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Audit Report 0-29: Audit of Minority Business Enterprise Legal Defense and Education Fund, Inc., (the Fund), Cosponsorship Expenses and Income.

Date Issued: 
Friday, September 29, 2000
Report Number: 
0-29

On September 29, 2000, the OIG issued Audit Report 0-29, Audit of Minority Business Enterprise Legal Defense and Education Fund, Inc., (the Fund), Cosponsorship Expenses and Income.  The purpose of this audit was to determine whether (1) the payments made to the Fund for services related to the cosponsorship were justified, (2) to determine the Fund’s compliance with the terms of the cosponsorship agreement, and (3) determine whether the Fund properly accounted for the fee income it collected. The agreement required the Fund to submit

invoices to justify expenditures.  Further, the agreement provided that the SBA and the Fund, which is located in Washington, DC, would cosponsor training regarding new 8(a), HUBZone, and Small Disadvantaged Business (SDB) rules and contracting procedures.  The agreement also  provided for training to take place in 12 major cities from October 1998 through April 1999. As SBA’s cosponsor, the Fund was responsible for general administration as well as executing and overseeing various contracts for the training events, such as curriculum development, marketing, printing of workshop material, workshop logistics, and onsite services. The estimated cost of the cosponsorship was $1,337,800. The approved budget called for Federal funding of $900,000, income from attendee fees of $308,335, and an in-kind contribution from the Fund of $129,465.  In conducting this audit, the OIG considered an expense to be unjustified if it had no accompanying invoice, was already paid, unrelated to the cosponsorship activity, or if the expense was never incurred.

 

The OIG determined that the Fund had received $646,611 in Federal funding when the cosponsored activity was completed.  Further, the Fund reported that it had received $81,545 from attendee fees.  However, OIG found that the Fund did not provide the records necessary to determine whether it properly accounted for these fees, nor did it provide any support for in-kind contributions.  Specifically, the Fund did not provide the records necessary to determine the extent of their non-compliance with the in-kind contribution and whether the Fund properly accounted for the fee income it collected.   Further, the OIG found that the Fund was paid $121,394 for unjustified expenses under the cosponsorship.  In addition, it did not provide the amount of in-kind contribution agreed upon in the agreement and did not provide the auditors with documentation supporting the accuracy of the $81,545 that it reported as fees collected. The OIG issued two findings and two recommendations.