Status of Open World Exchange Program's Efforts to Strengthen Financial Management and Performance Measurement

What GAO Found

Since our 2004 report, Open World has taken a number of steps to address our recommendations on financial management controls, and has also generally followed leading financial management practices. For example, to address our recommendations, Open World (1) contracted with an independent public accountant to perform an assessment of its ability to be audited; (2) developed Financial Procedures and Directives guidance that covers key activities such as grants; (3) developed the Grant Procedures document, which enhanced accountability for its grantees; (4) submitted its financial statements to an annual financial statement audit since fiscal year 2005, resulting in clean audit opinions since fiscal year 2006; (5) established an audit committee, comprised of independent members that have financial and programmatic knowledge, which also reviews management's annual assessment of its internal controls; and (6) developed guidelines for grantees to calculate and report the estimated value of U.S. volunteers' contributed services, and also disclosed this value as part of its annual budget justification. Open World's financial management controls also generally followed leading practices for financial accountability. For example, Open World (1) developed appropriate policies, procedures, techniques, and mechanisms with respect to each of the agency's activities; (2) developed guidance aimed at ensuring that transactions are properly documented, approved, and processed; and (3) performed ongoing monitoring of its transactions through annual financial audits since fiscal year 2005. Open World has plans to further enhance its financial management controls to better align its grant monitoring with leading practices by performing reviews of grantees' compliance with grant agreement guidelines.

Open World has taken a number of steps that address our 2004 recommendations and reflect several leading practices for performance measurement. For example, to address our recommendations, Open World established its first strategic plan covering fiscal years 2007-2011 and later issued an updated plan covering fiscal years 2012-2016. In addition, it (1) presented to the Board the first comprehensive quantitative analysis of annual achievement on each of its performance measures for fiscal years 2007 through 2011; (2) implemented periodic reports from program participants, hosts, and contractors that provide standardized information about program performance and results; and (3) is currently converting its performance databases to a web-based system intended to reduce time needed to report on program feedback and performance. As of August 2012, Open World's efforts were generally consistent with several of the key attributes that GAO has identified for successful performance measures. For example, most performance measures in Open World's strategic plan were clearly stated and could allow for objective data to be collected. Although Open World had some intended outcomes that did not link to corresponding measures or program activities that contribute to achieving these outcomes, Open World officials stated in September 2012 that they revised their performance measures to ensure that they directly link the activities of the program to the objectives in their strategic plan. In June 2012, Open World set numerical targets that could allow management to more systematically track its performance against program goals, but Open World had not yet developed an agency performance plan or released annual updates comparing its performance targets to actual results. During August 2012 discussions with us, Open World officials agreed to take the additional steps of preparing an annual performance plan and reporting annual updates publicly to further align their performance measurement efforts with leading practices. In September 2012, Open World officials stated that they had finalized an annual performance plan.

Why GAO Did This Study

Since its establishment in 1999, the Open World Leadership Center (Open World) exchange program has brought nearly 18,000 emerging leaders from Russia and 13 other participating countries to the United States to give them firsthand exposure to the U.S. economic system and democratic institutions. Open World is governed by a Board of Trustees and has seven permanent staff, led by an Executive Director, that work with numerous partners to carry out its program. U.S. embassies in participating countries play a key role by nominating many individuals for the program, vetting applicants for final selection, and processing visas for participants. Open World awards grants to U.S. national host organizations that, in conjunction with local partners, develop programs for participants and arrange home stays. Program participants stay in the homes of American host volunteers.

In 2003, Congress asked us to review Open World's progress toward achieving its overall purpose and whether the program had appropriate financial management and accountability mechanisms in place. As a result of our review, we issued a report in 2004 that contained eight recommendations aimed at enhancing Open World's financial management and performance measurement. In 2011, Congress directed us to determine the actions the program had taken to implement our 2004 recommendations. In response to the mandate, we reviewed (1) Open World's actions to address our recommendations on financial management and internal controls, and how the program's current financial management controls compare with leading practices for accountability; and (2) the program's actions to address our recommendations on performance measurement and how its mechanisms for performance measurement compare with leading practices.

For more information, contact Michael Courts at (202) 512-8980, or courtsm@gao.gov, or Beryl H. Davis at (202) 512-2623, or davisbh@gao.gov.