The latest federal audit of spending at Los Alamos National
Laboratory, released Monday, revealed an additional $14.6 million
in “potentially unallowable costs.”
The findings came on the same day as the results of an external
review conducted by Ernst and Young LLP, which outlined suggestions
about how the lab can improve accounting, property management and
other procedures.
The lab, managed by the University of California, has been the
subject of many federal investigations of fraud and improper
spending in the past several months.
Gregory Friedman, the U.S. Energy Department’s inspector
general, recommended in the audit that the UC repay any unallowable
purchases, improve its internal controls, and pay a penalty.
“The questioned costs described in this report can … be
attributed in large measure to management decisions and policies
that did not ensure the interests of federal taxpayers were
adequately protected,” Friedman said in the report.
The audit focused on questionable costs for meals, travel costs
and the cost to conduct internal audits that did not meet federal
requirements.
Interim Lab Director Pete Nanos took “strong
exception” to the findings.
“We believe we have been consistent with … federal
requirements and guidance for allowable and unallowable
costs,” Nanos said in a statement.
Michael Reese, UC press aide, said the university strongly
disagrees with Friedman’s recommendation that the UC repay
the federal government.
“We completely, completely reject their argument and their
line of reasoning,” he said, adding that university officials
have concurred with the findings of earlier audits.
The Energy Department investigated $5.2 billion in lab costs
charged to the federal contract from fiscal year 2000 through
2002.
A majority of the charges for meals and entertainment, along
with all internal audit charges, were deemed questionable in the
audit, totalling $7.16 million.
The remaining questionable charges were travel claims that the
Energy Department said did not meet federal travel regulations.
Along with purchase discrepancies, the audit found a series of
“internal control weaknesses” at the lab which allowed
the questionable costs to occur.
The findings are similar to an earlier investigation of the
lab’s purchase cards, which revealed the lab was vulnerable
to fraud and abuse.
The university commissioned a series of external evaluations
after these discoveries, and the Ernst team’s 100-plus page
review is the latest of these reports.
It is a specific guide for improvements in seven areas of lab
business “”mdash; accounts payable, banking, budget execution, cash
receipts, information technologies, payroll and property management
and accounting.
In particular, the team recommended that the lab change business
practices before rolling out its new integrated business software
next year. The new software will allow managers to track
purchasing, inventory and other business activities using one
computer program instead of relying on several stand-alone
systems.
With reports from Daily Bruin wire services.