U.S. Department of Education
Office of Inspector General
Semiannual Report to Congress: No. 49
April 1, 2004 - September 30, 2004
October 29, 2004
Dear Mr. Secretary:
I am pleased to submit to you, in accordance with the Inspector General Act of 1978 (Public Law
95-452, as amended, section 5(b)), this semiannual report on the activities of the Department’s
Office of Inspector General for the six-month period ending September 30, 2004.
This report highlights our most significant work from the last six months, reflecting our strong
commitment and valuable role in assisting the Department in improving its programs and
ensuring their integrity. We look forward to continuing to work with you toward these goals.
The Inspector General Act requires you to transmit this report within 30 days to the appropriate
congressional committees and subcommittees, together with a report containing any comments
you wish to make. Your report should also include the statistical tables specified in section
5(b)(2) and (3), and a statement with respect to audit reports on which management decisions
have been made, but final action has not been taken, as specified in section 5(b)(4).
Sincerely,
John P. Higgins, Jr.
Enclosure
400 MARYLAND AVE., S.W. WASHINGTON, D.C. 20202-1510
Our mission is to ensure equal access to education and to promote educational excellence throughout the nation.
UNITED STATES DEPARTMENT OF EDUCATION
OFFICE OF INSPECTOR GENERAL
THE INSPECTOR GENERAL
Contents
INSPECTOR GENERAL’S MESSAGE TO CONGRESS
ACTIVITIES AND ACCOMPLISHMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PMA GOAL: ELIMINATION OF FRAUD AND ERROR IN STUDENT AID PROGRAMS . . . 1
Identity theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Other student aid fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Eligibility issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Distance Education Demonstration Program (DEDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Monitoring of Postsecondary Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Default Issues/Lender Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Monitoring Federal Fund reserve levels at guaranty agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PMA GOAL: BUDGET AND PERFORMANCE INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . . . 4
Puerto Rico Department of Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Charter Schools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Title I, Part A, Funding Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
21st Century Community Learning Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
State Educational Agencies: Monitoring Subrecipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Dallas Independent School District (DISD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Bureau of Indian Affairs’ (BIA) Administration of IDEA, Part B funds . . . . . . . . . . . . . . . . . . . . . . 7
PMA GOAL: FINANCIAL MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Internal Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PMA GOAL: EXPANDED ELECTRONIC GOVERNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Identifying Information Resource Management Knowledge, Skills, and Abilities . . . . . . . . . . . . . 10
PMA GOAL: STRATEGIC MANAGEMENT OF HUMAN CAPITAL . . . . . . . . . . . . . . . . . . . . 10
Status of Human Capital Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Contractor Employee Clearance Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other Activities and Accomplishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Nonfederal Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
National Single Audit Sampling Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reporting Requirements of the Inspector General Act, as amended . . . . . . . . . . . . . . . . . . . . . . . . 12
Table 1: Recommendations Described in Previous Semiannual Reports on Which Corrective
Action Has Not Been Completed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 2: ED/OIG Audit Reports on Education Department Programs and Activities
(April 1, 2004 to September 30, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 3: Inspection and other ED/OIG Products on Education Department Programs and Activities
(April 1, 2004 to September 30, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table 4: ED/OIG Issued Audit Reports with Questioned Costs
(April 1, 2004 to September 30, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table 5: ED/OIG Issued Audit Reports with Recommendations for Better Use of Funds
(April 1, 2004 to September 30, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table 6: Unresolved Reports Issued Prior to April 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Table 7: Statistical Profile: April 1, 2004 to September 30, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
INSPECTOR GENERAL’S
MESSAGE TO CONGRESS
We are pleased to provide this semiannual report on the accomplishments of the Office of Inspector
General (OIG), U.S. Department of Education (Department), from April 1 through September 30,
2004. During this period, we issued 60 audit and inspection reports and memoranda and closed 45
investigations. We also initiated a joint project with Federal Student Aid to identify systemic risk in
the federal student aid programs so the Department can take proactive steps to protect these multibillion
dollar programs.
Our findings and recommendations are an important resource for assisting the Department in
addressing its management challenges and in meeting the goals of the President’s Management
Agenda, while our identity theft awareness campaign continues to reach new audiences. In addition to
sharing prevention information with all guaranty agencies and fifty college newspapers, we coproduced
a video featuring one of our investigative subjects, currently incarcerated for student aid
fraud, describing the techniques he used to steal identities. We plan to make extensive use of the
video in our expanding outreach efforts.
OIG audits, inspections, and other reviews identified areas needing improvement or requiring the
Deparment’s attention, including distance education, monitoring, external audit follow-up, and
grantee oversight. The Department generally agreed with our recommendations. Our audits of state
and local educational agencies’ and school districts’ administration of programs under the Elementary
and Secondary Education Act of 1965, as amended, and the Individuals with Disabilities Education
Act, as amended, found procedural weaknesses resulting in recommendations for corrective action and
at times, significant monetary recoveries.
OIG investigations resulted in significant convictions and sentencings. Among them were an
individual who pled guilty to student financial aid fraud after our investigation disclosed that he had
attempted to fraudulently obtain more than $43 million in student loans; a Michigan school owner and
three officials convicted on multiple counts for an $875,000 falsification of records fraud; and a
former inmate in Florida sentenced to 37 months incarceration and ordered to pay restitution for
fraudulently obtaining student financial aid for himself and four other inmates to attend several
community colleges online.
We look forward to continuing to work in cooperation with the Secretary, his officers and managers,
and the Congress toward our mutual goal to make a positive difference in the Department’s programs
and operations.
John P. Higgins, Jr.
Inspector General
1
Activities and Accomplishments
The Office of Inspector General (OIG) for the period April 1, 2004 through September 30,
2004, continued its work to improve the programs and operations of the Department of
Education (Department) and to protect their integrity. We have summarized our work
according to the mandates of the President’s Management Agenda (PMA). Detailed
information is available on our website at http://www.ed.gov/about/offices/list/oig.
PMA GOAL: ELIMINATION OF FRAUD AND ERROR IN
STUDENT AID PROGRAMS
We continue to devote substantial audit and investigative resources to detect and prevent
fraud, waste, and abuse in student aid programs, the largest dollar programs administered
by the Department. These programs have been on the Government Accountability
Office’s (GAO) high risk list since 1990. While the Department has made some progress,
reducing risk in the student aid programs continues to be a management challenge for the
Department.
IDENTITY THEFT We continued our campaign to alert students to the threat of identity theft by updating our
website, www.ed.gov/misused, with information concerning recent scams against the
student aid programs. This website, developed in conjunction with the Federal Student
Aid (FSA), contains information about preventing and reporting identity theft involving
federal education dollars. We also sent information about how to prevent identity theft to
the guaranty agencies and to 50 college newspapers. With the assistance of the Arizona
Department of Public Safety, we produced a DVD, “FSA Identity Theft: We Need Your
Help,” featuring an individual incarcerated for student aid fraud who describes the
techniques he used to steal identities. We are using this DVD in our continuing outreach
campaign.
With regard to our identity theft investigations, an individual pled guilty to student
financial aid fraud after our investigation disclosed that he had attempted to fraudulently
obtain more than $43 million in student loans. He actually received about $161,000 in
student loan proceeds by submitting 12 loan applications falsely claiming that he, his
brother, and his mother were enrolled as graduate students at a university in the United
Kingdom. Our investigation prevented disbursements related to approximately 2,370
additional student loan applications bearing fictitious identities and similar false claims of
enrollment at graduate schools in the United Kingdom. In another case, an individual pled
guilty after our investigation disclosed that he obtained more than $42,000 in student
financial aid fraudulently by using two identities to attend Phoenix College.
An identity theft case also led to one of our Special Agents’ selection as one of three law
enforcement officers from across the nation to receive the 2004 National Missing
Children’s Award. The award, bestowed by a distinguished panel of law enforcement
leaders, recognized her exemplary investigative work enabling a young man kidnapped in
infancy by his father to be reunited with his mother twenty years later. Our Special Agent
was investigating evidence that the father used the son’s Social Security number to
fraudulently obtain almost $95,000 in student loans, grants, and scholarships when she
established the connection between the cases that led to the extraordinary reunion.
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OTHER STUDENT
AID FRAUD
Our investigations into other types of fraud in the student aid programs also contribute to
this PMA goal. One individual pled guilty and six were sentenced for their participation in
a fraud scheme engineered by an Illinois couple, who recruited individuals to pose as
graduate students to illegally receive student loans for purported attendance at a London
university. The six who were sentenced were ordered to pay a total of more than $27,000
restitution and were among fifteen who took part in the scheme.
A former inmate of the Florida Department of Corrections pled guilty to student financial
aid fraud, forging a judge’s signature, and wire fraud. Our joint investigation with the
Postal Inspection Service and the Federal Bureau of Investigation developed evidence that
he fraudulently obtained student financial aid for himself and four other inmates to attend
online several community colleges in Colorado and forged a federal magistrate’s signature
in furtherance of the scheme. He was sentenced to 37 months incarceration followed by
three years supervised release and ordered to pay more than $62,000 in restitution and a
$300 special assessment fee.
In another case, our investigation led to a guilty plea, 18 months incarceration, three years
supervised release, more than $70,000 in restitution, and a $200 special assessment fee by
an individual who used a false Social Security number to obtain more than $58,000 in
student financial aid. The individual had previously defaulted on a student loan under
another Social Security number.
A jury in the Eastern District of Michigan convicted 1) the owner of The Training Center,
Dearborn, Michigan, 2) the head of the computer department and registrar, 3) the director
of education, and 4) the financial aid assistant and director of admissions, of conspiracy,
wire fraud, and student financial assistance fraud. In addition, an instructor at the school
was convicted of student aid fraud. Our investigation developed evidence that the
defendants falsified or directed the falsification of attendance records, G.E.D. certificates,
high school diplomas, ability-to-benefit tests, and certifications of foreign high-school
education to continue to receive accreditation and Department funds. The amount of the
fraud was approximately $875,000.
ELIGIBILITY
ISSUES
Our audit work in the student aid programs included reviews at a Tennessee technology
center and a Kansas technical school, both of which disclosed eligibility issues.
Tennessee Technology Center (TTC-M), Morristown,
Tennessee, and Kaw Area Technical School (KATS), Topeka,
Kansas, were ineligible to participate in the Title IV student aid
programs because they violated the Higher Education Act of
1965, as amended (HEA), prohibition against enrolling persons
under the age of compulsory school attendance as regular
students. We recommended that the Department terminate both schools’ participation in
the Title IV programs, and require them to return the amount of Title IV aid distributed to
their students in violation of the statutory prohibition: for TTC-M, $2.4 million; for
KATS, $882,000. The schools did not concur with our findings and recommendations.
