NATIONAL ENDOWMENT FOR THE HUMANITES OFFICE OF INSPECTOR GENERAL SEMIANNUAL REPORT OF THE INSPECTOR GENERAL TO THE CONGRESS APRIL 1, 1996 TO SEPTEMBER 30, 1996 REPORT NUMBER 15 "Democracy demands wisdom and vision in its citizens" - National Foundation on the Arts and the Humanities Act of 1965 October 31, 1996 The Honorable Sheldon Hackney Chairman National Endowment for the Humanities Washington, DC 20506 Dear Chairman Hackney: I am submitting herewith the fifteenth semiannual report on the activities of the Endowment's Office of Inspector General (OIG) for the period ending September 30, 1996. The report, which is required by the Inspector General Act as amended, provides an overview of the activities of the Office during this six-month period. The Act requires that you transmit this report, along with any comments you may wish to make and other statistical tables and reports required by the law, to the appropriate congressional committee and subcommittee within thirty days from receipt of this letter. NEH employees should be commended for providing services to our constituents during this past year. Even with the budget crisis and the furlough, the staff worked industriously to get their work completed on time. The OIG is continuing to improve its operations and adding value to the NEH through strategic planning and technology. We believe the challenge for the agency and the OIG is to implement even more technologies and to move forward with implementing the Government Performance and Results Act. I appreciate the cooperation of all NEH employees in the conduct of the OIG activities and look forward to working with them in the next fiscal year. Sincerely, Sheldon L. Bernstein Inspector General Enclosure TABLE OF CONTENTS LETTER TO THE CHAIRMAN EXECUTIVE SUMMARY 1 REPORTING REQUIREMENTS OF THE SEMIANNUAL REPORT 2 AUDITS AND SURVEYS 3 Significant Problems, Abuses, and Deficiencies Summary of Audit Reports 3 Cognizant Audit Agency Reviews 4 INVESTIGATIONS 5 Hotline and Prevention Activities 5 OTHER ACTIVITIES 6 Indirect Cost Rate Negotiations/Reviews 6 Intra-Agency Involvement 6 Peer Review 6 Strategic Planning for the OIG 7 Participation on the Executive Council on Integrity and Efficiency 7 Regulatory and Legislative Reviews 7 Training 7 Audit Resolution and Follow-Up 7 Semi-Annual Reports on the World Wide Web 8 Review of NEH's Compliance with Public Law 101-391 8 REPORTS WITH OUTSTANDING MANAGEMENT DECISIONS 9 SUMMARY OF AUDIT REPORTS ISSUED BEFORE THE COMMENCEMENT OF THE REPORTING PERIOD FOR WHICH NO MANAGEMENT DECISION HAS BEEN MADE 9 AGENCY REFUSAL TO PROVIDE INFORMATION OR ASSISTANCE 10 SIGNIFICANT REVISED MANAGEMENT DECISIONS MADE DURING THE REPORTING PERIOD 10 SIGNIFICANT MANAGEMENT DECISIONS WHICH THE INSPECTOR GENERAL IS IN DISAGREEMENT 10 LIST OF AUDIT REPORTS Internal Audit/Survey Inspection Reports Issued 11 External Audit/Survey Reports Issued 11 Indirect Cost Rate Desk Review Reports Issued 11 On-Site Quality Review 11 Cognizant Audit Agency Review Reports Issued 12 TABLE I - INSPECTOR GENERAL-ISSUED REPORTS WITH QUESTIONED COSTS 14 TABLE II - INSPECTOR GENERAL-ISSUED REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE 15 GLOSSARY OF AUDIT TERMINOLOGY 16 APPENDIX 1 - OVERVIEW OF THE NATIONAL ENDOWMENT FOR THE HUMANITIES 17 APPENDIX 2 - ESTABLISHMENT OF THE OFFICE OF INSPECTOR GENERAL 17 EXECUTIVE SUMMARY This is the fifteenth semiannual report issued by the Office of Inspector General (OIG) of the National Endowment for the Humanities (NEH) pursuant to the Inspector General Act of 1978, as amended. The report summarizes the major activities and accomplishments of the office from April 1, 1996 to September 30, 1996. INTERNAL AUDITS/INSPECTIONS We issued two reports during this period. These are: (1) a Management Information Alert -- Telephone -Long Distance Calls, and (2) a Limited Scope Review of Telecommunications, Equipment, and Services. We anticipated performing a user survey for Humanities Magazine, but after discussions with the Director of Communications for the agency, we decided that the timing wasn't right. EXTERNAL/GRANTEE AUDITS/SURVEYS We issued 1) Inspection Report of