During the reporting period, 7 reports were issued dealing with grants and grantees. Other ongoing reviews are in their final stages. The division of OIG resources results in audit work being performed by a combination of permanent and contractor's staff. Emphasis will continue to be placed on surveys of ARC operations and programs, completion of grant audits, audit resolution and followup, and physician compliance with J-1 Visa Waiver program requirements.

In the past, we have reported that the one common theme resulting from a reading of all the audit reports as a group is the need for ARC staff to put more emphasis on oversight of ongoing grants and to be firmer in the administration and management of grants. For example, there have been instances where grantees have been given further funding when they had not submitted status reports supporting the expenditure of previous allocations. The IG met with program operations staff to discuss the need for better grant oversight and the need to require that the grantees adhere to grant provisions and timeframes. A change in the manner of handling draft audit reports and the agency response has brought the program managers more directly into the oversight function of the grants that they manage. It is expected that, moving forward, this should not be a reportable issue.

Our report issued during a previous period on the Systems Engineer and Employment Project at Auburn University at Montgomery (OIG Report 03-16 ARC Grant AL-13484) had ten recommendations and $109,724 in questioned costs of the $200,000 grant. Further, $79,499 in matching contributions was questioned. The questioned costs are a result of the grantee's unauthorized changes in the scope of work and billing procedures; lack of documentation of program results and internal control issues. The grantee has stated that they have begun revising their policy and procedures. Followup and oversight by ARC should result in full resolution of many of the issues raised in the report and negotiations are ongoing.

The Inspector General Act of 1978, as amended, provides that the IG may receive and investigate complaints or information concerning the possible existence of an activity constituting a violation of law, rules, or regulations; mismanagement; gross waste of funds; or abuse of authority. The OIG does not employ criminal investigators. When the need has arisen, the matter would be referred to the Federal Bureau of Investigation or assistance would be contracted with another Federal OIG. Also, the results of investigations may be referred to the appropriate Federal, State, or local prosecutive authorities for action.

The OIG currently has one investigation ongoing with the support of another OIG criminal investigators. Further, the OIG is monitoring two other investigations being conducted by state law enforcement or ethics organizations that relate to ARC programs. In one instance the case was referred to the state by the OIG.