(“Review of Student Enrollment and Professional Judgment Actions at Tennessee
Technology Center at Morristown, TN,” ED-OIG/A04-E0001; September 23, 2004.
“Audit of Kaw Area Technical School,” ED-OIG/A07-D0026; May 20, 2004)
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DISTANCE
EDUCATION
DEMONSTRATION
PROGRAM
Our audit of the Distance Education Demonstration Program (DEDP) found that the
program has not met the statutory requirement to provide Congress with information on
specific aspects of the HEA and regulatory requirements that should be altered to provide
students greater access to distance education programs. We also found that DEDP
participants did not provide complete and consistent information on their annual reports,
without which the Department cannot properly evaluate the participants and the impact of
waiving HEA provisions and regulations. Finally, we found that the Department did not
submit reports to Congress by the statutory due dates. The Department did not agree with
all of our findings, but agreed to take action on our recommendations. (“U.S. Department
of Education’s Administration of the Distance Education Demonstration Program,” EDOIG/
A09-D0010; September 30, 2004)
MONITORING OF
POSTSECONDARY
INSTITUTIONS
Our audit of the Department’s monitoring of postsecondary
institutions found that the model used to identify and select
institutions for review is an ineffective tool for identifying “at risk”
institutions. We also found weaknesses in the program review
process, the technical assistance process, and monitoring of regional
office operations. We recommended that the Department implement
management controls to ensure that the data used to identify the most
at-risk institutions is complete, accurate, and applicable to the
institutions being evaluated, and develop a methodology for
evaluating the effectiveness of the risk assessment model used to identify institutions
presenting the highest risk of loss of Title IV funds. We also recommended corrective
actions on our other findings. The Department did not agree with all of our findings, but
agreed to take action on the recommendations. (“Case Management and Oversight’s
Monitoring of Postsecondary Institutions,” ED-OIG/A04-D0014; September 30, 2004)
DEFAULT
ISSUES/LENDER
DUE DILIGENCE
Our audit at the Illinois Student Assistance Commission (ISAC) disclosed that ISAC did
not comply with the regulations regarding the submission of eligible reinsurance claims.
We found that ISAC’s claim review process was not adequate to ensure that it claimed
reinsurance only if the lender exercised due diligence in servicing the loan. We also found
that imaging policies and procedures did not ensure that ISAC maintained complete and
accurate computer images of original claim packets, a repeat finding from our December
1999 audit report. Finally, we found that policies and procedures did not ensure that ISAC
maintained adequate support to meet regulatory records retention requirements. ISAC
agreed with most of our findings. (“Audit of the Illinois Student Assistance Commission’s
Review of Lender Due Diligence and Post-Default Collections Related to Administrative
Wage Garnishment,” ED-OIG/A05-D0040; August 20, 2004)
We also conducted a significant investigation of a debt-collection agency, specializing in
collection of defaulted loans. Two employees of this agency pled guilty to conspiracy to
commit bank fraud. Our investigation developed evidence that they, along with the owner
and other employees, submitted fraudulent applications for consolidated student loans,
generating more than $1 million in commission for the collection agency. The defendants
fraudulently represented that applicants were repaying their prior student loans to enable
them to qualify for new loans.
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MONITORING
FEDERAL FUND
RESERVE LEVELS
AT GUARANTY
AGENCIES
Our inspection found that the Department’s monitoring of the Federal Fund needs
improvement. Because of imprecise reporting instructions to guaranty agencies and
uncorrected data errors, the Department was unable to provide a reliable measure of the
reserve level at each agency. In addition, the Department had not developed written
policies or procedures to address a guaranty agency’s failure to meet the minimum reserve
level, and was unaware of the requirement to report annually to Congress on the agencies’
financial condition. We recommended that the Department withhold reimbursement
payments to guaranty agencies that do not submit an accurate and complete annual report
within 60 days after the end of the fiscal year, issue clear and concise instructions for the
report, and provide training to the agencies to ensure consistent reporting. We also
recommended that it report to Congress on the fiscal soundness of the guaranty agency
system, as required by the HEA. The Department concurred with most of our
recommendations. (“Monitoring the Federal Fund Reserve Level at Guaranty Agencies
Needs Improvement,” ED-OIG/I13E0017; September 14, 2004)
PMA GOAL: BUDGET AND PERFORMANCE INTEGRATION
Performance and results are increasingly linked to budget and funding decisions at the
federal and grant recipient levels. Without this accountability, the Department cannot
reliably assess how, and how well, the funds it dispenses are used. Our work in elementary
and secondary programs disclosed weaknesses in program administration by state and
local educational agencies and other grantees, and a continuing need for careful
monitoring by the Department. In addition, our investigations involving these programs
revealed a need for greater accountability on the part of program participants.
PUERTO RICO
DEPARTMENT OF
EDUCATION
Our audit work at the Puerto Rico Department of Education (PRDE) continued to disclose
severe fiscal and integrity issues. This period we met with PRDE officials to discuss
progress on the issues we have identified, as well as actions still needed to address our
findings and recommendations. We also issued two audit reports, one on contracts
awarded by PRDE to Rock Solid Technologies, the other on improper salary charges to
Department programs by PRDE.
Contracts awarded to Rock Solid Technologies
Our audit of contracts awarded to Rock Solid Technologies (RST) found that PRDE
improperly charged $3,354,545 to the Department’s Elementary and Secondary Education
Act (ESEA), Title I, Part A and Technology Literacy Challenge programs for two statefunded
contracts unrelated to these programs, because PRDE did not implement adequate
controls to oversee RST’s contract administration and to properly allocate contract
charges. As a result, PRDE’s students did not fully benefit from the Department’s
funding. We recommended that PRDE return the $3,354,545 and establish controls to
ensure that contract-related expenditures are properly allocated. PRDE stated that its
current administration was taking proactive steps to improve the weaknesses inherited
from the prior administration, and that it was working closely with the Department to
update its procedures. (“Puerto Rico Department of Education’s Administration of
Contracts Awarded to Rock Solid Technologies,” ED-OIG/A02-E0007; September 8,
2004)
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Improper salary charges
We found that PRDE’s improper salary charges to Education programs, estimated at $84
million, were primarily due to its failure to monitor payroll transactions processed by RST.
We also determined PRDE’s salary reconciliations of the Title I funds for fiscal years 2002
and 2003 to be erroneous. In addition, PRDE and the Puerto Rico Treasury Department
failed to provide adequate records necessary to initiate the analysis of the Title I and other
Departmental funds. We recommended that PRDE conduct quarterly reconciliations, reevaluate
all reconciliations completed to date, and make appropriate adjustments to
Department grants. We also recommended improvements to internal controls over
processing payroll.
PRDE responded that it was working with the Department to institute new procedures to
ensure that all salary charges to federal programs are accurate and fully comply with
federal laws and regulations. PRDE also stated that it had established a Payroll Team that
was working with the Department to update PRDE’s payroll system, and suggested that
the issue of past reconciliations be discussed in the context of the ongoing Cooperative
Audit Resolution and Oversight Initiative. In addition, PRDE reconciled the Title I payroll
account for fiscal year 2003. As of December 11, 2003, PRDE had reimbursed the Title I
account $49,789,989 of the $57,764,458 improperly charged to it. (“Puerto Rico
Department of Education’s Salaries for the Period July 1, 1999 to June 30, 2003,” EDOIG/
A02-D0023; June 2, 2004)
Legislation creates vehicle for independent review and oversight
During this reporting period, Puerto Rico enacted legislation creating an Internal Audit
Office and an Audit Oversight Committee that will provide independent review and
oversight of PRDE activities. The charter for the Committee was created with advice and
assistance from OIG staff. The signing of the legislation was a landmark event because it
is the first time the government of Puerto Rico has created an independent audit oversight
committee for one of its government agencies.
CHARTER
SCHOOLS
We issued a report on Arizona’s allocations of ESEA, Title I, Part A, and Individuals with
Disabilities Education Act (IDEA), Part B funds to charter school local educational
agencies (LEAs). We found that the Arizona Department of Education (ADE) needs to
enhance the information it provides to LEAs about the statutory requirements for new or
expanding charter school LEAs, allocate the proportionate amount of IDEA, Part B funds
to new charter school LEAs, and strengthen procedures to ensure that new or expanding
charter school LEAs receive timely access to these funds. ADE concurred with the
findings. (“Charter Schools’ Access to Title I and IDEA, Part B Funds in the State of
Arizona,” ED-OIG/A09-D0033; August 24, 2004)
TITLE I, PART A,
FUNDING
ALLOCATION
Our audit of 15 Michigan LEAs’ allocations of $120,447,182 of Title I, Part A funds to
366 public schools found that 5 of the 15 LEAs did not always ensure that Title I funds
were allocated only to eligible schools, that lower-poverty schools were not receiving
higher per-pupil allocations than higher-poverty schools and that proper poverty measures
were used, and that the data used to identify and count eligible poverty children were
accurate. Had the LEAs complied with the requirements, approximately $1.58 million of
Title I funds could have been put to better use. Michigan concurred with the findings, and
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6
generally agreed with our recommendations. (“Michigan’s LEA Allocations of Title I,
Part A, Funds to Schools for the Period July 1, 2001, through June 30, 2002,” ED-OIG/
A05-D0038; June 25, 2004)
INVESTIGATIONS Our investigations in several of the Department’s elementary and secondary programs
highlighted a need for greater accountability by the participants. Four current and former
employees of the Orleans Parish School District, Louisiana, pled guilty to extortion, theft,
and/or conspiracy charges for a $70,000 kickback scheme. Our investigation with the
Federal Bureau of Investigation and New Orleans Police Department developed evidence
that a former payroll clerk conspired with teachers, secretaries and para-educators to
submit fraudulent travel reimbursements, stipend payments, and payroll checks, in
exchange for a kickback of 50 percent of the illegal payments.
Two brothers were convicted in California of mail fraud and false statements in connection
with a non-profit, community-based organization they directed that administered a
federally funded English as a Second Language Citizenship program. Our investigation
disclosed that, in support of their claim for over $800,000 in federal funds, they knowingly
provided fraudulent representations, including teaching sites where classes were never
held, names of teachers who did not teach, false attendance figures, and false student
identities.
In another investigation, the former program director for the American Samoa Department
of Education pled guilty to conspiracy to defraud the Department of Education and other
federal agencies. He was responsible for the management and distribution of food and
goods used for feeding children in the American Samoa Public School System. Evidence
from our investigation showed that he and his co-conspirators converted for their personal
use about $68,000 in food and goods.
