Audit of New Mexico's Title IV-E Contracted University Training Costs for the 2-Year Period Ended September 30, 2002

EXECUTIVE SUMMARY:

The New Mexico Children, Youth and Families Department (the State agency) contracted with three State universities to provide a portion of its Title IV-E training needs. Our objective was to determine whether the Federal share of the three universities' Title IV-E training costs claimed by the State agency was allowable, supported, and allocated in accordance with Federal requirements. 

For the 2 years ended September 30, 2002, the State agency claimed $4,625,600 (Federal share) of allowable and $1,188,154 (Federal share) of unallowable or unsupported Title IV-E training costs. In addition, the State agency claimed $47,734 for one university that incorrectly computed administrative costs using an unsupported indirect-cost rate. 

We recommended that the State agency: (1) refund $1,188,154 to the Federal Government, (2) work with the Administration for Children and Families to identify the allowable portion of the $47,734 in indirect costs allocated to the Title IV-E program, (3) implement procedures to adequately review university contracts and amend the contracts as necessary to comply with Federal requirements that limit administrative costs to the 50-percent administrative rate when the requirements of 45 CFR § 235.64 are not met, and (4) implement procedures to more closely monitor university billings to ensure that universities bill only for costs that are allowable and supported in accordance with program requirements. The State agency partly agreed.