Summary

In January 1990, GAO began a special audit effort to spotlight federal programs at high risk of waste, fraud, abuse, and mismanagement. This report looks at one of the 16 programs identified by GAO--the Urban Mass Transportation Administration's (UMTA) grants program in the Department of Transportation (DOT). GAO found that the majority of grant recipients in UMTA's Region IX (San Francisco, California) did not have adequate management controls to ensure compliance with federal grant requirements and to safeguard forms. For example, DOT's Office of Inspector General discovered about $84 million wasted, misspent, or mismanaged by eight Region IX grantees, including instances of double billing and missing property. GAO found that Region IX did not effectively use its monitoring tools and enforcement authorities to correct existing problems and prevent future abuses. According to Region IX officials, limited staff resources prevented closer monitoring, and the region's oversight was consistent with UMTA's philosophy of relying on grantees to adhere to federal requirements and protect federal funds. In GAO's view, however, these inadequate internal controls and neglected oversight tools place federal mass transit funds at risk of waste, fraud, and abuse.

GAO found that: (1) the majority of Region IX recipients did not have adequate management controls to ensure compliance with federal grant requirements and safeguard funds; (2) the Department of Transportation's (DOT) Office of Inspector General identified $84 million which eight Region IX grantees wasted, misspent, or mismanaged; (3) Region IX recovered about $10 million in grantee funds and agreed to alternative actions on about $59 million, but did not routinely compel grantees to correct the management deficiencies; (4) according to Region IX officials, limited staff resources prevented closer monitoring of grantees' adherence to federal requirements to protect federal funds; and (5) by not ensuring that grantees have adequate internal controls and not using oversight tools to force corrective actions, Region IX is allowing federal mass transit funds to be vulnerable to fraud, waste, and abuse. GAO also found that Region IX did not effectively use its monitoring tools and enforcement authorities, because the region did not: (1) review and follow up on quarterly project and financial reports; (2) verify compliance with federal requirements during triennial reviews; or (3) promptly close grants on completed projects.