1). Grant Monitoring at Education

Education describes its grant management processes as a “cradle-to-grave”  strategy. Education’s grant monitoring practices and procedures require that  program office staff undertake numerous activities to monitor grantees for  compliance with administrative, financial, and performance regulations  and requirements to protect against fraud, waste, and abuse of federal  resources. Education Has Made Uneven Progress in Implementing a Department-wide, Risk-based Approach to Grant Monitoring

Education allows individual program offices to develop their own  procedures for assessing grantee risk. While the department has not yet  provided department-wide guidance on grantee risk assessment, the Risk  Management Service (RMS) is planning to introduce several new efforts  designed to help in this area. In 2007, the department’s Grants Pilot Project Team  recommended the establishment of a coordinated, comprehensive, and  department-wide approach to risk-based grant monitoring for  discretionary and formula grants. The Secretary created RMS in October  2007 to work with all components of the department to ensure that each  office has effective procedures in place to assess and mitigate risk among  its grantees. Specifically, RMS is to develop tools to assess grantee risk for  use throughout the department and train department staff to use the  tools. While some of Education’s program offices are making progress assessing  and managing grantee risk as discussed above, staff in three other program  offices described significant limitations of the risk assessment process in  place for their grant programs:    Program specialists in one office told us that experienced program  specialists rely on their skills and experience to determine what to look  for. Limitations in Financial Expertise and Training Hinder Education’s Ability to Effectively Monitor Grantees

Directors and supervisors in the program offices we visited noted that  while their staff generally have the expertise needed to perform their  monitoring duties, limited financial expertise and training hinder effective  monitoring of grantees’ compliance with financial requirements. While  monitoring protocols aid in reviewing compliance with basic financial  requirements, the ability to verify or evaluate what grantees report about  their use of funds is limited by a lack of expertise. 1) on financial  compliance issues. Education has not assessed the effectiveness of using contractors to  conduct fiscal monitoring. 3). While  management staff in some offices said they share information on  promising practices through informal contacts and networks, managers in four of the offices we visited said that a means to share such information  more systematically would be helpful to all offices and a good way to  improve grant monitoring practices. Conclusions

Since it created RMS in October 2007, Education has made progress in  developing a risk-based approach to monitoring its more than 18,000  grantees. Appendix I: Comparison of Grant Funding in the Department of Education’s Principal and Program Offices

Each pie chart in figure 4 represents a principal office in Education that  awards grants to state and local educational agencies, institutions of  higher education, and other eligible entities. The unlabeled  slices represent the program offices that were not included in our review.
Why GAO Did This Study

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.

What GAO Found

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.