21ST CENTURY
COMMUNITY
LEARNING
CENTERS
We issued two audit reports on school districts’ administration of 21st Century Community
Learning Center (CCLC) grants. In Elk Grove, California, we found that the Elk Grove
Unified School District drew down about $1.3 million of federal funds in excess of the
immediate needs of the CCLC program. In addition, the district did not properly
document all of the personnel costs charged to the grant. As a result, we were not able to
determine whether $643,199 of the $745,671 charged to the grant was properly charged.
The district disagreed with our finding concerning personnel costs but generally agreed
with the other findings in the report. (“Elk Grove Unified School District’s Administration
of the 21st Century Community Learning Centers Grant No. S287B010656,” ED-OIG/
A09-E0010; July 20, 2004)
In Baltimore, Maryland, our audit of the Baltimore City Public Schools (BCPS) identified
management control weaknesses that adversely affected BCPS’s ability to properly
account for expenditures and administer its 21st CCLC program. We found that BCPS had
inadequate financial management controls and did not keep records of its 21st CCLC
program’s in-kind contributions. In addition, the program expenditures were not always
reasonable, allowable, and allocable; consequently, BCPS expended $43,821 for
unallowable and unsupported costs. BCPS concurred with our findings and
recommendations. (“Baltimore City Public Schools’ Administration of its 21st Century
Community Learning Center Grant program,” ED-OIG/A03-D0010; June 2, 2004)
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STATE
EDUCATIONAL
AGENCIES:
MONITORING
SUBRECIPIENTS
Our audit at the Ohio Department of Education (ODE) and subsequent inquiries to
agencies in five other states identified an issue that, if occurring elsewhere, could mean
that millions of dollars in federal funds are potentially at risk. Our audit at ODE identified
inadequate procedures for monitoring subrecipients to which it disbursed less than
$300,000 in federal awards. As a pass-through entity, ODE was required to ensure that
subrecipients expending more than $300,000 in federal awards had single audits
conducted. Although ODE awarded some subrecipients less than $300,000, they could
have received federal funds from other sources, thus requiring a single audit. As a result,
$42 million in federal funds is potentially at risk in Ohio. ODE did not concur with our
finding. (“Audit of Ohio Department of Education’s monitoring and resolution of single
audits,” ED-OIG/A05-E0011; June 4, 2004)
Subsequent inquiries to agencies in five other states also found that some state educational
agencies (SEAs) may not have been ensuring that LEAs to whom they awarded less than
$300,000 in federal funds were complying with the single audit requirement. We advised
the Department that supplemental guidance may be needed to inform SEAs that they must
be able to determine whether each subrecipient expended $300,000 or more in total federal
awards. For fiscal years ending after December 31, 2003, the threshold was increased to
$500,000.
DALLAS
INDEPENDENT
SCHOOL
DISTRICT
Our audits at Dallas Independent School District (DISD) found that it had materially failed
to deliver the services and products specified in its approved Bilingual Education -
Systemwide Improvement grant application, and disbursed $205,000 in Teaching
American History grant funds to an unapproved, ineligible partner. We recommended that
the Department recover $1,788,853, consisting of non-performance of grant services,
unallowable costs, and unsupportable costs, for the Bilingual Education grant, and
$205,000 in unallowable costs disbursed to the ineligible partner for the Teaching
American History grant. DISD did not concur with our findings but concurred with some
of our recommendations. (“Audit of the Dallas Independent School District’s (DISD)
administration of the Bilingual Education - Systemwide Improvement Grant for the Period
September 1, 1999, through August 31, 2003,” ED-OIG/A06-D0023; August 4, 2004.
“Audit of the Dallas Independent School District’s administration of the Teaching
American History Grant for the period October 1, 2002, through September 30, 2005,”
ED-OIG/A06-E0015; September 16, 2004)
BUREAU OF
INDIAN AFFAIRS'
ADMINISTRATION
OF
IDEA, PART B
FUNDS
Our audit of the IDEA, Part B requirements at Fond du Lac Ojibwe School found that,
although the school developed an individualized education program (IEP) for all of the
students sampled, it was unable to demonstrate that it provided special education and
related services to over half of the students in our sample in accordance with their IEP.
The school received over $860,000 to provide special education services during our twoyear
audit period. We recommended that the Department instruct the Bureau of Indian
Affairs (BIA) to obtain assurance from Fond du Lac that it used the funds to deliver the
educational assistance proposed in each of the IEPs, instruct Fond du Lac to document all
IDEA-funded services provided to each current student with disabilities, determine
whether Fond du Lac should be designated a high-risk grantee, and consider placing
special conditions for all Education awards to Fond du Lac. BIA officials agreed with our
findings and recommendations. (“Bureau of Indian Affairs’ Administration of the
Individuals with Disabilities Education Act Funds at Fond du Lac Ojibwe School,
Minnesota,” ED-OIG/A06-E0001; August 30, 2004)
Semiannual Report To Congress: #49
8
PMA GOAL: FINANCIAL MANAGEMENT
Sound financial management is essential to the Department’s ability to provide accurate
financial information, to manage for results, and to ensure operational integrity. The
Department’s stewardship of billions of federal education dollars depends on a reliable,
consistent financial management system to deliver services and benefits to recipients.
Strong internal controls are a key component to improved financial management. Our
work this period identified the need for stronger internal controls in several areas.
INTERNAL
CONTROLS
Monitoring lapsed funds
We found that the Department did not have procedures and controls for notifying grantees
when grant award balances were about to become unavailable as a result of funds not
being obligated and used within required timeframes. Although it is not a statutory
requirement to notify grantees, it would be a good business practice for the Department to
do so. We recommended that the Department develop and implement procedures and
controls to give advance warning to grantees of grant award balances that are about to
become unavailable. The Department concurred with the finding and recommendation.
(“Monitoring of Grant Award Lapsed Funds by the Office of the Chief Financial Officer,
the Office of Elementary and Secondary Education, the Office of Special Educational and
Rehabilitative Services, and the Office of Vocational and Adult Education during fiscal
years 1998, 1999, and 2000,” ED-OIG/A04-D0015; August 2, 2004)
Data gathering/lapsed funds report for Chairman John A. Boehner
We responded to a request from John A. Boehner, Chairman, U.S. House of
Representatives, Committee on Education and the Workforce, for information regarding
Department budget authority that was canceled in fiscal years 2002 through 2004. The
response provided Chairman Boehner with data regarding Department budget authority
that was canceled in fiscal years 2002 and 2003 and was no longer available for obligation
or expenditure for any purpose. Similar information about fiscal year 2004 cancellations
will be provided to Chairman Boehner after final executed budget information for fiscal
year 2004 becomes available.
Audit follow up
We reviewed the audit follow up process for external audits in five of the Department’s
principal offices. In four of the five offices, we found that improvements were needed,
either because documentation was not maintained to support that corrective actions had
been completed, or because staff did not always follow up to obtain assurance that they
had been completed. In one case, we found that the office inappropriately relied on
subsequent single or compliance audits for assurance that issues noted in some OIG audits
had been corrected. The Department’s principal offices generally agreed with our findings
and recommendations, in some cases describing actions planned or taken to address them.
(“Audit followup process for external audits in the Institute of Education Sciences,” EDOIG/
A19-E0007; April 1, 2004. “Audit followup process for external audits in the Office
of Special Education and Rehabilitative Services,” ED-OIG/A19-E0006; June 2, 2004.
“Audit followup process for external audits in the Office of Elementary and Secondary
Education and the Office of Safe and Drug-Free Schools,” ED-OIG/A19-E0004; August
Semiannual Report To Congress: #49
9
27, 2004. “Audit followup process for external audits in Federal Student Aid,” ED-OIG/
A19-E0002; September 16, 2004. “Audit followup process for external audits of
discretionary grant audits resolved by the Post Audit Group (PAG) in the Office of the
Chief Financial Officer (OCFO), and for external audits of contracts resolved by the
Contracts and Purchasing Operations (CPO) group in OCFO,” ED-OIG/A19-E0003 &
A19-E0005; September 23, 2004)
Oversight of grantees subject to the Restricted Indirect Cost Rate
We found that the Department’s monitoring of grant costs with respect to grantees subject
to the Restricted Indirect Cost Rate (RICR) provisions is not adequate to ensure that
grantees: 1) do not claim indirect costs if they do not have negotiated indirect cost rate
agreements, 2) do not claim more than eight percent of Modified Total Direct Cost if they
do not have RICR agreements, and 3) provide enough information for program officials to
ascertain the details of costs included in the indirect cost pool and in the base used for
computing indirect costs. We estimated that the Department could better utilize at least
$4.6 million by implementing the recommendations in this report. The Department
generally concurred with our findings and recommendations. (“U.S. Department of
Education’s Oversight of Grantees Subject to the Restricted Indirect Cost Provisions in 34
C.F.R. Parts 75 and 76,” ED-OIG/A07-D0005; April 21, 2004)
Reconciling accounting records
We performed an audit to determine if the Department’s principal offices reconciled their
accounting records to the Department’s central automated processing system (EDCAPS)
to ensure accuracy and completeness of information. We found that while offices did
reconcile their records, they did not consistently retain summary-level documentation to
support having done so. We made recommendations to improve the Department’s
reconciliation process and strengthen financial management. The Department concurred
with our findings, supported the recommendations, and described specific corrective
actions planned or taken to address the issues noted. (“Reconciliation of Principal Office
Records to the United States Department of Education’s Central Automated Processing
System,” ED-OIG/A17-E0001; July 8, 2004)
PMA GOAL: EXPANDED ELECTRONIC GOVERNMENT
As the Department offers greater electronic access to its student aid programs, in response
to the expanded electronic government initiative, it must also address the risks inherent in
such access. We continued our work to evaluate the Department’s progress in managing
the information technology (IT) resources it uses to administer the billions of education
dollars under its stewardship. Appropriate IT management remains a challenge for the
Department.
Semiannual Report To Congress: #49
10
IDENTIFYING
INFORMATION
RESOURCE
MANAGEMENT
KNOWLEDGE,
SKILLS, AND
ABILITIES
The Department has made progress in complying with the Clinger-Cohen Act
requirements for obtaining knowledge, skills, and abilities (KSAs) necessary to effectively
perform information resource management (IRM) functions. However, we found that it
did not use a systematic process in evaluating KSAs. It also did not address the KSA
requirements for all IRM staff, and was therefore unable to develop a comprehensive
strategy to eliminate deficiencies between needed and actual KSAs. The Department’s
IRM thus may lack the basic KSAs needed to effectively manage information technology
resources and investments, and to accomplish its goals.