Compensation Paid to Media Grantees, and 2) Review Report of Grantees' Organizational Prior Approval Systems. QUALITY REVIEWS We performed three on-site quality reviews of certified public accounting firms that audited our grantees. We issued one report with no exceptions noted. PEER REVIEW A peer review was conducted by the National Archives Records Administration's (NARA) OIG. All government audit organizations must undergo at least one external quality control review every three years. The NARA OIG reported that we have an adequate quality assurance program, but it was not fully implemented. We are implementing their recommendations to alleviate the concerns noted. INVESTIGATION ACTIVITY During this period, we received eleven Hotline contacts regarding grantees and internal matters. At the beginning of the reporting period two matters were open, both involving grantees. One has been closed during the period. Three investigative matters remain open as of September 30, 1996; two pertain to grantees and the third concerns employee issues. REPORTING REQUIREMENTS OF THE SEMIANNUAL REPORT OF THE OFFICE OF INSPECTOR GENERAL Indexed below are the specific reporting requirements prescribed by the Inspector General Act of 1978, as amended (Public Law 100-504). page Section 4(a)(2) -- Review of Legislation and Regulations 7 Section 5(a)(1) -- Significant Problems, Abuses, and Deficiencies 3 Section 5(a)(2) -- Recommendations with Respect to Significant Problems, Abuses, and Deficiencies 3 Section 5(a)(3) -- Significant Un-implemented Recommendations Described in Previous Semiannual Reports 9 Section 5(a)(4) -- Matters Referred to Prosecutive Authorities * Section 5(a)(5) and 6(b)(2) -- Summary of Instances Where Information Was Refused 10 Section 5(a)(6) -- Listing of Audit Reports Showing Number of Reports and Dollar Value of Questioned Costs 11 Section 5(a)(7) -- Summary of Significant Reports 3 Section 5(a)(8) -- Statistical Table Showing Number of Reports and Dollar Value of Questioned Costs 14 Section 5(a)(9) -- Statistical Table Showing Number of Reports and Dollar Value of Recommendations that Funds Be Put to Better Use 15 Section 5(a)(10) -- Summary of Audit Reports Issued Before the Commencement of the Reporting Period for Which No Management Decision Has Been Made By the End of the Reporting Period 9 Section 5(a)(11) -- Significant Revised Management Decisions Made During the Reporting Period 10 Section 5(a)(12) -- Significant Management Decisions with which the Inspector General Is in Disagreement 10 * None. AUDITS AND SURVEYS SIGNIFICANT PROBLEMS, ABUSES, AND DEFICIENCIES No reports were issued this period that disclosed significant problems. SUMMARY OF AUDIT REPORTS INTERNAL ACTIVITY Management Information Alert -- Telephone - Long Distance Calls We reviewed the FTS2000 Agency Invoice provided to NEH by The General Services Administration. Our review of the FTS invoice was for the month of October 1995. Our objective was to look for the following trends: - large number of minutes (20 minutes) per call to recurring numbers; - large number of calls per phone line; and, - large number of repetitive calls to outside phone line. We did not use computer matching techniques in our review, only very obvious trends were noted. Overall, we found eighteen phone lines that met our review objectives. We recommended that NEH periodically remind NEH staff that the telephone is for official government use and that the NEH Administrative Office staff review the FTS long distance invoice on a periodic basis. The NEH has implemented the recommendation. Limited Scope Review of Telecommunication Equipment and Services (OIG-96-01) Internal Survey We performed a limited scope review of telecommunication equipment and related services. The primary objectives of the review were to ascertain NEH policies and procedures pertaining to the disposition of telecommunication equipment and related services and to evaluate the adequacy of such procedures. We learned that as of September 30, 1996, NEH had not informed the General Services Administration and the local telephone company that over 100 lines could be removed. We estimated