oversight

U.S. Department of Education Funds Disbursed for New York City Department of Education Telecommunication Services.

Published by the Department of Education, Office of Inspector General on 2005-06-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             U.S. DEPARTMENT OF EDUCATION 

                              OFFICE OF INSPECTOR GENERAL 

                                     32 Old Slip, 26th Floor 

                                   New York, New York 10005 

                          Telephone (646) 428-3860 Fax (646) 428-3868 



                                                    June 14, 2005

                                                                                    Control Number
                                                                                    ED-OIG/A02-E0008

Richard P. Mills
Commissioner of Education
New York State Education Department
89 Washington Avenue
Albany, NY 12234

Dear Commissioner Mills:

This Final Audit Report presents the results of our audit, entitled U.S. Department of
Education Funds Disbursed for New York City Department of Education
Telecommunication Services. The objective of our audit was to determine if U.S.
Department of Education (ED) funds disbursed for New York City Department of
Education (NYCDOE) telecommunication services were for services that were excessive
or erroneous. An additional objective was to ensure that the use of ED funds for telecom
purposes was allowable.

In its May 20, 2005, response to our draft report, New York State Department of
Education (NYSED) concurred with our recommendations and it is included as
Attachment 1 to the report. NYSED referred to NYCDOE’s response to the draft report.
Because of the voluminous number of exhibits included in NYCDOE’s response, copies
are available upon request. We summarized NYSED’s and NYCDOE’s responses at the
end of the respective findings.


                                                 BACKGROUND

NYCDOE oversees New York City’s public school system, the largest public school
system in the country. NYCDOE serves 1.1 million school children and is organized into
10 Regions, each of which includes approximately 120 schools.

According to a NYCDOE representative, NYCDOE began an ongoing project to
regularly have phone bills reviewed, driven by the idea that it is good business practice.


       Our mission is to ensure equal access to education and to promote educational excellence throughout the Nation.
Audit of ED Funds Disbursed for                                      Final Report
NYCDOE Telecommunication Services                                    ED-OIG A02-E0008

Phone bills can be erroneous due to human error, computer error, misapplied rates,
decentralized billing, tax and surcharge mistakes, tariff error, and duplicate billing.
Auditing phone bills is a risk-free way to recover past overcharges and correct phone bills
so that they result in future savings. Since May 2001, NYCDOE contracted with third
party phone auditors. Their review of NYCDOE’s phone bills has resulted in refunds
totaling over $6.5 million for funds disbursed by NYCDOE for telecommunication
services.

For the period July 1, 1999 through June 30, 2003, over $7.2 million in ED funds have
been charged by NYCDOE for telecommunication services.


                                   AUDIT RESULTS

We sampled approximately $2 million of the total $7.2 million in telecommunication
services transactions, and found that NYCDOE charged unsupported and unallowable
costs to ED funds. Specifically, for the sampled items, we found that NYCDOE charged
$1.5 million in unsupported costs to ED grants. In addition, NYCDOE used about
$46,000 in ED funds for telecom purposes that were unallowable under ED grants. This
includes $8,795 of unallowable indirect costs charged to ED direct grants and $36,901 of
unallowable costs charged to ED grants for disconnected telecom services.

Finding 1 – Unsupported Costs Were Charged to ED Funds.

NYCDOE could not support expenditures for ED funds disbursed for telecommunication
services because NYCDOE did not maintain an adequate archiving system to retrieve
requested documents. We sampled 349 transactions totaling $2,013,794 and found that
NYCDOE could not provide support for 243 transactions totaling $1,517,937, which
represents 75 percent of the dollar amount of transactions within our sample.

                                    Table 1
               Distribution of Unsupported Telecommunication Funds1

                      Flow Through
             Year        Funds            Direct Grants           Total
             2000             72,166              30,543             102,709
             2001            303,168               3,335             306,503
             2002             78,946              11,718              90,664
             2003          1,017,061               1,000           1,018,061
             Total        $1,471,341             $46,596          $1,517,937



1
 Refer to Exhibit 1 for grant distribution. Flow Through Grants refer to grants
administered through the State Education Agencies whereas; Direct Grants are issued
directly to the Local Education Agencies.


                                            2
Audit of ED Funds Disbursed for                                           Final Report
NYCDOE Telecommunication Services                                         ED-OIG A02-E0008

Per 34 CFR § 75.730, “A grantee shall keep records that fully show: . . . (b) How the
grantee uses the funds; (c) The total cost of the project . . . (e) Other records to facilitate
an effective audit.”

