Prince George's County has shaken up the management of its federal jobs funding after the disclosure of fiscal lapses and questionable transactions in a corporation charged with running employment services, officials said yesterday.

A new report from the Maryland Office of Legislative Audits cast a critical light on the Prince George's Workforce Services Corp., until recently the county's designated recipient and administrator of certain federal funds for job training and services.

Auditors questioned payments totaling $391,000 from July 2001 to April 2004 to a contractor who was related to a senior corporation employee. They said the contractor, unnamed in the report, received payments for consulting, a house renovation and maintenance services without competitive bids and, in some cases, without documentation to verify that work was done. The employee also was not named.

James D. Fielder Jr., Maryland's secretary of labor, licensing and regulation, said the issues raised in the report were "very serious, in terms of the public must trust the delivery of services."

The report's findings were referred to the state attorney general, and from there, to the Prince George's state's attorney's office for possible criminal investigation. A spokesman for State's Attorney Glenn F. Ivey declined to comment.

Meanwhile, County Executive Jack B. Johnson (D) announced that Workforce Services Corp., based in Landover, would no longer handle jobs-program funding. That responsibility now belongs to the county's Economic Development Corp., another private nonprofit group, based in Largo.

Johnson said the change was made to "energize workforce development in the county" after he became aware of "performance problems" within Workforce Services Corp.

Johnson's predecessor, former county executive Wayne K. Curry (D), had named Workforce Services Corp. as the county's jobs-program administrator in June 2000.

Curry did not immediately respond to a telephone message left yesterday afternoon.

Joseph T. Puhalla, who was president of Workforce Services Corp. during the period analyzed by auditors, could not be reached for comment at a residential phone number listed in Bowie.

The federal funding at issue is significant. In the fiscal year that began July 1, Maryland received about $31 million under the federal Workforce Investment Act. That money flows through a dozen entities across the state to local jobs programs. The share for Prince George's this year is $3.7 million.

Bruce A. Myers, the state legislative auditor, said his review of Workforce Services Corp. began in April after the state received a tip on a fraud hotline. The report, issued last month, raised questions about no-bid transactions and various dealings between the corporation and those doing business with it.

"It doesn't appear to be at arm's length," Myers said in a telephone interview, "and this is taxpayer money."

Auditors found that the corporation ran a deficit of $2.1 million as of June 30, 2004, and missed a deadline for filing a required financial statement audit for fiscal 2004. They also found various record-keeping problems and inaccuracies in the corporation's federal tax return for fiscal 2004.

Among the questionable transactions, the report said, were:

* Payments totaling $391,000 to one contractor under a no-bid arrangement, which included $231,000 for consulting and $108,000 for renovating a house purchased in 2001.

* More than $1,000 paid to the same contractor for work on a house belonging to a relative of a corporation officer.

* About $198,000 in payments to another contractor, in Oregon, also without bids. Of that total, $90,000 was meant, in part, to develop two databases. But they were never delivered, and auditors could not substantiate an explanation that other services were provided instead.

Auditors also found no current lease agreement or evidence that bids were solicited for space for the corporation's headquarters. Over two years, the corporation paid $927,500 to a management company with an official who was related to a corporation employee, auditors found.