Review of Internal Controls Over Independent Living Program Funds Awarded States

EXECUTIVE SUMMARY:

This report points out that the Administration for Children and Families' (ACF) internal controls were inadequate to safeguard Independent Living Program (ILP) funds from unauthorized expenditure and to prevent States from violating the spending cutoff dates established by legislation. Although there were several weaknesses noted, the most significant was the lack of a single control to prevent funding draws or expenditures after the spending cutoff dates. The controls appeared more oriented to the award amount, and permitted all transactions up to that amount, regardless of when the transactions occurred. We have concluded that ACF's inability to prevent State violations of the spending cutoff dates constitutes a significant program weakness in internal controls. The weaknesses in internal controls were a contributing factor to the States' failure to comply with the spending cutoff dates and Federal reporting requirements. As a result, $16.7 million of the $135 million of ILP funds awarded to States in Fiscal Years 1987 through 1989 was either spent or at risk of being spent after the spending cutoff dates.