We recommended that the Department use a systematic process such as the established
core competencies in addressing the Clinger-Cohen requirements related to KSAs for
IRM, and ensure that skill assessments for the Office of the Chief Information Officer are
tied to the IRM goals included in the Department’s overall strategic plan. The Department
concurred with our findings and recommendations. (“Audit of the Department’s Efforts in
Identifying IRM KSAs,” ED-OIG/A07-E0002; August 20, 2004)
PMA GOAL: STRATEGIC MANAGEMENT OF HUMAN
CAPITAL
In response to the PMA, the Department developed the One-ED Report and a strategic
investment process that was intended to examine all work functions in the Department
within a three-year period. It also issued the Blueprint for Management Excellence, which
identified numerous action steps intended to improve the strategic management of human
capital within the Department. Our work this period revealed areas requiring the
Department’s attention in the human capital arena.
STATUS OF
HUMAN CAPITAL
INITIATIVES
We reviewed 20 of the Blueprint’s action items to determine the status of the human
capital initiatives at the Department. Our inspections identified two major concerns. First,
the “One-ED Report” was relied upon to close several action items; however, neither the
report nor the strategic investment process has proven to be an effective surrogate for the
development of a comprehensive human capital plan that will enable the entire
Department to systematically address core issues such as workforce planning, succession
planning, and organizational structure. Second, the number of action items identified as
completed that were not in fact completed underscored the need to verify the information
provided when an action item is reported as completed. The Department agreed that
additional work needs to be done in the area of human capital planning, and advised us that
a new human capital plan would be completed in the coming months. (“Blueprint for
Management Excellence Action Items,” August 23, 2004)
Similarly, our inspection of innovative recruitment strategies concluded that the plan
outlined by the Department had not been completed. Absent implementation and an
assessment of the plan’s effectiveness, there is no basis for concluding that the actions
identified as “completing the action item” will help move the Department toward its
underlying objective. The Department generally did not concur with our
recommendations. (“Review of MIT Action Item Number 84,” ED-OIG/I13E0001; April
12, 2004)
Semiannual Report To Congress: #49
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CONTRACTOR
EMPLOYEE
CLEARANCE
PROCEDURES
Our inspection found that the Department had not established its own internal procedures
for handling and processing contractor employee security clearance procedures, and that
its tracking system could not verify that principal offices were meeting the 14-day
requirement for processing contractor employee security forms. In addition, the
processing was significantly slowed because of missing data, and because the current
system did not allow the Department to track pending clearances. We also identified
weaknesses in its directive on contractor employees, and a lack of training for contracting
officer representatives or other program officials on the security responsibilities of
contractor employees. The Department generally agreed with our findings and
recommendations. (“Inspection Memorandum of the Inspection of the U.S. Department of
Education’s Contractor Employee Security Clearance Procedures,” ED-OIG/I13D0009;
April 16, 2004)
Other Activities and Accomplishments
We are active participants in the nonfederal and single audit arenas. Our activities this
period are summarized below.
NONFEDERAL
AUDITS
Participants in Department programs are required to submit annual audits performed by
independent public accountants (IPAs). We perform quality control reviews (QCRs) of
these audits to assess their quality. We completed 50 QCRs of audits conducted by 48
different IPAs, or offices of firms with multiple offices. We concluded that 20 (40%) were
acceptable, 24 (48%) were technically deficient, and 6 (12%) were substandard. We also
referred two IPAs to appropriate State Boards of Accountancy and the American Institute
of Certified Public Accountants (CPAs) for possible disciplinary action. The two referrals,
made for substandard work related to three audits, were based on QCRs reported in a prior
semiannual report.
We received notice from a state education department regarding disciplinary action taken
against a CPA as a result of a prior referral of substandard audit work disclosed by OIG.
The referral was made as a result of a quality control review of a Single Audit Act audit.
The CPA pled guilty to a charge of unprofessional conduct and agreed to a penalty of a
partial suspension of his CPA license in the area of auditing until successful completion of
coursework, two years’ probation and a $5,000 fine.
A state board of accountancy advised us of disciplinary action against a CPA, resulting
from a prior referral for substandard audit work. The referral was based upon our QCR of
a compliance audit of a college. The board placed the CPA’s license on probation for three
years and required pre-issuance review of his next two audit or attest engagements.
NATIONAL
SINGLE AUDIT
SAMPLING
PROJECT
Our office is leading an intergovernmental project to accurately assess the quality of all
audits conducted under the Single Audit Act (Public Law 104-106), using statistical
sampling. Our Assistant Inspector General for Audit Services is Chair of this Project’s
Advisory Board, and our Director, Non-Federal Audit Team is leading the Project
Management Staff. During this period, we worked with the Office of Management and
Budget, six other federal Offices of Inspector General, and three State Auditors to finalize
planning for the project. The QCRs of the 208 audits selected will be conducted through
October 2005.
Semiannual Report To Congress: #49
12
Reporting Requirements of the Inspector General Act, as amended
Section Requirement
Table
Number
Page
Number
5(a)(1) and
5(a)(2) Significant Problems, Abuses, and Deficiencies
Activities and Accomplishments 1
5(a)(3) Uncompleted Corrective Actions
Recommendations Described in Previous Semiannual Reports on Which Corrective
Action Has Not Been Completed 1 13
5(a)(4) Matters Referred to Prosecutive Authorities
Statistical Profile 7 27
5(a)(5) and
6(b)(2) Summary of Instances Where Information Was Refused or Not Provided
5(a)(6) Listing of Audit Reports
ED/OIG Audit Reports on Education Department Programs and Activities 2 13
5(a)(7) Summary of Significant Audits
Activities and Accomplishments 1
Inspection and Other ED/OIG Products on Education Department Programs and
Activities 3 17
5(a)(8) Audit Reports Containing Questioned Costs
ED/OIG Issued Audit Reports with Questioned Costs 4 18
5(a)(9) Audit Reports Containing Recommendations That Funds Be Put to Better
Use
ED/OIG Issued Audit Reports with Recommendations for Better Use of Funds 5 19
5(a)(10) Summary of Unresolved Audit Reports Issued Prior to the Beginning of
the Reporting Period
Unresolved Reports Issued Prior to April 1, 2004 6 19
5(a)(11) Significant Revised Management Decisions
5(a)(12) Significant Management Decisions with Which OIG Disagreed
5(a)(13) Unmet Intermediate Target Dates Established by the Department Under
the Federal Financial Management Improvement Act of 1996
Semiannual Report To Congress: #49
13
Table 1: Recommendations Described in Previous Semiannual
Reports on Which Corrective Action Has Not Been Completed
Report
Number
Report Title (Prior Semiannual
Report [SAR] Number and Page)
Date
Issued
Date
Resolved
Total
Monetary
Findings
Number of
Recommendations Latest
Target
Date Open Closed
Section 5(a)(3) of the Inspector General Act as amended requires a listing of each report resolved before the commencement of the
reporting period for which management has not completed corrective action. The reports listed below are OIG internal and nationwide
audit reports.
NEW AUDITS SINCE LAST REPORTING PERIOD
Federal Student Aid (FSA)
A11-C0011 Audit of Federal Student Aid’s Development
and Implementation of Oracle Federal
Financials (SAR 47, pg. 13)
5/22/03 8/14/03 0 13 *
Office of the Chief Information Officer (OCIO)
A11-C0008 Department of Education’s Implementation
of GISRA Year 2 (SAR 45, pg. 3)
9/16/02 5/28/03 0 26 *
A11-D0001 Phase II Audit of the Department’s Critical
Infrastructure Protection (CIP) Program
(SAR 46, pg. 5)
3/28/03 9/24/03 0 7 *
AUDITS REPORTED IN PREVIOUS SEMIANNUAL REPORTS
Federal Student Aid
A05-A0025 Great Lakes Higher Education Guaranty
Corporation’s (Great Lakes Guaranty)
Administration of the Federal Family
Education Loan (FFEL) Program Federal
and Operating Funds (SAR 42, pg. 22)
3/30/01 1/31/02 3 4 12/31/04
Office of the Chief Financial Officer (OCFO)
A03-B0018 Audit of the U.S. Department of Education’s
(the Department’s) Discretionary Grant
Monitoring Process (SAR 44, pg. 3)
10/24/01 3/26/02 1 1 9/30/05
A07-B0016 The Department’s Management Controls
Over Discretionary Grants Need to be
Strengthened to Ensure Grant Accountability
(SAR 45, pg. 17)
9/26/02 1/31/03 0 5 *
* Closure of audits were not completed by the Department prior to end of reporting period (9/30/2004).
Table 2: ED/OIG Audit Reports on Education Department Programs
and Activities (April 1, 2004 to September 30, 2004)
Report
Number Report Title
Date
Issued
Questioned
Costs*
Unsupported
Costs
No. of
Recommendations
Section 5(a)(6) of the Inspector General Act of 1978 as amended requires a listing of each report completed by OIG during the
reporting period.
AUDIT REPORTS
Federal Student Aid (FSA)
A04-D0014 Case Management and Oversight’s Monitoring of
Postsecondary Institutions
9/30/04 8
Semiannual Report To Congress: #49
14
A04-E0001 Review of Student Enrollment and Professional
Judgment Actions at Tennessee Technology Center at
Morristown, TN
9/23/04 $2,458,347 7
A05-D0040 Audit of the Illinois Student Assistance Commission’s
Review of Lender Due Diligence and Post-Default
Collections Related to Administrative Wage
Garnishment
8/20/04 $122,750 8
A07-D0026 Audit of Kaw Area Technical School (KATS) 5/20/04 $882,445 3
A07-E0013 Audit of Rolla Technical Institute/Center (RTI) 8/20/04 None
A19-E0002 Audit of the audit followup process for external audits
in Federal Student Aid (FSA)
9/16/04 3
Office of the Chief Financial Officer (OCFO)
A02-D0015 Audit of the 2001 Virtual Data Center Transformation
Task Order (Task Order)
8/10/04 3
A02-D0023 Puerto Rico Department of Education’s (PRDE)
Salaries for the Period July 1, 1999 to June 30, 2003
(OESE also designated as action official)
6/2/04 6
A03-D0010 Audit of Baltimore City Public School’s (BCPS)
Administration of its 21st Century Community
Learning Center (21st CCLC) Grant program (OESE
also designated as action official)
6/2/04 $42,986 $835 10
A04-D0015 Review of the monitoring of grant award lapsed funds
by the Office of the Chief Financial Officer (OCFO),
the Office of Elementary and Secondary Education
(OESE), the Office of Special Educational and
Rehabilitative Services (OSERS), and the Office of
Vocational and Adult Education (OVAE) during fiscal
years (FY) 1998, 1999, and 2000 (OESE, OSERS, and
OVAE were copied on the report but were not
designated as action officials)
8/2/04 1
A05-E0011 Audit of the Ohio Department of Education’s (ODE)
monitoring and resolution of single audits for
subrecipient fiscal years ending in calendar year 2002
6/4/04 1
A06-D0023 Audit of the Dallas Independent School District’s
(DISD) administration of the Bilingual Education-
Systemwide Improvement Grant for the period
September 1, 1999, through August 31, 2003 (OELA
also designated as action official)
8/4/04 $1,353,875 $434,978 2
A06-E0015 Audit of the Dallas Independent School District’s
(DISD) administration of the Teaching American
History Grant (grant) for the period October 1, 2002,
through September 30, 2005 (OII also designated as
action official)
9/16/04 $205,000 4
A07-D0005 Audit of the U.S. Department of Education’s
(Department’s) oversight of grantees subject to the
restricted indirect cost rate (RICR) provisions in 34
C.F.R. Parts 75 & 76
4/1/04 5**
Table 2: ED/OIG Audit Reports on Education Department Programs
and Activities (April 1, 2004 to September 30, 2004) (Cont.)
