We provided information  on these schools to Education for follow-up. We identified over $32 million of other potentially improper grant and loan  payments. Ineffective Controls over Third Party Drafts Led to Their Elimination

As we testified in April and July 2001, significant internal control  weaknesses over Education’s process for third party drafts markedly  increased the department’s vulnerability to improper payments. We also found that  Education employees circumvented a key computer system application  control designed to prevent duplicate payments. Poor Controls over Government Purchase Cards Resulted in Some Fraudulent, Improper, and Questionable Purchases

In our July 2001 testimony before this subcommittee, we described internal  control weaknesses over Education’s purchase card program, including  lack of supervisory review and improper authorization of transactions.
Why GAO Did This Study

The Department of Education has a history of financial management problems, including serious internal control weaknesses, that have affected the Department's ability to provide reliable financial information on its operations.

What GAO Found

GAO found that significant internal control weaknesses in payment processes and poor physical control over its computer assets led to fraud, improper payments, and lost assets. GAO also identified instances of grant and loan fraud and pervasive control breakdowns and improper payments in other areas, particularly involving purchasing cards.