We audited the Office of Labor Relations deposit account based on a request from the Acting Director of the Office Labor Relations. The Acting Director was concerned with internal controls over the deposit account. The objective of our review was to determine whether (1) controls used to administer and distribute restitution payments were adequate and (2) the correct workers received the restitution payments.

Labor Relations violated the Miscellaneous Receipts Act when it retained liquidated damages, which should have been transferred to the U.S. Treasury. It also indefinitely retained in its deposit account funds categorized as unclaimed funds, unfound depositors, and unfound workers. As a result, more than $1.3 million in funds was withheld from use by various programs within the Federal Government.

Labor Relations mismanaged project deposit funds; specifically, it did not conduct a recurring reconciliation of the deposit account. It also expended $20,000 to cover the Civic Lofts project payments,
which was more than the actual balance for the project deposit. As a result, its deposit account balance did not reconcile with the balance maintained by the Office of the Chief Financial Officer and the Treasury.

Labor Relations did not (1) pay the Internal Revenue Service (IRS) 2010 taxes withheld from the employee’s wage restitution in a timely manner and (2) properly address the employer’s share of the taxes. As a result, it delayed paying the IRS more than $200,000 for the 2010 employee’s share of the taxes and could owe the IRS an additional $40,000 for the employer’s share of the taxes.