Report
Number Report Title
Date
Issued
Questioned
Costs*
Unsupported
Costs
No. of
Recommendations
Semiannual Report To Congress: #49
15
A07-D0024 Audit of the Talent Search (TS) program at LULAC
National Educational Service Centers, Inc. (LNESC)
6/18/04 2
A09-D0032 California State University, Fresno Foundation’s
Administration of GEAR UP Partnership Grant No.
P334A990267 (OPE also designated as action official)
6/17/04 $8,940 $371,460 7
A09-E0010 Elk Grove Unified School District’s Administration of
the 21st Century Community Learning Centers Grant
No. S287B010656 (OESE also designated as action
official)
7/20/04 $6,262 $643,199 8
A17-E0001 Audit to determine if Principal Offices (PO’s) reconcile
their accounting records to the United States
Department of Education’s (Department) Central
Automated Processing System (EDCAPS) to ensure
accuracy and completeness of information for the
period October 2002 through February 2004
7/8/04 2
A19-E0003
A19-E0005
Audits of the audit followup process for external audits
of discretionary grant audits resolved by the Post Audit
Group (PAG) in the Office of the Chief Financial
Officer (OCFO), and for external audits of contracts
resolved by the Contracts and Purchasing Operations
(CPO) group in OCFO
9/23/04 2
Office of the Chief Information Officer (OCIO)
A07-E0002 Audit of the Department’s Efforts in Identifying IRM
KSAs
8/20/04 3
Office of Elementary and Secondary Education (OESE)
A02-E0007 Puerto Rico Department of Education’s (PRDE)
Administration of Contracts Awarded to Rock Solid
Technologies (RST)
9/8/04 $3,354,545 2
A05-D0038 Audit of Michigan’s local educational agencies’ (LEA)
allocations of Elementary and Secondary Education
Act of 1965, as amended (ESEA), Title I, Part A (Title
I), funds to schools for the period July 1, 2001, through
June 30, 2002 (2001-2002 school year)
6/25/04 4**
A05-E0016 Audit of the Wisconsin Department of Public
Instruction (DPI) and selected local education agencies
(LEA)
9/30/04 None
A19-E0004 Audit of the audit followup process for external audits
in the Office of Elementary and Secondary Education
(OESE) and the Office of Safe and Drug-Free Schools
(OSDFS) (OSDFS also designated as action official)
8/27/04 2
Office of Management (OM)
A19-D0003 Audit of Allocation of Common Support Expenses
(ODS also designated as action official)
4/27/04 6
Office of Postsecondary Education (OPE)
A09-D0010 U.S. Department of Education’s Administration of the
Distance Education Demonstration Program (FSA also
designated as action official)
9/30/04 3
Table 2: ED/OIG Audit Reports on Education Department Programs
and Activities (April 1, 2004 to September 30, 2004) (Cont.)
Report
Number Report Title
Date
Issued
Questioned
Costs*
Unsupported
Costs
No. of
Recommendations
Semiannual Report To Congress: #49
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Office of Special Education and Rehabilitative Services (OSERS)
A06-E0001 Audit of the Individuals with Disabilities Education Act
(IDEA), Part B requirements at Fond du Lac Ojibwe
School (Fond du Lac) for the period July 1, 2001,
through September 30, 2003
8/30/04 3
A09-D0033 Charter Schools’ Access to Title I and IDEA, Part B
Funds in the State of Arizona (OII and OESE also
designated as action officials)
8/24/04 4
A19-E0006 Audit of the audit followup process for external audits
in the Office of Special Education and Rehabilitative
Services (OSERS)
6/2/04 1
Office of Vocational and Adult Education (OVAE)
A03-D0013 Audit of Perkins III Performance Data at OVAE 5/24/04 8
ALTERNATIVE AUDIT PRODUCTS
Federal Student Aid (FSA)
A04-E0005 Review of Gwinnett College of Business’
administration of the U.S. Department of Education
(Department) programs authorized under Title IV of the
Higher Education Act of 1965, as amended (Audit
Closeout Letter)
7/27/04
Institute of Education Sciences (IES)
A19-E0007 Audit Followup Process - External Audits (Audit
Closeout Letter)
4/1/04
Office of Elementary and Secondary Education (OESE)
A03-E0004 Talbot County Public Schools’ (TCPS) administration
of its Safe Schools/Healthy Students (SS/HS) grant
(Award Number S184L000004) (Audit Closeout Letter)
4/2/04
Office of Special Education and Rehabilitative Services (OSERS)
A09-E0013 Audit of the Washington State Office of Superintendent
of Public Instruction’s (WA-OSPI) administration of
the State Program Improvement Grant No.
H323A010012 (Audit Closeout Letter)
6/10/04
Office of the Chief Financial Officer (OCFO)
F04-E0001 EDPUBS Pre-Award 01 Field Pricing Support 9/9/04
F07-E0019 Central Processing System III contract Extension Pre-
Award Field Pricing Support
8/26/04
F19-E0019 Front End Business Integration (FEBI) Phase II 9/8/04
* For purposes of this schedule, questioned costs include other recommended recoveries.
** Audit A07-D0005 identified $4,600,000 in one-time better use of funds (BUF). Audit A05-D0038 identified $48,835 in one-time
BUF and $1,580,000 in annual BUF.
Table 2: ED/OIG Audit Reports on Education Department Programs
and Activities (April 1, 2004 to September 30, 2004) (Cont.)
Report
Number Report Title
Date
Issued
Questioned
Costs*
Unsupported
Costs
No. of
Recommendations
Semiannual Report To Congress: #49
17
DESCRIPTION OF ALTERNATIVE PRODUCTS
Attestation reports convey the results of attestation engagements performed within the context of their stated scope and
objective(s). Attestation engagements can cover a broad range of financial or non-financial subjects and can be part of a financial
audit or performance audit. They include the examination, review, or performance of agreed-upon procedures on a subject matter
or an assertion about a subject matter and reporting on the results.
Audit closeout memoranda/letters are issued to provide written notification to auditees of audit closure when the decision is
made to close an assignment without issuing an audit report.
Interim audit memoranda/letters are used to notify ED management or the audited entity of a serious and urgent condition or
issue identified during an on-going audit assignment when there is a strong likelihood that waiting until the audit report’s issuance
would result in the loss of an opportunity to prevent or curtail significant harm to the ED interest.
Management information reports provide ED management with information derived from audits (when the issuance of an audit
report is not appropriate) or special projects that may be useful in its program administration or conduct of program activities.
Pre-award audit services are provided by OIG in response to requests by ED contracting or program office staffs. These
normally include making an assessment of an offeror’s accounting system and performing field pricing support.
Seven interim audit memoranda were issued but are not on the OIG website and are not publicly distributed.
Table 3: Inspection and other ED/OIG Products on Education
Department Programs and Activities (April 1, 2004 to September 30,
2004)
Report Number Title of Report Date Issued
Section 5(a)(6) of the Inspector General Act of 1978 as amended requires a listing of each report completed by OIG during the
reporting period.
Office of Management (OM)
MIT CAP Report 8/23/04
I13D0023 Review of MIT Action Item 82: Creation of a Nationwide Recruitment Network 6/21/04
I13D0025 Review of MIT 219: Creation of Individual Development Plans 5/11/04
I13E0006 Completion of Blueprint for Management Excellence #180: Performance
Management Training for Supervisors
5/4/04
I13E0010 Review of MIT 183: Manager Survey after Employee Training Completion 4/23/04
I13D0020 Completion of Blueprint for Management Excellence #221: Leadership and
Succession Planning Model
4/12/04
I13E0001 Review of MIT # 84: Innovative Recruitment Strategies 4/12/04
Federal Student Aid (FSA)
I13E0017 Monitoring the Federal Funds Level at Guaranty Agencies Needs Improvement 9/14/04
L04-E0001 Tennessee Technology Center at Morristown’s Compliance with the Requirement
That It Admit as Regular Students Only Persons Who Have a High School Diploma
or Its Equivalent or Are Beyond the Age of Compulsory School Attendance (Alert
Memorandum, Student Financial Assistance No. 04-02)
5/11/04
L05-E0013 Ivy Tech State College’s General Technical Studies Program (Alert Memorandum,
Student Financial Assistance 04-03)
8/19/04
L19-E0008 Federal Student Aid Audits on Administrative Stay (Alert Memorandum Student
Financial Assistance No. 04-01)
5/4/04
House of Representatives’ Committee on Education and the Workforce (Committee)
S17-E0011 Response to request of the Honorable John A. Boehner, Committee Chair, regarding
ED’s canceled budget authority (Letter relaying results of Special Project)
9/29/04
Table 2: ED/OIG Audit Reports on Education Department Programs
and Activities (April 1, 2004 to September 30, 2004) (Cont.)
Report
Number Report Title
Date
Issued
Questioned
Costs*
Unsupported
Costs
No. of
Recommendations
Semiannual Report To Congress: #49
18
Office of the Chief Financial Officer (OCFO)
L05-E0015 State Education Agencies Did Not Monitor All Subrecipients for Submission of
Required Single Audit Reports (Alert Memorandum, State and Local No. 04-05)
5/18/04
L09-E0016 The Department Should Place Special Conditions on Grants to Alum Rock Union
Elementary School District (Alert Memorandum, State and Local No. 04-03)
5/6/04
L17-E0005 Verification of Information Entered into the Grant Administration and Payment
System and the Recipient System for New Grantees (Alert Memorandum, Financial
Statement Internal Audit Team)
4/8/04
DESCRIPTION OF INSPECTIONS AND OTHER PRODUCTS
Alert memoranda are prepared when auditors identify a serious condition requiring immediate Department management action
that is either outside the agreed-upon objectives of an on-going audit assignment or is identified while engaged in work not related
to an on-going assignment when an audit report will not be issued.
