Results of Auditing at the Council for Economic Opportunities in Greater Cleveland

In response to allegations of fraud and abuse disclosed by various audits of Government programs, GAO reviewed the Council for Economic Opportunities in Greater Cleveland and its subgrantees to determine if action was taken to correct the management deficiencies which permitted the fraud and abuse to occur. In addition, GAO tested other similarly funded or constituted grantee organizations in other locations to determine whether comparable situations exist. The Council receives funds from the Departments of Health, Education and Welfare and Agriculture, and the Community Services Administration. GAO used accounting firm audit reports and workpapers to review Council activities. The auditors noted: unauthorized loans from the Council's checking accounts, some of which have not been repaid; diversion and embezzlement of Federal funds; dual, excessive, and unsupported reimbursement for travel costs; unauthorized payroll advances and bonuses to Council and subgrantee staff; and unauthorized credit cards charges for personal use by subgrantee staff. While the Council stated that corrective measures have been taken to prevent a recurrence of the problems described and to recover the funds, GAO found it has not corrected the entire situation and as a result, some abuse and possible fraudulent use of Federal funds still exist.