that from March 1996 through August 1996 NEH paid approximately $ 16,000 for these unused lines. NEH agreed to take immediate action and has done so. We also recommended that NEH develop written policies and procedures governing the disposition of telephone equipment. EXTERNAL ACTIVITY Inspection Report of Compensation Paid to Media Grantees (OIG-96-02) External Review The primary objectives of the review was to determine whether 1) the grantees complied with the terms and conditions of the award letter, and 2) the information provided in the program guidelines and the award letter are adequate. We communicated with the grantees by FAX, letter, and telephone. We reviewed nine media grantees. We looked at 1) the compensation paid to individuals designated in award letters as fixed fee positions, and 2) equipment charges. Several years ago, as a result of OIG audits and surveys, the NEH Grants Office developed guidelines for compensation paid to key personnel and for equipment charged on media grants. We found that the grantees basically complied with the grant terms and conditions. We suggested to management ways to enhance the NEH guidelines. They have agreed to make the changes. Review Report of Grantees' Organizational Prior Approval System (OIG-96-03) External Review The review was performed to determine whether NEH grantee organizations 1) complied with the requirements of the General Grant Provisions for Organizations that called for establishing a prior approval system, and 2) procedures and documentation were adequate. The results of our review revealed that six of the seventeen grantees did not have written procedures for a prior approval system. All six organizations have since developed written procedures. We noted deficiencies with all of the seventeen written procedures provided to us. The procedures ranged from a simple statement of who was authorized to approve changes to a detailed set of instructions. However, none of the instructions covered all necessary areas of delegated authority, or they erroneously included elements that require prior NEH approval. We recommended that the NEH Grants Office provide a sample prior approval system to grantees for guidance. They have agreed. The grantees indicated they will make the necessary changes to comply. COGNIZANT AUDIT AGENCY REVIEWS We receive audit reports on NEH grantee organizations from other federal agencies, state and local government auditors, and independent public accountants. These reports generally are the result of A-128 or A-133 audits. In most instances, the cognizant agency is the Department of Health and Human Services, the federal agency with the predominant financial interest. The reports are reviewed by OIG staff and the results of the review are submitted to NEH management for action, if needed, or for information purposes. During this period we reviewed 60 reports. INVESTIGATIONS The Inspector General Act of 1978, as amended, provides that the Inspector General 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 special investigators. Should the need arise, either the matter would be referred to the Federal Bureau of Investigation or assistance would be contracted with another federal Office of Inspector General. The results of investigations may be referred to the appropriate federal, state, or local prosecutive authorities for action. As of April 1, 1996, we had two files open. One remains open as of September 30, 1996, pending information from a grantee. This is an allegation concerning a grantee. An anonymous caller said the executive director of a grant organization was misusing federal funds. We are reviewing the case. During the six-month period April 30, 1996 to September 30, 1996, we received eleven "Hotline" contacts. Four dealt with NEH employees issues, and the other seven concerned grantees. As of September 30, 1996, three cases remain open; two involve grantees and one concerns an employee issue. HOTLINE AND PREVENTION ACTIVITIES Due to budget restraints we have closed our 800 hot line number and the rented post office box that we have had since January 1993. We are maintaining our local hotline phone number, agency