Grant Monitoring:

Department of Education Could Improve Its Processes with Greater Focus on Assessing Risks, Acquiring Financial Skills, and Sharing Information

GAO-10-57: Published: Nov 19, 2009. Publicly Released: Nov 19, 2009.

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The Department of Education (Education) awards about $45 billion in grants each year to school districts, states, and other entities. In addition, the American Recovery and Reinvestment Act of 2009 provided an additional $97 billion in grant funding. In a series of reports from 2002 to 2009, Education's Inspector General cited a number of grantees for failing to comply with financial and programmatic requirements of their grant agreements. GAO was asked to determine: (1) what progress Education has made in implementing a risk-based approach to grant monitoring, (2) to what extent Education's program offices have the expertise necessary to monitor grantees' compliance with grant program requirements, and (3) to what extent information is shared and used within Education to ensure the effectiveness of grant monitoring. To do this, GAO reviewed agency documentation related to Education's internal controls and interviewed senior Education officials and staff in 12 of the 34 offices that monitor grants.

In October 2006, Education began to look at ways to improve the efficiency and effectiveness of the department's grant management processes; in particular, it sought ways to more effectively monitor its grants after they were made. In 2007, Education created the Risk Management Service (RMS) to work with all components of the department to ensure that each office has an effective risk management strategy in place. Effective monitoring protocols and tools based on accepted control standards are key to ensuring that waste, fraud, and abuse are not overlooked and program funds are being spent appropriately. Such tools include identifying the nature and extent of grantee risks and managing those risks, having skilled staff to oversee grantees to ensure they are using sound financial practices and meeting program objectives and requirements, and using and sharing information about grantees throughout the organization. Our review of Education's current grant monitoring processes and controls found that it: (1)Has made uneven progress in implementing a department-wide, risk-based approach to grant monitoring. Education has not disseminated department-wide guidance on grantee risk assessment, but it has planned some new efforts in this area. In the absence of guidance on a department-wide risk assessment strategy, individual program offices have developed their own strategies for assessing and managing risk that vary in rigor. (2) Has limited financial expertise and training, hindering effective monitoring of grantees' compliance with financial requirements. Education has monitoring tools that aid in reviewing basic financial compliance, but the lack of staff expertise limits the ability to probe more deeply into grantees' use of funds. (3) Lacks a systematic means of sharing information on grantees and promising practices in grant monitoring throughout the department. These shortcomings can lead to weaknesses in program implementation that ultimately result in failure to effectively serve the students, parents, teachers, and administrators those programs were designed to help.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: In order to better target grant monitoring and ensure that monitoring staff have the knowledge and information that would help them focus their monitoring efforts, the Secretary of Education should develop department-wide guidance on risk assessment, continue effodevelop new grantee risk assessment tools that can be implemented department-wide, and work with the program offices to ensure these tools are implemented.

    Agency Affected: Department of Education

    Status: Closed - Implemented

    Comments: Education issued a bulletin requiring that discretionary grants up for renewal undergo a risk assessment based on their financial and performance information as well as any compliance or audit findings. Also, the Department's Risk Management Service (RMS), in collaboration with the principal offices, has pilot tested and is implementing use of a tool for program offices to assess risks for discretionary grantees. This tool uses known information about individual grantees past performance to calculate risk scores for administration, financial management, and internal controls. Training on the use of this tool has been provided and continues to be open to both discretionary and non-discretionary (i.e., formula grant) program office staff. As of July 2012, over 100 grantees have been assessed using this tool. RMS has also issued a risk-based grant monitoring guide and a comprehensive Risk Mitigation Guide for both discretionary and non-discretionary programs to use in assessing grantee risk and identifying strategies to mitigate for particular types of risk.

    Recommendation: In order to better target grant monitoring and ensure that monitoring staff have the knowledge and information that would help them focus their monitoring efforts, the Secretary of Education should implement a strategy to ensure each program office has staff with sufficient financial monitoring expertise to conduct or assist other program specialists in conducting financial compliance reviews. This could include proceeding with plans for enhanced financial training analso assessing options such as using dedicated staff or contractors to conduct grantee financial reviews.

    Agency Affected: Department of Education

    Status: Closed - Implemented

    Comments: Education has developed a 32 hour course entitled "Monitoring Financial Management of ED Grants." It has been piloted and opened for regular enrollment to all ED staff since May 2011. The objective of the course is to develop skills to plan, conduct, and document fiscal monitoring assignments and recognize potential problems, including identifying more complex issues and referring them to an appropriate authority for further review. Education reports that feedback from course participants has been positive and that it plans to keep it open through February 2015. At least 150 Department staff have completed the course. Because of resource and staffing constraints, the Department is not planning to develop any centralized grant financial monitoring capability.

    Recommendation: In order to better target grant monitoring and ensure that monitoring staff have the knowledge and information that would help them focus their monitoring efforts, the Secretary of Education should develop an easily accessible mechanism for sharing information across aoffices about grantees' past and present performance, and an accessibleforum for sharing promising practices in grant monitoring to ensure all program offices are able to effectively and efficiently perform all of their duties and responsibilities.

    Agency Affected: Department of Education

    Status: Closed - Implemented

    Comments: Education rolled out a SharePoint site in February 2012. It is accessible to all staff through the Department's intranet. Among the information available from the site are risks identified for specific grantees and mitigation actions to address the risks such as attaching award conditions, sharing and exchanges of promising monitoring practices, and sections of a Risk Mitigation Guide being drafted. Information being developed for inclusion in the future consists of analyses of audit findings for the Department's programs and summaries of the most frequently occurring audit findings across programs.

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