34 CFR § 76.702 states: “A State and a subgrantee shall use fiscal control and fund
accounting procedures that insure proper disbursement of and accounting for Federal
funds.”

Pursuant to 20 USC § 1232f(a),

        Each recipient of Federal funds under any applicable program through
        any grant, subgrant, cooperative agreement, loan, or other arrangement
        shall keep records which fully disclose the amount and disposition by the
        recipient of those funds, the total cost of the activity for which the funds
        are used, the share of that cost provided from other sources, and such
        other records as will facilitate an effective financial or programmatic
        audit. The recipient shall maintain such records for three years after the
        completion of the activity for which the funds are used.

34 CFR § 80.20(a) states “ . . . Fiscal control . . . must be sufficient to: (2) Permit the
tracing of funds to a level of expenditures adequate to establish that such funds have not
been used in violation of the restrictions and prohibitions of applicable statutes.” Further,
(b)(6) states that “ . . . Accounting records must be supported by such source
documentation as cancelled checks, paid bills, payrolls, time and attendance records,
contract and subgrant award documents, etc.”

According to OMB Circular A-87 § C.1.j, to be allowable under Federal awards, costs
must be adequately documented. Section C.1.b, states, costs must be allocable to Federal
awards under the provisions of this Circular. Section C.3.a, establishes, “A cost is
allocable to a particular cost objective if the goods or services involved are chargeable or
assignable to such cost objective in accordance with relative benefits received.”

NYCDOE did not implement adequate controls to maintain documentation of Federal
expenditures. Contributing factors include the following:

    • 	 Due to a major NYCDOE reorganization in 2003, all district offices archived all
        documentation in over 28,000 boxes without adequately inventorying the
        contents. Therefore, original documentation was not readily available. Although
        a recent re-inventorying of records was underway at the time of our audit, few
        supporting documents were provided at the conclusion of fieldwork.

    • 	 Data prior to the 2003 reorganization should have been previously archived, but
        as NYCDOE lacked internal controls regarding archiving and record keeping, this
        data was also unavailable. Internal controls were inadequate because they lacked
        complete procedures to ensure proper and effective record retention.



                                               3
Audit of ED Funds Disbursed for                                       Final Report
NYCDOE Telecommunication Services                                     ED-OIG A02-E0008

Since NYCDOE did not provide the supporting documents, we were unable to determine
if the telecommunication services were properly charged to ED grants. As NYCDOE
was unable to provide 75 percent of the dollar amount of transactions within our sample,
we question the propriety of the balance not tested during our audit, totaling over $5.1
million of telecommunication services charged to ED funds.

Recommendations
We recommend that the ED Chief Financial Officer, through NYSED, require NYCDOE
to:

1.1 	   Provide sufficient documentation to support $1,517,937 charged to ED grants for
        telecommunication services, or return this amount to ED, including the indirect
        costs attributable to unsupported services, as discussed in Finding 2.

1.2 	   Provide sufficient documentation to support for the untested transactions totaling
        $5,193,191 charged to ED grants for telecommunication services, or return this
        amount to ED, including the indirect costs attributable to unsupported services.

1.3 	   Establish and implement internal controls for proper record keeping and
        allocation of telecommunication charges to ED grants.

NYSED Comments

NYSED agreed with the recommendations.

However, regarding Recommendation 1.2, NYSED stated that they would request
additional sampling be conducted by ED to determine a more accurate disallowance rate.

OIG Response

We considered NYSED’s response to Recommendation 1.2, but our position remains the
same. Although afforded sufficient time, NYCDOE was unable to produce supporting
documentation for 75 percent of the dollar value of transactions sampled. Expansion of
our sampling would not produce alternative results.

NYCDOE Comments

NYCDOE concurred with Finding 1. NYCDOE concurred with two of three
recommendations of this finding.

NYCDOE did not agree with Recommendation 1.2. NYCDOE stated it disagreed that it
should be required to provide invoices for the entire universe of telecommunication
services charged to ED grants, and stated that controls in its budget and accounting
systems provided the necessary on-line approvals to charge transactions to a particular
fund source. As the audit found only $46,000, or 2.2 percent, as unallowable, NYCDOE



                                             4

Audit of ED Funds Disbursed for                                             Final Report
NYCDOE Telecommunication Services                                           ED-OIG A02-E0008

considered due diligence was applied in accordance with restrictions governing ED
grants.