E-mail address, and an Internet address. We maintain all three to provide additional confidentiality for those persons bringing matters to the attention of the OIG. We issued two agencywide E-mail messages to NEH staff. One informed staff of what violations should be reported to the OIG and the second was a general announcement to report waste, fraud, mismanagement, or abuse to the OIG. We plan on E-mailing these two messages to all NEH staff three times a year. Summary of Investigations Investigative Workload Open at beginning of period 2 Matters brought to the OIG 11 Total Investigative contacts 13 Closed or referred during reporting period 10 Open at end of period 3 Presently, the IG is performing all investigations work since the auditor/investigator retired in February 1996. Assistance is obtained from other OIG's on an as-needed basis. OTHER ACTIVITIES INDIRECT COST RATE NEGOTIATIONS/REVIEWS Grantees are entitled to recover total project costs, both direct and indirect. Indirect costs are those costs of an organization or institution that are not readily identifiable with a particular project or activity but are nevertheless necessary to the general operation of the organization or institution and the conduct of the activities it performs. The cost of office supplies, general telephone, postage, accounting, and administrative salaries are types of expenses usually considered as indirect costs. In theory, all such costs might be charged directly; practical difficulties, however, preclude such an approach. Therefore, they are usually grouped into a common pool(s) and distributed to those organizational or institutional activities that benefit from them through the expedient of an indirect cost rate(s). Cognizant federal agencies approve the rates after reviewing cost allocation plans submitted by grantees. The approved rate will generally be recognized by other federal agencies. During this period, we negotiated indirect cost rates with eight grantees. INTRA-AGENCY INVOLVEMENT In this period OIG staff attended and engaged in various NEH meetings - panel meetings (where grant applications are reviewed by outside consultants), pre-council meetings (where the program divisions discuss the panel review results with the Chairman and his immediate staff), and the National Council meeting. In addition, the IG attends the Chairman's bi-weekly meeting; the Deputy Chairman's bi-weekly meeting, and a monthly travel policy meeting. The Deputy Inspector General partakes in the Deputy Chairman's bi-weekly meeting and is an active member on the NEH Internal Technology Committee. Two OIG staff attended monthly NEH Employee Association Meetings; one is on the executive committee. PEER REVIEW The Inspector General Act of 1978, as amended, requires all OIGs to have a peer review every three years. The Executive Council on Integrity and Efficiency's (ECIE) committee on peer review assigned the NARA OIG the responsibility of conducting a review of the NEH OIG. A peer review was conducted by the National Archives Records Administration's (NARA) OIG. All government audit organizations must under go at least one external quality control review every three years. The NARA OIG reported that we have an adequate quality assurance program, but it was not fully implemented. They also noted that we were not in full compliance with the Government Auditing Standards. We were lax in cross-referencing, and believed this caused a problem for the NARA OIG. We are implementing their recommendations to alleviate the concerns noted. STRATEGIC PLANNING FOR THE OIG We developed a strategic plan following guidelines established by the United States General Accounting Office (GAO). This is a continuous effort. With the downsizing of the NEH and the elimination of certain programs, our audit universe has changed and this has had an effect on our plan. We are developing a strategy to work with grantees early in the grant period to avoid future problems. We anticipate that we will need more agency support of computer hardware and software. Due to the staffing constraints, we will continue to use various reporting structures such as surveys