Inspection reports are the results of an analysis, evaluation, review, or study of the Department’s programs and activities.
Special projects are works that result in the issuance of a product or report that is not conducted in full compliance with the
audit, inspection, or investigation standards.
Alert memoranda and special projects are not on the OIG website and are not publicly distributed.
Table 4: ED/OIG Issued Audit Reports with Questioned Costs (April
1, 2004 to September 30, 2004)
Number Questioned1 Unsupported
2
A. For which no management decision has been made before the
commencement of the reporting period (as adjusted)
79 $173,101,433 $43,411,989
B. Which were issued during the reporting period 9 $9,885,622 $1,573,222
Subtotals (A + B) 88 $182,987,055 $44,985,211
C. For which a management decision was made during the reporting period 13 $4,075,489 $2,029,875
(i) Dollar value of disallowed costs $4,075,488 $2,029,875
(ii) Dollar value of costs not disallowed $1 $0
D. For which no management decision has been made by the end of the
reporting period
75 $178,911,566 $42,955,336
E. For which no management decision was made within six months of issuance 67 $169,069,765 $41,382,949
1Questioned costs are costs that are questioned because of either an alleged violation of a provision of a law, regulation, contract,
grant, cooperative agreement, or other agreement or document governing the expenditure of funds or a finding that the
expenditure of funds for the intended purpose is unnecessary or unreasonable. Other recommended recoveries are funds
recommended for reasons other than being questioned costs. The category is usually used for findings involving recovery of
outstanding funds and/or revenue earned on federal funds. The amount also includes any interest due the Department resulting
from the auditee’s use of funds. Amounts reported for this category are combined with unsupported costs.
2Unsupported costs are costs that are questioned because, at the time of the audit, such costs were not supported by adequate
documentation.
Table 3: Inspection and other ED/OIG Products on Education
Department Programs and Activities (April 1, 2004 to September 30,
2004) (Cont.)
Report Number Title of Report Date Issued
Semiannual Report To Congress: #49
19
Table 5: ED/OIG Issued Audit Reports with Recommendations for
Better Use of Funds1 (April 1, 2004 to September 30, 2004)
Number Dollar Value
A. For which no management decision has been made before the commencement of the
reporting period (as adjusted)
5 $237,640,759
B. Which were issued during the reporting period 2 $6,228,835
Subtotals (A + B) 7 $243,869,594
C. For which a management decision was made during the reporting period 2 $5,229,328
(i) Dollar value of recommendations that were agreed to by management 2 $5,229,328
(ii) Dollar value of recommendations that were not agreed to by management 0 $0
D. For which no management decision has been made by the end of the reporting
period
5 $238,640,266
E. For which no management decision was made within six months of issuance 1 $1,628,835
1None of the audits reported in this table were performed by the Defense Contract Audit Agency.
Table 6: Unresolved Reports Issued Prior to April 1, 2004
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Section 5(a)(10) of the Inspector General Act as amended requires a listing of each report issued before the commencement of the
reporting period for which no management decision had been made by the end of the reporting period.
New Since Last Reporting Period
Federal Student Aid (FSA)
A05-D0020 Audit of the Administration of the Federal Pell Grant (Pell) program by The
Alexander Institute (Institute) during the period September 28, 2000, through June
30, 2003 (SAR 48, pg. 17)
Status: FSA informed us that the audit is being resolved by the FSA Chicago Case
Team.
12/11/03 $1,718,869 1
A06-D0016 Audit of National Education Center-Spartan School of Aeronautics’ compliance
with Student Financial Assistance program eligibility requirements, under Title IV
of the Higher Education Act of 1965, as amended (HEA) (SAR 48, pg. 17)
Status: FSA informed us that the audit was resolved on September 22, 2004;
however, the required data was not entered in the Audit Accountability and
Resolution Tracking System (AARTS) as of September 30, 2004. The audit will be
removed in the next Semiannual Report.
2/19/04 $312,149 4
A07-C0032 Audit of the New Jersey Higher Education Student Assistance Authority’s
(HESAA) monitoring of law firms (special counsels) providing collection services
to HESAA (SAR 48, pg. 17)
Status: No response received as to the status of the audit.
3/3/04 $11,059 10
Office of the Chief Financial Officer (OCFO)
A02-D0007 Audit of the New York City Department of Education (NYCDOE), Manhattan
High Schools Superintendent’s District’s (District) Administration of the 21st
Century Community Learning Centers (21st CCLC) Program (SAR 48, pg. 15)
Status: OCFO’s Post Audit Group (OCFO/PAG) informed us that they are in the
process of drafting a program determination letter. OCFO expects to resolve the
audit by November 30, 2004.
11/24/03 $61,776 7
Semiannual Report To Congress: #49
20
A04-D0001 North Alabama Center for Educational Excellence’s Administration of the TRIO
Programs Needs Improvement (Office of Postsecondary Education (OPE) also
designated as action official) (SAR 48, pg. 15)
Status: OCFO/PAG informed us that they are working to resolve the audit.
11/24/03 $877,384 14
A05-D0017 Audit of the University of Illinois at Chicago’s (UIC) Gaining Early Awareness and
Readiness for Undergraduate Programs (GEAR UP) project (OPE also designated
as action official) (SAR 48, pg. 15)
Status: OCFO/PAG informed us that they are reviewing a significant amount of
documentation and are working with the program office, the Office of General
Counsel (OGC), and the OIG, to resolve the audit report. OCFO expects to resolve
the audit by March 31, 2005.
1/14/04 $1,018,212 4
A05-D0018 Audit of the Cesar Chavez Middle School’s (School) use of U.S. Department of
Education (ED) funds for the period July 1, 2001, through June 30, 2002 (2001-
2002 fiscal year) (Office of Innovation and Improvement (OII) also designated as
action official) (SAR 48, pg. 15)
Status: OCFO/PAG informed us that they are awaiting a response from OGC
regarding a draft program determination letter. OCFO expects to resolve the audit
by December 31, 2004.
10/30/03 $196,805 3
A05-D0023 Audit of the Aztlan Academy’s (Academy) use of U.S. Department of Education
(ED) funds for the period July 1, 2001, through June 30, 2002 (2002 fiscal year)
(OII also designated as action official) (SAR 48, pg. 15)
Status: OCFO/PAG informed us that they are awaiting a response from OGC
regarding a draft program determination letter. OCFO expects to resolve the audit
by December 31, 2004.
10/14/03 $148,440 2
A05-D0028 Audit of the Sonoran Science Academy’s (Academy) use of U.S. Department of
Education (ED) funds for the period August 1, 2001, through July 31, 2002 (project
period) (OII also designated as action official) (SAR 48, pg. 16)
Status: OCFO/PAG informed us that they are awaiting additional documentation
from the auditee. OCFO expects to resolve the audit by December 31, 2004.
11/19/03 $19,534 2
A05-D0029 Audit of the Sonoran Desert School’s (School) use of U.S. Department of
Education (ED) funds for the period September 1, 2001, through August 31, 2002
(project period) (OII also designated as action official) (SAR 48, pg. 16)
Status: OCFO/PAG informed us that the audit was placed on administrative stay
on April 28, 2004 until October 31, 2004.
10/31/03 $37,452 4
A05-D0037 Audit of the Future Teachers of Chicago/Illinois’ (Future Teachers) Teacher
Recruitment Grant No. P336C020025 (Grant) for the period October 1, 2002,
through June 30, 2003 (OPE also designated as action official) (SAR 48, pg. 16)
Status: OCFO/PAG informed us that they are reviewing a significant amount of
documentation and are working with the program office, OGC, and the OIG, to
resolve the audit report. OCFO expects to resolve the audit by March 31, 2005.
3/23/04 $365,296 3
A06-D0017 Audit of the 21st Century Community Learning Centers (21st Century) grant to
Project ASCEND (After School and Community Enrichment for a New Direction)
for the period June 1, 2001, through March 31, 2003 (Office of Elementary and
Secondary Education (OESE) also designated as action official) (SAR 48, pg. 16)
Status: OCFO/PAG informed us that they are reviewing a significant amount of
documentation and are working with the program office, OGC, and the OIG, to
resolve the audit report. OCFO expects to resolve the audit by March 31, 2005.
2/11/04 $316,633 3
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
21
A09-D0012 Alum Rock Union Elementary School District’s Administration of the 21st Century
Community Learning Centers Grant No. S287A000487 (OESE also designated as
action official) (SAR 48, pg. 16)
Status: OCFO informed us that the audit was placed on administrative stay on
September 13, 2004 until December 17, 2004.
3/17/04 $205,264 11
A09-D0015 Gonzales Unified School District’s Administration of the 21st Century Community
Learning Centers Grant No. S287A000704 (OESE also designated as action
official) (SAR 48, pg. 16)
Status: OCFO informed us that the Indirect Cost Group is working on a draft
program determination letter.
12/19/03 $474,005 4
Office of Elementary and Secondary Education (OESE)
A02-D0014 Puerto Rico Department of Education’s (PRDE) Title I Expenditures for the period,
July 1, 2002 to December 31, 2002 (See note 1 at end of table) (SAR 48, pg. 17)
Status: OESE informed us that the audit is in Cooperative Audit Resolution and
Oversight Initiative (CAROI).
3/30/04 $49,536 9
A02-D0016 New York City Department of Education’s Use of Computer Equipment to Support
the E-Rate Program (SAR 48, pg. 17)
Status: OESE informed us that a program determination letter was issued on
September 30, 2004. The audit will be removed in the next Semiannual Report.
3/30/04 1
A05-D0008 Audit of 20 Arizona charter schools’ uses of U.S. Department of Education (ED)
funds for the period October 1, 2000, through September 30, 2001 (Office of
Special Education and Rehabilitative Services (OSERS) also designated as action
official) (SAR 48, pg. 17)
Status: OESE informed us that on September 30, 2004 they requested a renewal or
reinstatement of the administrative stay.
11/6/03 $1,264,943 10
A05-D0021 Audit of the Detroit City School District’s (District) administration of Title I, Part
A (Title I) of the Elementary and Secondary Education Act of 1965, as amended
(the Act), Set-Aside programs for the period July 1, 2002, through May 31, 2003
(SAR 48, pg. 17)
Status: OESE informed us that a program determination letter was issued on
September 30, 2004. The audit will be removed in the next Semiannual Report.
