Audit Division

Audit Summary


Department of Employment, Training

and Rehabilitation

Rehabilitation Division

Vocational Assessment Centers

Report LA02-06



Results in Brief


The Vocational Assessment Centers operated without sound financial and administrative practices.Key decisions regarding the Centersí operations were made without adequate information.In 1997, the Legislature approved the Divisionís request to establish a fee-for-service system and a separate budget account for the Centers.However, the Division had not adequately planned for this change.Because management set the fees too low to cover expenses, the Centers did not become self-supporting as anticipated.

††††††††† Weak financial and administrative controls contributed to the Centersí financial difficulties.The Centers had problems billing for services, bidding for production contracts, and controlling expenditures.Because of poor controls and anticipated budget shortfalls, the Division abandoned the fee-for-service funding process in February 2000.

††††††††† Division management has proposed additional changes in the Centersí operations for the 2002-2003 biennium without gathering adequate information.These changes include the elimination of the Centersí sheltered workshops and related services at both Centers.However, the Division has not collected sufficient information to evaluate the effect these changes will have on its clients or finances during the biennium.As a result, service to some clients may be in jeopardy.

Principal Findings


       In 1994, Division staff recommended the Centers establish a fee-for-service system and drafted a transition plan.However, the plan did not include establishing a system of management controls necessary to measure, report, and monitor the Centersí performance.For example, management did not establish a system to track profitability or determine overhead costs attributable to each production job.(page 9)

       Although the Centersí costs increased by about 30% from 1995 to 2000, some fees charged for its services were lowered.Fees were reduced in all cases where comparable services were provided during this 6-year period.For example, the Las Vegas Center charged $400 a week for situational assessment and work adjustment services in 1995.By 1998, the fee had dropped to $300 a week.(page 9)

       Controls over billing for both production and assessment services are weak.We found about $10,000 of services provided for which no payments were received.(page 10)

        The Centers had weak controls over preparing bids for contract work and approving contracts.This problem was further compounded by not tracking the profitability of each production job.(page 11)

       In February 2000, the Centers stopped billing for services to clients referred from other agencies within the Division.In order to compensate for the lost revenues, the Division transferred $675,000 from the Bureau of Vocational Rehabilitationís budget account into the Centersí budget account.(page 12)

       The Centers reported providing production-related assessment services to over 650 clients during fiscal year 2000.However, the Divisionís transition plan, dated October 31, 2000, does not show how the Division plans to continue providing a like number of services once the Centersí sheltered workshops close.In addition, the Division has not evaluated the cost of providing similar services nor has it analyzed the benefits of replacement services compared to the services provided in its sheltered workshops.(page 14)

Agency Response

to Audit Recommendations




††††† Number††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Accepted††††††††† Rejected


††††††††††† 1†††††††††††††† Compile and analyze information necessary to make informed

†††††††††††††††††††††††††††† decisions regarding the administration of the Centers.††††††††††††††††††††††††       X     ††††††††††              


††††††††††† 2†††††††††††††† Establish fees sufficient to cover estimated costs.†††††††††††††††††††††††††††††††       X     ††††††††††              


††††††††††† 3†††††††††††††† Establish procedures for ensuring all fees for services are billed

†††††††††††††††††††††††††††† and collected.††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††       X     ††††††††††              


††††††††††† 4†††††††††††††† Ensure purchases are reviewed and approved by management.††††††††††       X     ††††††††††              


†††††††††††††††††††††††††††† †††††† TOTALS††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††       4     ††††††††††       0