memorandums, and management alerts to speed up the reporting process. The evidence and supporting documentation will continue to support our opinions. PARTICIPATION ON THE EXECUTIVE COUNCIL ON INTEGRITY AND EFFICIENCY The Executive Council on Integrity and Efficiency (ECIE) was established by the President in 1992 to coordinate and implement governmentwide activities to combat fraud and waste in federal programs and operations. OIG staff regularly attend ECIE meetings. REGULATORY AND LEGISLATIVE REVIEWS The Inspector General Act of 1978, as amended, requires the Office of Inspector General to review proposed legislation and regulations. The reviews are made to assess whether the proposed legislation or regulation (1) impacts on the economy and efficiency of Endowment programs and operations, and (2) contains adequate internal controls to prevent and detect fraud and abuse. During this period, we commented on several OMB circulars. We also reviewed several documents for NEH grantees and staff. In addition, we reviewed several internal administrative directives for NEH. TRAINING The OIG is complying with the continuing education requirements of the General Accounting Office's Government Auditing Standards. All auditors are receiving at least forty hours of training per year as required. AUDIT RESOLUTION AND FOLLOW-UP Budgetary restraints at NEH have forced the OIG to assume the dominant role in the audit follow-up process. Fortunately, the procedures used by NEH make the process efficient. Many of the auditors' recommendations concern accounting system improvements by our grantees. Our auditors are the only staff in the agency qualified to review and reply to grantees. In addition, since we are aware of time frames, we are generally able to meet the 180-day deadline. In this small agency, we find this procedure to be efficient and effective. Some of our grantees are taking longer than the 180-day deadline to implement procedural recommendations and in responding to questioned costs. These delays are understandable because of the grantees' small staffs. SEMIANNUAL REPORTS ON THE WORLD WIDE WEB (WWW) The OIG has portions of several semiannual reports on the www. The reports have been accessible through the Inspector's General homepage (http://www.sbaonline.sba.gov/ignet/ig.html). Now it links up with the NEH homepage (http://www.neh.fed.us). To access the semiannual reports, enter the URL "http://www.sbaonline.sba.gov/ignet/internal/neh.neh.html." REVIEW OF NEH's COMPLIANCE WITH THE HOTEL AND MOTEL FIRE SAFETY ACT OF 1990 (PUBLIC LAW 101-391) At the request of the NEH Accounting Office, we reviewed the Endowment's compliance with lodging requirements of the Hotel and Motel Fire Safety Act of 1990. Based on our review, the agency was able to report that it was in compliance with the law. Upon our request, the accounting office agreed to issue a memorandum urging all Endowment travelers to make inquiries concerning the fire safety at the hotels stayed at. REPORTS WITH OUTSTANDING MANAGEMENT DECISIONS Section 5(a)(3) of the Inspector General Act, as amended, requires an identification of audit recommendations disclosed in previous semiannual reports which corrective actions are still in process. The following is a list of all OIG audit reports, discussed in prior semiannual reports, for which final management actions have not been completed and closed out. Report Issued Grantee Report No. 05-09-95 Audit of Gift Certification Letters from State Humanities Councils OIG-95-03 (EA)1/ Our approach is to be aggressive in meeting the deadlines--including recommending that the agency suspend grants in progress and hold in abeyance new grant applications. However, we believe the above are working diligently to implement the findings. 