11/21/03 $278,414 10
Office of Innovation and Improvement (OII)
A09-D0018 Charter Schools’Access to Title I and IDEA, Part B Funds in the State of California
(OESE also designated as action official) (See note 1 at end of table) (SAR 48, pg.
18)
Status: No response received as to status of the audit.
3/29/04 12
Office of Postsecondary Education (OPE)
A03-C0017 Audit to Determine if Cohort Default Rates Provide Sufficient Information on
Defaults in the Title IV Loan Programs (FSA also designated as action official)
(SAR 48, pg. 18)
Status: OPE informed us that the audit has been referred to the Department’s
Audit Follow-up Official for dispute resolution.
12/22/03 4
Office of Special Education and Rehabilitative Services (OSERS)
A02-D0020 Puerto Rico Department of Education’s (PRDE) Special Education Expenditures
for the period, July 1, 2002 to December 31, 2002 (See note 1 at end of table) (SAR
48, pg. 18)
Status: OSERS informed us that the audit is being resolved through CAROI team
effort.
3/30/04 $122,901 9
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
22
Reported in Previous Semiannual Report
Federal Student Aid (FSA)
A02-B0026 Audit of Taylor Business Institute’s Administration of Title IV Student Financial
Assistance Programs (SAR 47, pg. 13)
Status: FSA informed us that the audit is being reviewed by FSA New York Case
Team.
7/8/03 $2,089 5
A03-A0022 Audit of Commissioned Sales and Course Length at Wesley College (SAR 44, pg.
14)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
1/15/02 $1,431,560 5
A03-B0013 Audit of the Ability-to-Benefit (ATB) Testing Process at Lincoln Technical
Institute, Inc. (LTI), Philadelphia, PA (SAR 45, pg. 16)
Status: FSA informed us that the audit was resolved on October 31, 2003;
however, there was no audit clearance document in AARTS as of September 30,
2004. The audit will be removed in the next Semiannual Report.
5/10/02 $256,946 9
A04-B0015 Review of Cash Management and Student Financial Assistance Refund Procedures
at Bennett College (OPE designated as collateral action office for this report) (SAR
45, pg. 16)
Status: FSA informed us that the audit was resolved on March 14, 2003; however,
the required data was not in AARTS as of September 30, 2004. The audit will be
removed in the next Semiannual Report.
9/26/02 $997,313 7
A04-B0018 Alcorn State University’s Administration of Title IV Student Financial Assistance
Programs Needs Strengthening (SAR 47, pg. 13)
Status: FSA informed us that the audit was resolved on January 30, 2004.
However, the OIG’s concurrence notification and the verified audit clearance
document were not date stamped in AARTS as of September 30, 2004. The audit
will be removed in the next Semiannual Report.
8/15/03 $342,505 24
A04-B0019 Advanced Career Training Institute’s Administration of the Title IV Higher
Education Act Programs (SAR 47, pg. 13)
Status: FSA informed us that the audit is being reviewed by FSA Atlanta Case
Team.
9/25/03 $7,469,328 14
A05-A0030 Audit of Commissioned Sales at Olivet Nazarene University (SAR 43, pg. 11)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
5/21/01 $3,299,891 4
A05-B0003 Audit of Commissioned Sales and Course Length at Benedictine University (SAR
44, pg. 14)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
12/31/01 $221,988 5
A05-B0004 Indiana Wesleyan University, Adult and Professional Studies Administration of
Title IV Programs, Marion, Indiana (SAR 43, pg. 11)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
9/28/01 $31,682,782 5
A05-B0014 Audit of Course Length at Olivet Nazarene University (SAR 43, pg. 12)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
9/28/01 4
A05-B0019 Audit of Course Length at Trinity Christian College (Trinity) (SAR 45, pg. 16)
Status: FSA informed us that the audit was resolved on September 30, 2004. The
audit will be removed in the next Semiannual Report.
9/17/02 $111,061 3
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
23
A05-C0015 Audit of American School of Technology’s Administration of the Title IV, HEA
Programs, Columbus, Ohio (SAR 46, pg. 12)
Status: FSA informed us that the audit is being reviewed by FSA Chicago Case
Team.
3/21/03 $1,311,249 13
A06-70005 Professional Judgment at Yale University (SAR 36, pg. 18)
Status: FSA informed us that they are awaiting a policy decision to address and
resolve this finding in the final audit determination letter.
3/13/98 $5,469 3
A06-70009 Professional Judgment at University of Colorado (SAR 37, pg. 17)
Status: FSA informed us that they are awaiting a policy decision to address and
resolve this finding in the final audit determination letter.
7/17/98 $15,082 4
A06-A0001 Interactive Learning Systems’ Administration of the Title IV Student Financial
Assistance Programs (SAR 43, pg. 12)
Status: FSA informed us that the audit was resolved on March 23, 2003. However,
the OIG’s concurrence notification, and the verified audit clearance document was
not date stamped in AARTS as of September 30, 2004. The audit will be removed in
the next Semiannual Report.
7/20/01 $990,828 7
A06-A0003 International Business College’s Administration of Title IV Student Financial
Assistance Programs (SAR 42, pg. 22)
Status: FSA informed us that they are working to resolve this audit.
3/28/01 $461,035 4
A06-A0024 Audit of Commissioned Sales and Course Length at Southern Wesleyan University
(SAR 45, pg. 16)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
9/4/02 $19,451,123 5
A06-B0012 Audit of Los Angeles City College’s Compliance with the Title IV, Student
Financial Assistance, Verification Requirements (SAR 44, pg. 15)
Status: FSA informed us that the audit was resolved on January 27, 2003;
however, the required data was not in AARTS as of September 30, 2004. The audit
will be removed in the next Semiannual Report.
11/14/01 $14,072 3
A06-B0014 Audit of United Education Institute’s Compliance with the Title IV, Student
Financial Assistance, Verification Requirements (SAR 43, pg. 12)
Status: FSA informed us that the audit was resolved on February 20, 2003;
however, the required data was not in AARTS as of September 30, 2004. The audit
will be removed in the next Semiannual Report.
9/6/01 $7,285 1
A06-C0018 Gretna Career College’s Administration of the Title IV Student Financial
Assistance Programs (SAR 46, pg. 12)
Status: FSA informed us that the audit was resolved on October 28, 2003.
However, the OIG’s concurrence notification, and the verified audit clearance
document was not date stamped in AARTS as of September 30, 2004. The audit will
be removed in the next Semiannual Report.
12/19/02 $1,383,470 6
A06-C0035 Audit of FlightSafety Academy’s compliance with Student Financial Assistance
Citizenship and Program Eligibility Requirements, under Title IV of the Higher
Education Act of 1965, as amended (HEA) (SAR 47, pg. 13)
Status: FSA informed us that the audit was resolved on March 5, 2004. However,
the OIG's concurrence notification, and the verified audit clearance document were
not date stamped in AARTS as of September 30, 2004. The audit will be removed in
the next Semiannual Report.
9/29/03 $5,666,525 3
A07-23545 State of Missouri, Single Audit Two Years Ended June 30, 1991
Status: No response received as to the status of the audit.
4/1/93 $1,048,768 18
A07-33123 State of Missouri, Single Audit Year Ended June 30, 1992
Status: No response received as to the status of the audit.
3/7/94 $187,530 18
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
24
A07-90035 Audit of Commissioned Sales at William Penn University (SAR 43, pg. 12)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
5/15/01 $5,023,447 4
A07-A0030 Baker University School of Professional and Graduate Study’s Administration of
Title IV Federal Student Aid Programs (SAR 45, pg. 17)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
9/19/02 $15,716,275 7
A07-A0031 Fontbonne University Options Program’s Administration of Title IV Federal
Student Aid Programs (SAR 45, pg. 17)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
9/30/02 $12,441,490 7
A07-B0001 Audit of Course Length at William Penn University (SAR 43, pg. 12)
Status: FSA informed us that the audit was resolved on August 22, 2004 through a
settlement agreement. The audit will be removed in the next Semiannual Report.
9/28/01 4
A09-70015 Associated Technical College (ATC) Eligibility of Institutions to Participate in
Title IV Programs & Other Issues (SAR 37, pg. 16)
Status: FSA/SEC/CMO senior managers are thoroughly reviewing the 90/10
calculations before approving the final audit determination letter.
9/9/98 $8,600,000 7
N06-90010 Inspection of Parks College’s Compliance with Student Financial Assistance
Requirements (SAR 40, pg. 18)
Status: FSA Dallas Case Team denied school’s recertification on December 31,
1999. School closed February 5, 2000.
2/9/00 $169,390 1
Office of the Chief Financial Officer (OCFO)
A04-C0014 Audit of Kentucky State University’s (KSU) compliance with the administration of
the Title III, Part B, Strengthening Historically Black Colleges and Universities
Program (SAR 46, pg. 14)
Status: OCFO/PAG informed us that a program determination letter was issued on
March 30, 2004, and the finding audit clearance document was amended for
finding 1 on September 24, 2004; however, the audit clearance was not corrected
in AARTS as of September 30, 2004. The audit will be removed in the next
Semiannual Report.
3/12/03 $28,083 4
A06-C0034 Audit of the Texas Education Agency’s (TEA) Treatment of the Costs of Unused
Accrued Vacation Leave of Retiring or Separating Employees (terminal leave) for
the period September 1, 1999, through August 31, 2002 (SAR 47, pg. 14)
Status: OCFO informed us that the Indirect Cost Group and TEA signed a
settlement agreement dated June 23, 2004. The audit will be removed in the next
Semiannual Report.
7/8/03 2
A06-D0014 Audit of the 21st Century Community Learning Centers (21st Century) grant to Mt.
Judea Public School (Mt. Judea) for the period June 1, 2000, through January 31,
2003 (SAR 47, pg. 14)
Status: OCFO/PAG informed us that they submitted a draft program
determination letter on September 22, 2004. OCFO expects to resolve the audit by
November 30, 2004.
9/29/03 $397,500 2
A07-C0031 Audit of the Talent Search Program at Luther College (SAR 46, pg. 14)
Status: OCFO/PAG informed us that they are working with the program office in
obtaining additional documentation. OCFO expects to resolve the audit by
December 31, 2004.
3/28/03 $219,567 4
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
25
A07-D0002 Audit of the Talent Search Program at Case Western Reserve University (CWRU)
(SAR 47, pg. 14)
Status: OCFO/PAG informed us that they are working with the program office in
obtaining additional documentation. OCFO expects to resolve the audit by
December 31, 2004.
