The Office of the Inspector General, Audit Division, has completed an audit of the National Institute of Justice cooperative agreement, awarded by the U.S. Department of Justice, Office of Justice Programs (OJP), National Institute of Justice (NIJ) to the Lane County Department of Youth Services (LCDYS), located in Eugene, Oregon. The purpose of this agreement, Juvenile Breaking the Cycle (JBTC), is to provide an alternative to standard incarceration for juveniles convicted of alcohol and drug abuse. Using a combination of a new county facility, non-profit residential accommodations and post sentence counseling, JBTC intends to address the core problems facing today's youth, which often manifests its self in drug and alcohol abuse. As of September 24, 1999, LCDYS was awarded a total of $3,752,569 to implement their strategy to provide local governments with an alternative to the complex issue of teen drug and alcohol abuse. We tested the accounting records of the LCDYS for JBTC to determine if reimbursements claimed for costs under the grant were allowable, supported, and in accordance with applicable laws, regulations, guidelines, and terms and conditions of the grant.

Of the $3,062,138 expended as of September 30, 2003, we tested transactions totaling $405,053. We noted expenditures as they relate to budgeting and purchasing policies that resulted in the questioning of $74,670 in grant funds received. In brief, we found:

• LCDYS did not receive prior approval for transfers between budget categories that exceeded the allowable ten percent of the grant award. Upon completion of our audit, NIJ approved the budget modifications.

• LCDYS changed the format and submission dates of their progress reports without formal approval from NIJ, as required in the award document.

• Eight out of 17 Financial Status Reports were not submitted on time.

These items are discussed in detail in the Findings and Recommendations section of the report. Our audit objectives, scope, and methodology appear in Appendix II.