1/ Two councils are required to provide documentation for $74,500 ($54,500 and $20,000). SUMMARY OF AUDIT REPORTS ISSUED BEFORE THE COMMENCEMENT OF THE REPORTING PERIOD FOR WHICH NO MANAGEMENT DECISION HAS BEEN MADE Audit of Gift Certificate Letters from State Humanities Councils OIG-95-03 (EA) We reviewed eighteen state humanities councils' records and documentation supporting gift certification letters. We originally questioned $534,847 of gifts certified to release federal matching funds. Of this amount $74,500 remains unresolved. AGENCY REFUSAL TO PROVIDE INFORMATION OR ASSISTANCE There were no reports made to the Chairman of the National Endowment for the Humanities where information or assistance, requested under section 5(a)(5) of the Inspector General Act of 1978, as amended, was unreasonably refused or not provided. SIGNIFICANT REVISED MANAGEMENT DECISIONS MADE DURING THE REPORTING PERIOD No significant management decisions were revised during this reporting period. SIGNIFICANT MANAGEMENT DECISIONS WHICH THE INSPECTOR GENERAL IS IN DISAGREEMENT The Inspector General has no disagreement with significant management decisions made during this reporting period. LIST OF AUDIT REPORTS The following is a list of audit/survey reports issued by the OIG during the reporting period. For each audit report, where applicable, the total dollar value of questioned costs (including a separate category for the dollar value of unsupported costs) is provided. The Act also requires us to report on "the dollar value of recommendations that funds be put to better use." We have no amounts to report and therefore have omitted the column. INTERNAL AUDIT/SURVEY/INSPECTION REPORTS ISSUED Funds Report Date Questioned Unsupported Put to Number Issued Cost Cost Better Use Use Management Information Alert -- Telephone - Long Distance Calls - - 05/07/96$ $ $ Limited Scope Review of Telecommunication Equipment 96-01 09-30-96 16,000 and Services EXTERNAL AUDIT/SURVEY/REPORTS ISSUED Report Date Questioned Unsupported Number Issued Cost Cost Inspection Memorandum Report on Compensation Paid to Media Grantees 96-02 09-20-96 $ $ Review of Grantees' Organizational Prior Approval Systems 96-03 09-30-96 INDIRECT COST RATE DESK REVIEW REPORTS ISSUED Report Date Questioned Unsupported Grantee Number Issued Cost Cost Northeast Document Conservation 96-09 05-02-96 $ $ Center Old Sturbridge Village 96-10 05-03-96 Friends School of Baltimore 96-11 05-21-96 Mystic Seaport Museum 96-12 05-22-96 GWETA, Inc. 96-13 06-25-96 Brookland Historical Society 96-14 07-24-96 New England Foundation for the Humanities 96-15 08-28-96 Soc. for the Preservation of New England Antiquities 96-16 09-30-96 ON-SITE QUALITY REVIEW Report Date Questioned Unsupported Grantees Number Issued Cost Cost Southeastern Library Network, Inc. (SOLINET) 96-101 09/24/96 $ $ COGNIZANT AUDIT AGENCY REVIEW REPORTS ISSUED Report Date QuestionedUnsupported Grantee Number Issued Cost Cost New York Foundation for the Arts, Inc. 96-71(CAA) 04/18/96 American Museum of Natural History 96-72(CAA) 04/18/96 University of Arkansas 96-73(CAA) 04/18/96 Loyola University, Chicago 96-74(CAA) 04/18/96 Connecticut Humanities Council 96-75(CAA) 04/18/96 American Antiquarian Society 96-76(CAA) 04/18/96 State of Alaska 96-77(CAA) 04/18/96 University of Pennsylvania 96-78(CAA) 04/18/96 Texas A & M Research Foundation 96-79(CAA) 04/18/96 Duke University 96-80(CAA) 04/18/96 Kentucky State University 96-81(CAA) 04/18/96 Mark Twain Memorial (Also Known as Mark Twain House) 96-82(CAA) 04/18/96 Old Sturbridge Village 96-83(CAA) 04/18/96 Yale University 96-84(CAA) 04/18/96 State University of New Jersey, Rutgers 96-85(CAA) 04/18/96 Wellesley College 96-86(CAA) 04/18/96 Commonwealth of Pennsylvania 96-87(CAA) 04/18/96 State of North Carolina 96-88(CAA) 04/18/96 University of Chicago 96-89(CAA) 04/18/96 University of New Hampshire System 96-90(CAA) 04/18/96 Trinity University 96-91(CAA) 04/22/96 University of Dayton 96-92(CAA) 04/22/96 Emory University 96-93(CAA) 04/22/96 Gallaudet University 96-94(CAA) 04/22/96 University of Mississippi 96-95(CAA) 04/22/96 University of Puerto Rico-System, San Juan 96-96(CAA) 04/22/96 Research Foundation of SUNY 96-97(CAA) 04/22/96 University of Massachusetts - Amherst Campus, Boston Campus - Dartmouth Campus, Lowell Campus - Worcester Medical School Campus 96-98(CAA) 04/22/96 Galef Institute 96-99(CAA) 04/22/96 Lenox Library Association 96-100(CAA) 04/22/96 University of Maryland System 96-101(CAA) 05/01/96 Northeast Document Conservation Center, Inc. 96-102(CAA) 