7/11/03 $212,428 5
Office of Elementary and Secondary Education (OESE)
A01-90006 Puerto Rico Department of Education Needs Major Improvements in its
Administration of the Even Start Program (SAR 41, pg. 22)
Status: OESE informed us that a CAROI team effort is working on resolution.
9/27/00 181,305 18
A01-A0004 Puerto Rico Department of Education Did Not Administer Properly a $9,700,000
Contract with National School Services of Puerto Rico (SAR 42, pg. 21)
Status: OESE informed us that a CAROI team effort is working on resolution.
3/28/01 $7,841,493 14
A02-50200 The Puerto Rico Department of Education Must Institute a Time Distribution
System (SAR 36, pg. 13)
Status: OESE informed us that a CAROI team effort is working on resolution.
11/14/97 1
A02-B0012 Puerto Rico Department of Education Did Not Administer Properly Title I
Contracts with National School Services of Puerto Rico for the 1999/2000 and
2000/2001 School Years (SAR 43, pg. 11)
Status: OESE informed us that a CAROI team effort is working on resolution.
9/28/01 $8,412,280 10
A02-B0025 Puerto Rico Department of Education Did Not Administer Properly Three
Contracts with R.V. Research and Management Group, Inc. (SAR 45, pg. 18)
Status: OESE informed us that a CAROI team effort is working on resolution.
9/12/02 $2,146,023 10
A02-C0011 The Virgin Islands Department of Education - St. Thomas/St. John School
District’s Control of Equipment Inventory (OSERS and OVAE also designated
action officials for this report) (SAR 47, pg. 15)
Status: OESE informed us that staff from OESE, OCFO, OSERS, and OVAE are
involved in a team effort to resolve the audit.
6/5/03 $1,451,218 6
A02-C0012 The Virgin Islands Department of Education Did Not Manage Its Federal Education
Funds (SAR 47, pg. 15)
Status: OESE informed us that a program determination letter was issued on
September 27, 2004; however, the required data was not in AARTS as of September
30, 2004. The audit will be removed in the next Semiannual Report.
9/30/03 $1,542,928 18
A02-C0017 Puerto Rico Department of Education’s Administration of Contracts with the
League of United Latin American Citizens National Educational Service Center
(OVAE also designated as action official for this report) (SAR 47, pg. 15)
Status: OESE informed us that the audit is in CAROI.
6/10/03 $115,390 5
A02-C0019 The Virgin Islands Department of Education-St. Croix School District’s Control of
Equipment Inventory (OSERS also designated as action official for this report)
(SAR 46, pg. 13)
Status: OESE informed us that staff from OESE, OCFO, OSERS, and OVAE are
involved in a team effort to resolve the audit.
3/31/03 $1,017,416 7
A03-B0023 Audit of Caroline Wilder Harris (C.W. Harris) Elementary School’s Federal Grant
Expenditures for the period July 1, 1999, through June 30, 2001 (SAR 45, pg. 18)
Status: OESE informed us that a program determination letter was issued on
September 30, 2003. The audit will be removed in the next Semiannual Report.
9/17/02 $43,159 2
A05-B0011 Audit of the Title I, Part A, Targeted Assistance Schools Grant (Grant)
Administered by the Mount Clemens Community Schools District (District) for the
July 1, 1997, through June 30, 1998, Award Year (SAR 45, pg. 18)
Status: OESE informed us that a program determination letter was issued on
September 30, 2004. The audit will be removed in the next Semiannual Report.
8/2/02 $338,571 4
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
26
A05-C0012 Audit of East Cleveland City Schools’ (ECCS) Administration of the 21st Century
Community Learning Centers (21st Century) Grant at Kirk Middle School (Kirk)
for the period June 1, 1998, through December 31, 2001 (SAR 45, pg. 18)
Status: OESE informed us that on September 30, 2004 they requested a renewal
or reinstatement of the administrative stay.
9/18/02 $349,637 9
A05-C0022 Audit of Community Consolidated School District 62’s (District) administration of
the 21st Century Community Learning Centers (21st Century) Grant for the period
June 1, 2000, through May 31, 2002 (Office of the Under Secretary (OUS) also
designated as action official for this report) (SAR 46, pg. 13)
Status: OESE informed us that on September 30, 2004 they requested a renewal
or reinstatement of the administrative stay.
2/24/03 $126,709 3
A05-C0029 Audit of Minnesota’s local educational agencies’ (LEA) allocations of Elementary
and Secondary Education Act, as amended, Title I, Part A, funds to schools for the
period July 1, 2001, through June 30, 2002 (2001-2002 school year) (SAR 47, pg.
15)
Status: OESE informed us that on September 30, 2004 they requested a renewal or
reinstatement of the administrative stay.
9/30/03 2
A05-D0009 Audit of Cleveland Municipal School District’s Set-Aside Funds for District-Wide
Activities (SAR 47, pg. 15)
Status: OESE informed us that on September 30, 2004 they requested a renewal or
reinstatement of the administrative stay.
8/6/03 $43,067 7
A06-C0031 Audit of the Migrant Education Program at the Florida Department of Education
(SAR 47, pg. 15)
Status: OESE informed us that a program determination letter was issued March
1, 2004; however, the verified audit clearance document was not date stamped in
AARTS as of September 30, 2004. The audit will be removed in the next
Semiannual Report.
5/2/03 3
A06-C0032 Kansas Department of Education’s Compliance with the Priority for Services
Requirements of the Migrant Education Program (SAR 47, pg. 15)
Status: OESE informed us that a program determination letter was issued March
1, 2004; however, the required data was not in AARTS as of September 30, 2004.
The audit will be removed in the next Semiannual Report.
5/15/03 3
A06-C0033 California Department of Education’s Compliance with the Priority for Services
Requirements of the Migrant Education Program (SAR 47, pg. 15)
Status: OESE informed us that a program determination letter was issued March
9, 2004; however, the required data was not in AARTS as of September 30, 2004.
The audit will be removed in the next Semiannual Report.
5/30/03 3
A09-D0014 Charter Schools Access to Title I Funds in the State of New York (OII is also
designated as action official for this report) (SAR 47, pg. 15)
Status: OESE informed us that on September 30, 2004 that they requested a
renewal or reinstatement of the administrative stay.
7/28/03 6
Office of Postsecondary Education (OPE)
A05-C0026 Audit of Northeastern Illinois University’s (NEIU) Administration of the
Developing Institutions - Hispanic-Serving Institutions (HSI) grant for the period
October 1, 2000, through October 31, 2002 (SAR 46, pg. 14)
Status: This audit was previously reported under OCFO, and OCFO informed us
that this audit was transferred to OPE for resolution. OPE informed us that they
are working with OIG to resolve the audit.
2/25/03 $478,261 2
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
27
A07-B0011 Audit of Valencia Community College’s Gaining Early Awareness and Readiness
for Undergraduate Programs Matching Requirement (SAR 47, pg. 15)
Status: OPE informed us that they are working on resolving this audit, and OGC is
reviewing the outstanding issues.
5/8/03 $1,822,864 5
Office of Safe and Drug Free Schools (OSDFS)
A01-90007 Puerto Rico Department of Education Needs Major Improvements in its
Administration of the Governor’s Safe and Drug-Free Schools Program (SAR 41,
pg. 22)
Status: OSDFS informed us that the audit is being resolved as part of the CAROI
settlement agreement with Puerto Rico Department of Education.
9/27/00 $82,452 17
Office of Special Education and Rehabilitative Services (OSERS)
A02-B0014 Audit of the Puerto Rico Vocational Rehabilitation Administration (PRVRA) (SAR
45, pg. 18)
Status: OSERS informed us that they are working to resolve the audit. OSERS
expects to resolve the audit by December 31, 2004.
6/26/02 $15,800,000 5
Office of Vocational and Adult Education (OVAE)
A09-C0026 Northwest Indian College Administration of the U.S. Department of Education,
Office of Vocational and Adult Education Grant No. V101A990026 (SAR 47, pg.
14)
Status: The audit previously was listed under OCFO, and was subsequently
transferred to OVAE. OVAE informed us that a program determination letter was
issued on September 30, 2004. The audit will be removed in the next Semiannual
Report.
9/30/03 $632,241 6
1We identified $151,205,677 in better use of funds in audit A02-D0014; $5,600,000 in better use of funds in audit A09-D0018, and
$79,515,522 in better use of funds in audit A02-D0020.
2Status comments reflect comments provided by the Department, comments agreed to, or documents obtained from the Audit
Accountability and Resolution Tracking System.
Table 7: Statistical Profile: April 1, 2004 to September 30, 2004
Six-month Period
Ending 9/30/04
Fiscal Year Ending
9/30/04
OIG AUDIT REPORTS ISSUED 31 72
Questioned Costs $8,312,400 $13,313,605
Unsupported Costs $1,573,222 $4,967.870
Recommendations for Better Use of Funds $6,228,835 $250,563,221
OTHER OIG PRODUCTS 29 59
(Inspections, Action Memoranda, Alert Memoranda, Closeout Letters, Management
Information Reports, Preaward Reviews, and Special Projects)
OIG AUDIT REPORTS RESOLVED BY PROGRAM MANAGERS 29 57
Questioned Costs Sustained $2,045,613 $145,774,070
Unsupported Costs Sustained $2,029,875 $2,889,804
Additional Disallowances Identified by Program Managers $214,193 $220,869
Management Commitment to the Better Use of Funds $5,331,102 $12,714,961
Table 6: Unresolved Reports Issued Prior to April 1, 2004 (Cont.)
Report
Number
Report Title
(Prior Semiannual Report [SAR] Number and Page)
Date
Issued
Total
Monetary
Findings
No. of
Recommendations
Semiannual Report To Congress: #49
28
INVESTIGATIVE CASE ACTIVITY
Cases Opened 139 230
Cases Closed 45 139
Cases Active at End of Period 425 N/A
Prosecutorial Decisions 87 175
-Accepted 72 130
-Declined 15 45
INVESTIGATION RESULTS
Indictments/Informations 72 110
Convictions/Pleas 44 96
Fines Ordered $30,575 $38,398
Restitution Payments Ordered $1,722,433 $5,906,027
Civil Settlements/Judgments (#) 7 12
Civil Settlements/Judgments ($) $189,847 $325,523
Recoveries $15,415 $560,539
Forfeitures/Seizures $2,200,000 $2,244,230
Table 7: Statistical Profile: April 1, 2004 to September 30, 2004 (Cont.)
Six-month Period
Ending 9/30/04
Fiscal Year Ending
9/30/04
U.S. Department of Education
Rod Paige
Secretary
Office of Inspector General
John P. Higgins, Jr.
Inspector General
Counsel’s Office
Mary Mitchelson
Counsel to the Inspector General
November 2004
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