Nonfederal recipients of Recovery Act-funded grants,  contracts, and loans are required to submit reports with information on  each project or activity, including the amount and use of funds and an  estimate of jobs created or retained. The first of the required recipient reports cover cumulative activity since  the Recovery Act’s passage in February 2009 through the quarter ending  September 30, 2009. The  final recipient reporting data for the first round of reports were first made  available on October 30. We assessed the reports from the Inspectors General (IG) on  Recovery Act data quality reviews from 15 agencies. Initial Observations on Recipient Reporting Data Identify Areas for Further Review

As detailed in our report, our analysis and fieldwork indicate there are  significant issues to be addressed in reporting, data quality, and consistent  application of OMB guidance in several areas. Many entries merit  further attention due to an unexpected or atypical data value or  relationship between data. o  Coverage: While OMB estimates that more than 90 percent  of recipients reported, questions remain about the other 10  percent. o  Review: Over three quarters of the prime reports were  marked as having undergone review by a federal agency,  while less than 1 percent were marked as having undergone  review by the prime recipient  Issues in the calculation of full-time equivalents (FTE). As part of our review, we examined the relationship between  recipient reports showing the presence or absence of any full-time  equivalent (FTE) counts with the presence or absence of funding amounts  shown in either or both data fields for “amount of Recovery Act funds  received” and “amount of Recovery Act funds expended.” Forty-four  percent of the prime recipient reports showed an FTE value. However, as  shown in table 1, we identified 3,978 prime recipient reports where FTEs  were reported but no dollar amount was reported in the data fields for  amount of Recovery Act funds received and amount of Recovery Act funds  expended. These records account for 58,386 of the total 640,329 FTEs  reported. The small percentage reviewed by the prime  recipients themselves during the OMB review time frame warrants further  examination. While it may be the case that the recipients’ data quality  review efforts prior to initial submission of their reports were seen as not  needing further revision during the review timeframe, it may also be  indicative of problems with the process of noting and recording when and  how the prime recipient reviews occur and the setting of the review flag. In addition, the report record data included a flag as to whether a  correction was initiated. Overall, slightly more than a quarter of the  reports were marked as having undergone a correction during the period  of review. Issues in Calculation of Full-Time Equivalents

In its guidance to recipients for estimating employment effects, OMB  instructed recipients to report solely the direct employment effects as  “jobs created or retained” as a single number. Problems with the interpretation of this guidance or the calculation of  FTEs were one of the most significant problems we found. Jobs created or  retained expressed in FTEs raised questions and concerns for some  recipients. One source of inconsistency was variation in the period of performance  used to calculate FTEs, which occurred in both the highway and education  programs we examined. While there were problems of inconsistent interpretation of the guidance,  the reporting process went relatively well for highway projects. DOT had  an established procedure for reporting prior to enactment of the Recovery  Act. As our report shows, in the cases of Education and the Department of  Housing and Urban Development, which do not have this prior reporting  experience, we found more problems. State and federal officials are  examining identified issues and have stated their intention to deal with  them. As recipient reporting moves forward, we will continue to review the  processes that federal agencies and recipients have in place to ensure the  completeness and accuracy of data, including reviewing a sample of  recipient reports across various Recovery Act programs to assure the  quality of the reported information. Recipient Reports and Economic Methods Together Can Offer Insights into Employment Impact

While the recipient reports provide a real-time window on the use and  results of Recovery Act spending, the data will represent only a portion of  the employment effect, even after data quality issues are addressed. Therefore, both the data reported by recipients and other macroeconomic  data and methods are helpful in gauging the overall employment effects of  the stimulus.
Why GAO Did This Study

This testimony discusses the report being issued today on the first set of recipient reports made available in October 2009 in response to the American Recovery and Reinvestment Act's section 1512 requirement. On October 30, Recovery.gov (the federal Web site on Recovery Act spending) reported that more than 100,000 recipients had reported hundreds of thousands of jobs created or retained. GAO is required to comment quarterly on the estimates of jobs created or retained as reported by direct recipients of Recovery Act funding from federal agencies. In the first quarterly GAO report, being released today, we address the following issues: (1) the extent to which recipients were able to fulfill their reporting requirements and the processes in place to help ensure recipient reporting data quality and (2) how macroeconomic data and methods, and the recipient reports, can be used to help gauge the employment effects of the Recovery Act. Because the recipient reporting effort will be an ongoing process of cumulative reporting, our review represents a snapshot in time. At this juncture, given the national scale of the recipient reporting exercise and the limited time frames in which it was implemented, the ability of the reporting mechanism to handle the volume of data from a wide variety of recipients represents a solid first step in moving toward more transparency and accountability for federal funds; however, there is a range of significant reporting and quality issues that need to be addressed. Consequently, our report contains several recommendations to improve data quality that Office of Management and Budget (OMB) staff generally agreed to implement. We will continue to review the processes that federal agencies and recipients have in place to ensure the future completeness and accuracy of data reported. Finally, our report notes that because the recipient reports cover about one-third of Recovery Act funds, both the data in those reports and other macroeconomic data and methods together can offer a more complete view of the overall employment impact of the Recovery Act.

What GAO Found

As detailed in our report, our analysis and fieldwork indicate there are significant issues to be addressed in reporting, data quality, and consistent application of OMB guidance in several areas. Many entries merit further attention due to an unexpected or atypical data value or relationship between data. As part of our review, we examined the relationship between recipient reports showing the presence or absence of any full-time equivalent (FTE) counts with the presence or absence of funding amounts shown in either or both data fields for "amount of Recovery Act funds received" and "amount of Recovery Act funds expended." Forty-four percent of the prime recipient reports showed an FTE value. However,we identified 3,978 prime recipient reports where FTEs were reported but no dollar amount was reported in the data fields for amount of Recovery Act funds received and amount of Recovery Act funds expended. These records account for 58,386 of the total 640,329 FTEs reported. While OMB estimates that more than 90 percent of recipients reported, questions remain about the other 10 percent. Less than 1 percent of the records were marked as having undergone review by the prime recipient. The small percentage reviewed by the prime recipients themselves during the OMB review time frame warrants further examination. While it may be the case that the recipients' data quality review efforts prior to initial submission of their reports were seen as not needing further revision during the review timeframe, it may also be indicative of problems with the process of noting and recording when and how the prime recipient reviews occur and the setting of the review flag. In addition, the report record data included a flag as to whether a correction was initiated. Overall, slightly more than a quarter of the reports were marked as having undergone a correction during the period of review. In its guidance to recipients for estimating employment effects, OMB instructed recipients to report solely the direct employment effects as "jobs created or retained" as a single number. Problems with the interpretation of this guidance or the calculation of FTEs were one of the most significant problems we found. Jobs created or retained expressed in FTEs raised questions and concerns for some recipients. One source of inconsistency was variation in the period of performance used to calculate FTEs, which occurred in both the highway and education programs we examined. While there were problems of inconsistent interpretation of the guidance, the reporting process went relatively well for highway projects. DOT had an established procedure for reporting prior to enactment of the Recovery Act. As our report shows, in the cases of Education and the Department of Housing and Urban Development, which do not have this prior reporting experience, we found more problems. State and federal officials are examining identified issues and have stated their intention to deal with them.