05/01/96 GWETA 96-103(CAA) 05/01/96 Pennsylvania Humanities Council 96-104(CAA) 05/01/96 Hawai'i Committee for the Humanities 96-105(CAA) 05/01/96 Renaissance Society of America, Inc. 96-106(CAA) 05/01/96 Southern Connecticut Library Council 96-107(CAA) 05/01/96 Oregon Graduate Institute of Science & Tech. 96-108(CAA) 05/01/96 Allegheny College 96-109(CAA) 05/01/96 Johnstown Area Heritage Association 96-110(CAA) 05/01/96 California Council for the Humanities 96-111(CAA) 05/01/96 Asia Society 96-112(CAA) 09/16/96 American Indian College Fund 96-113(CAA) 09/16/96 South Carolina Humanities Council 96-114(CAA) 09/16/96 Boston University 96-115(CAA) 09/16/96 Delaware Humanities Council 96-116(CAA) 09/16/96 Shakespeare and Co., Inc. 96-117(CAA) 09/16/96 State of Mississippi 96-118(CAA) 09/16/96 - Mississippi Dept. of Archives and History State of Indiana 96-119(CAA) 09/16/96 State of Iowa - University of Iowa - University of Northern Iowa - Iowa Dept. of Cultural Affairs - Iowa State University 96-120(CAA) 09/16/96 State of Tennessee - University of Tennessee - University of Memphis - Tennessee State University 96-121(CAA) 09/16/96 State of Oregon 96-122(CAA) 09/16/96 State of Alaska 96-123(CAA) 09/16/96 State of Washington - University of Washington - Western Washington University - Washington State University 96-124(CAA) 09/16/96 State of Wisconsin - State Historical Society of Wisconsin 96-125(CAA) 09/16/96 State of South Dakota - Northern State University 96-126(CAA) 09/16/96 Johnson County, Kansas 96-127(CAA) 09/16/96 State of Montana 96-128(CAA) 09/16/96 Commonwealth of Virginia - University of Virginia - Virginia Commonwealth University - College of William and Mary - Old Dominion University - Virginia Polytechnic and State University - James Madison University 96-129(CAA) 09/16/96 State of South Carolina - Clemson University - University of South Carolina 96-130(CAA) 09/16/96 TABLE I INSPECTOR GENERAL-ISSUED REPORTS WITH QUESTIONED COSTS DOLLAR VALUE Number of Questioned Unsupported Reports Cost Costs A. For which no management decision has been made by the commence- ment of the reporting period 2 $ 313,099 $ 313,099 B. Which were issued during the reporting period 0 $ - $ - Subtotals (A+B) 2 $ 313,099 $ 313,099 C. For which a management decision was made during the reporting period (i) dollar value of disallowed costs 0 $ 0 $ 0 (ii) dollar value of costs not disallowed (grantee subsequently supported all costs) 1 $ 238,599 $ 238,599 D. For which no management decision has been made by the end of the reporting period 1 $ 74,500 $ 74,500 Reports for which no management decision was made within six months of issuance 1 $ 74,500 $ 74,500 TABLE II INSPECTOR GENERAL-ISSUED REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE Number of Dollar Reports Value A. For which no management decision has been made by the commence- ment of the reporting period 0 $ 0 B. Which were issued during the reporting period 1 $ 16,000 C. For which a management decision was made during the reporting period 0 $ 0 (i) dollar value of recommendations that were agreed to by management 1 $ 0 (ii) dollar value of recommendations that were not agreed to by management 0 $ 0 D. For which no management decision was made by the end of the reporting period $ 16,000 1/ 1/ Report was issued on September 20, 1996. GLOSSARY OF AUDIT TERMINOLOGY Questioned Cost - A cost that is questioned by the OIG because of an alleged violation of a provision of a law, regulation, contract, grant, cooperative agreement, or other agreement or document governing the expenditure of funds; because such cost is not supported by adequate documentation; or because the expenditure of funds for the intended purpose is unnecessary or unreasonable. Unsupported Cost - A cost that is questioned because of the lack of adequate documentation at the time of the audit. Disallowed Cost - A questioned cost that management, in a management decision, has sustained or agreed should not be charged to the government. Funds Be Put To Better Use - Funds, which the OIG has disclosed in an audit report, that could be used more efficiently by reducing outlays, de-obligating program or