Strong Internal Controls at Service Delivery Level Will Help Prevent CETA-Type Fraud and Abuse in Job Training Partnership Act Programs

In response to a congressional request, GAO reviewed fraud in the Comprehensive Employment and Training Act (CETA) programs to: (1) determine the patterns and underlying causes of the fraud and abuses; and (2) identify ways new job training programs under the Job Training Partnership Act (JTPA) should be organized and managed to prevent similar problems.

GAO analysis of a sample of CETA fraud cases for fiscal years 1981 and 1982 showed that fraud and abuse: (1) was most often detected in the CETA Classroom/On-the-Job Training and Transitional Employment, Public Service Employment, and Youth Programs; (2) most often occurred at the subgrantee level and primarily involved subgrantee personnel or CETA participants; and (3) occurred largely because of the weak internal controls of the organizations providing CETA services. In addition, GAO found that the Department of Labor's inspector general (IG) could better inform Congress and agency heads about fraud and abuse if improvements were made in his fraud database. Adequate internal controls will be especially important at the service delivery level under JTPA. Therefore, Labor's IG audited JTPA implementation plans of each of the 50 states and 7 other entities. The audit found numerous weaknesses in the states' plans to ensure the adequacy of controls of their service delivery subgrantees. The IG recommended that the Employment and Training Administration (ETA) review all the states' procedures and controls during the first months of JTPA operations. ETA complied with the recommendation and found that nearly all critical systems have been developed but, at the time of the GAO audit, ETA had not yet verified that the procedures were fully implemented and working as recommended by the IG.