Performance Audit of AmeriCorps Grants Awarded to YouthBuild USA

The audit of AmeriCorps grants awarded to YouthBuild USA found that AmeriCorps was aware of inconsistencies between Federal Statute and Federal Regulations concerning limitations on Federal share of member living allowance and member support costs beginning in 2009 and neither updated its Federal regulations nor effectively explained the inconsistencies to grantees. In addition, YouthBuild did not comply with Federal or AmeriCorps requirements, resulting in $3,604,355 of questioned Federal and match costs. The audit identified an additional $3,087,791 in funds put to better use. The questioned costs and funds put to better use stem from YouthBuild’s ineffective system of internal controls over timekeeping that failed to provide reasonable assurance that it and its subgrantees are adequately managing AmeriCorps funds. YouthBuild’s weak internal controls allowed a subgrantee to recruit prospective and existing employees as AmeriCorps members and permit them to earn and receive education awards for the same hours worked fulfilling their normal employment duties. In addition, YouthBuild’s timekeeping and member training hours policies significantly deviated from Federal regulations and AmeriCorps’ policy; and YouthBuild did not sufficiently monitor its subgrantees to detect instances of non-compliance with its policies. AmeriCorps agreed to disallow $3,083,528 in questioned costs due to the YouthBuild subgrantee recruiting employees as AmeriCorps members and other instances of subgrantee non-compliance undetected by YouthBuild’s monitoring. However, AmeriCorps did not agree with recommendations to disallow the remaining $520,827 of questioned costs related to noncompliant timekeeping practices and to require YouthBuild to pay $3,087,791 in outstanding education awards. These decisions by AmeriCorps increase the likelihood that grantees will adopt fraudulent timekeeping practices and put a significant amount of AmeriCorps funds at risk.