operational funds, avoiding unnecessary expenditures, or taking other efficiency measures. Management Decision - The evaluation by management of the audit findings and recommendations and the issuance of a final decision by management concerning its response to such findings and recommendations. Final Action - The completion of all management actions, as described in a management decision, with respect to audit findings and recommendations. When management concludes no action is necessary, final action occurs when a management decision is made. Source: Excerpt from Section 106(d) of the Inspector General Act Amendments of 1988 (P.L. 100-504). APPENDIX 1 OVERVIEW OF THE NATIONAL ENDOWMENT FOR THE HUMANITIES In order "to promote progress and scholarship in the humanities and the arts in the United States," Congress enacted the National Foundation on the Arts and the Humanities Act of 1965. This act established the National Endowment for the Humanities as an independent grant-making agency of the federal government to support research, education, and public programs in the humanities. Grants are made through three divisions--Education and Research Programs, Preservation and Access, and Public Programs -- and three offices -- Challenge Grants, Enterprise, and Federal State Partnership. THE HUMANITIES The act that established the National Endowment for the Humanities says "The term `humanities' includes, but is not limited to, the study of the following: language, both modern and classical; linguistics; literature; history; jurisprudence; philosophy; archaeology; comparative religion; ethics; the history, criticism, and theory of the arts; those aspects of social sciences which have humanistic content and employ humanistic methods; and the study and application of the humanities to the human environment with particular attention to reflecting our diverse heritage, traditions, and history and to the relevance of the humanities to the current conditions of national life." APPENDIX 2 ESTABLISHMENT OF THE OFFICE OF INSPECTOR GENERAL On October 18, 1988, the Inspector General Act Amendments of 1988, Public Law 100-504 was signed into law. In this legislation, Congress established Offices of Inspector General in several departments and in thirty-three agencies, including NEH. The NEH inspector general (IG) is appointed by the Chairman. The independence of the IG is an important aspect of the Act. For example, the IG: cannot be prevented from initiating, carrying out, or completing an audit or investigation, or from issuing any subpoena; has access to all records of the agency; reports directly to the Chairman, and can only be removed by the Chairman, who must promptly advise Congress of the reasons for the removal; and reports directly to Congress. The OIG has the responsibility and authority to: conduct audits and investigations; provide leadership and coordination, and recommend policies to promote efficiency and effectiveness and to prevent fraud; keep the chairman and Congress fully and currently informed of problems and deficiencies; and comply with governmental auditing standards. The Act requires the IG to report semiannually to the Chairman and Congress. The report is provided to the chairman, who may comment on the report. The report must be forwarded to Congress within thirty days. Serious or flagrant problems can be reported anytime to the chairman, who may comment but must transmit the report intact to Congress within seven days of receipt. THE OFFICE OF INSPECTOR GENERAL serves American taxpayers by investigating reports of waste, fraud, mismanagement, or abuse involving federal funds. If you want to report any matter involving NEH programs, operations, or employees please call (202) 606-8423 or, you may write Office of Inspector General-HotLine National Endowment for the Humanities 1100 Pennsylvania Ave. N.W., Room 419 Washington, DC 20506 FAX: (202) 606-8329 ELECTRONIC MAIL HOTLINE sbernstein@neh.fed.us Be assured that government employees are protected from reprisal and that anyone may have his or her identity held in confidence, unless the Inspector General determines that such disclosure is unavoidable.