticeship Program that will assist workers to work 

at nanotech companies while completing their training. 

ETA requested the audit because on-site monitoring reviews identified 15 findings of 

non-compliance with grant terms and conditions, and a disproportionate number of 

complaints of wrong-doing from former employees and others that worked with 

IANANO. These issues included: 

	 Continued denial of access to the financial records of CINT, a for-profit arm of the 

grant recipient under which the training of program participants was conducted; 

	 Failure of the grantee to recognize, account for, and report program income, 

despite the fact that it charged participants tuition of approximately $4,000 each 

for training under the grant; 

	 Failure to obtain an audit under the Single Audit Act for the period ending in 

March 2009; 

	 Absence of a comprehensive cost allocation plan to ensure proper allocation of 

costs among the grant and the grantee’s other non-grant activities, and possibly 

inappropriate application of its approved indirect cost rate; and 

	 Inadequate internal controls and financial accounting system. 

Grant to IANANO 

21 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

PAGE INTENTIONALLY LEFT BLANK 

Grant to IANANO 

22 Report No. 02-11-203-03-390 
Appendix B Objectives, Scope, Methodology, and Criteria 

Prepared by WithumSmith+Brown, P.C. 

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

Appendix B 

Objectives, Scope, Methodology, and Criteria 

Objectives 

The objectives of our audit were to determine: 

1. Were financial transactions and program activities in accordance with the grant 

agreement and Federal cost principles? 

2. Was information the grantee reported to ETA accurate? 

3. Were grant terms for expenditures and deliverables clearly defined? 

Scope 

Our performance audit covered the period of the award from November 1, 2006, to 

October 31, 2009. Because this was a performance audit, our audit was not designed to 

provide an opinion on the internal controls of IANANO or to provide an opinion on the 

fair presentation of a schedule of award expenditures provided by the awardee. 

Accordingly, we provide no such opinions. We did not verify the total number of 

participants served. 

We conducted onsite visits to IANANO headquarters, the San Francisco ETA Regional 

Office, and the ETA National Office. 

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 provided a reasonable basis for our findings and conclusions based on our 

audit objectives. 

Methodology 

To accomplish our audit objectives, we obtained an understanding of the grant’s 

objectives by reviewing the grant agreements, solicitation for grant applications, grant 

modifications, progress reports, and financial reports, ETA monitoring reports, and other 

correspondence and related documents. We identified criteria key to the administration 

of the grant in the grant agreements and reviewed applicable IANANO policies and 

procedures. We conducted procedural walkthroughs with IANANO managers to obtain 

an understanding of administration and financial procedures for reporting performance 

data and charging costs to the DOL Grant. We reviewed documentation supporting the 

participant data reported to DOL and documentation supporting expenses charged to 

the grant. 

Grant to IANANO 

23 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

In performing the audit, we evaluated internal controls used by IANANO for reasonable 

assurance that the DOL grant was administrated in accordance with Federal and 

internal requirements. Our consideration of IANANO’s internal controls for administering 

the DOL grant would not necessarily disclose all matters that might be reportable 

conditions. Because of inherent limitations in internal controls, misstatements, losses, or 

noncompliance may nevertheless occur and not be detected. 

We assessed the reliability of performance and financial data. For the performance 

data, we obtained an understanding of the systems and methods used to collect and 

report participant outcome data. We concluded that data reported to ETA was not 

complete and not sufficiently reliable. For the financial data, we assessed the reliability 

of the general ledger and the timekeeping system, and determined that this data was 

not sufficiently reliable. 

We analyzed participant data to determine if there was evidence that participants 

actually completed the training reported by IANANO. We also conducted interviews with 

15 participants regarding certain aspects of the training programs. 

To audit labor costs, we reviewed 100 percent of the timesheets provided to us and also 

interviewed two IANANO managers and one former employee. We determined that the 

timekeeping system supporting the labor costs charged to the grant was not reliable. 

Our audit of indirect costs consisted of obtaining and reviewing IANANO’s approved 

indirect cost rate agreement and determining if the approved rates were properly 

applied to the correct base. 

Our audit did not include transaction testing of individual charges to the grant award. 

Criteria 

We used the following criteria to accomplish our audit: 

 OMB Circular A-122, dated May 10, 2004 

 OMB Circular A-110, dated September 30, 1999 

 Uniform Administrative Requirements 29 CFR Part 95 

 American Competitiveness and Workforce Improvement Act, dated 

October 21, 1998 

 HGJTI Grant No. HG-15852-07-60-A-6 terms and conditions, dated 

November 30, 2006, as amended 

Grant to IANANO 

24 Report No. 02-11-203-03-390 
Appendix C Acronyms 

 

Prepared by WithumSmith+Brown, P.C. 

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

Appendix C 

Acronyms 

BE/TT Business Re-engineering and Train-the-Trainers 

CD Compact Disc 

CFR Code of Federal Regulations 

CINT California Institute of Nanotechnology 

CNCP Certified Nanotech and Cleantech Professional 

DOL Department of Labor 

ETA Employment and Training Administration 

HGJTI High Growth Job Training Initiative 

IANANO International Association of Nanotechnology 

OIG Office of Inspector General 

OMB Office of Management and Budget 

SF Standard Form 

SGA Solicitation for Grant Applications 

SOW Statement of Work 

WS+B WithumSmith+Brown 

Grant to IANANO 

25 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

PAGE INTENTIONALLY LEFT BLANK 

Grant to IANANO 

26 Report No. 02-11-203-03-390 
Appendix D IANANO Response 

Prepared by WithumSmith+Brown, P.C. 

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

Appendix D 

IANANO Response 

Grant to IANANO 

27 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

28 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

29 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

30 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

31 Report No. 02-11-203-03-390 
 

Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

32 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

33 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

34 Report No. 02-11-203-03-390 
 

Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

35 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

36 Report No. 02-11-203-03-390 
 

Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

37 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

38 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

39 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

40 Report No. 02-11-203-03-390 
Appendix E ETA Response 

Prepared by WithumSmith+Brown, P.C. 

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

Appendix E 

ETA Response 

Grant to IANANO 

41 Report No. 02-11-203-03-390 
Prepared by WithumSmith+Brown, P.C. 

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

Grant to IANANO 

42 Report No. 02-11-203-03-390 
	 

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