OIG Response
We considered NYCDOE’s response to Finding 1, but our position remains the same.
Because NYCDOE was unable to produce documentation supporting 75 percent of the
dollar value of transactions sampled, the records are not available to substantiate its
response. Since sufficient documentation was not provided for a substantial part of our
sample, we could not determine the allowability of the costs or evaluate NYCDOE’s due
diligence applied in charging ED grants for telecommunication services.


Finding 2 – Unallowable Indirect Costs Were Charged to ED Direct Grant Funds

NYCDOE disbursed ED direct grant funds for telecommunication services that were
unallowable as they were already considered within the indirect cost rates charged to the
grants. Of the 349 transactions sampled, NYCDOE provided supporting documentation
for 106 transactions totaling $495,858. Of the supporting documentation provided, we
determined that NYCDOE charged direct grants $7,596 for 27 telecommunication service
transactions when those services were already included within the indirect cost rates
charged to the grants.

According to OMB A-87, Attachment B, Section 10, “Costs of telephone, mail,
messenger, and similar communication services are allowable.” However, as per
Attachment A, C.1.f., “A cost may not be assigned to a Federal award as a direct cost if
any other cost incurred for the same purpose in like circumstances has been allocated to
the Federal award as an indirect cost.”

NYCDOE’s internal controls were not adequate to ensure that indirect costs are not
directly charged to direct grants. We determined that direct charges of $7,596 were
unallowable. The indirect costs associated with this amount are also unallowable. Based
on the application of the indirect cost percentage,2 we calculated unallowable indirect
costs to be $1,198. In total, we determined that $8,795 was unallowable.

Recommendation
We recommend that the ED Chief Financial Officer, through NYSED, require NYCDOE
to:

2.1 	     Return $8,795 in telecommunication services charged to direct grants inclusive of
          its applicable indirect cost rates.

2.2 	     Establish internal control procedures to ensure telecom services are properly
          allocated to ED grants prior to payment.


2
    Refer to Exhibit II for illustration of direct grants and applicable indirect cost rates.


                                                  5

Audit of ED Funds Disbursed for                                        Final Report
NYCDOE Telecommunication Services                                      ED-OIG A02-E0008

NYSED Comments

NYSED concurred with our recommendations.

NYCDOE Comments

NYCDOE concurred with Finding 2 and the recommendations. NYCDOE agreed to
return $8,795 inclusive of its applicable indirect cost rates.


Finding 3 – Unallowable Costs Were Charged to ED Grant Funds

NYCDOE disbursed ED grant funds for telecommunication services that were
unallowable as the services were disconnected. We analyzed the supporting
documentation provided for the 106 transactions from our sample of 349 questioned
items. We determined that NYCDOE charged ED grant funds $36,901 for phone lines
that were unallowable as they were disconnected.

Analysis of the supporting documentation provided by NYCDOE, disclosed three
transactions totaling $36,901 were charged to the Title I grant. These charges included a
total of 137 telephone numbers3 that were disconnected according to third party auditors
contracted by NYCDOE.

NYCDOE apportioned its telecommunication services among many grants using
estimates. We cannot determine which phone lines were charged to Title 1 grants. There
may be additional disconnected phone lines, which were not included in our sample.
Consequently, we cannot ascertain what portion of the $7.2 million charged to ED funds
was proper.

According to OMB A-87, C.1.a. “To be allowable under Federal awards, costs must meet
the following general criteria: Be necessary and reasonable for proper and efficient
performance and administration of Federal awards.”

As per 34 CFR § 76.702, “A State and a subgrantee shall use fiscal control and fund
accounting procedures that insure proper disbursement of and accounting for Federal
funds.”

34 CFR § 80.20(a) states, “ . . . Fiscal control . . . must be sufficient to: (2) Permit the
tracing of funds to a level of expenditures adequate to establish that such funds have not
been used in violation of the restrictions and prohibitions of applicable statutes.”

For the period of our audit, July 1, 1999 through June 30, 2003, NYCDOE did not have
adequate internal controls in place to verify existing phone lines within its 1,200 schools


3
    These telephone numbers were billed as “working telephone numbers” or, WTN’s.


                                              6

Audit of ED Funds Disbursed for                                        Final Report
NYCDOE Telecommunication Services                                      ED-OIG A02-E0008

prior to payment of telecom invoices. As a result, NYCDOE disbursed $36,901 in ED
grant funds for telecommunication services when those services did not exist.

Recommendation
We recommend that the ED Chief Financial Officer, through NYSED, require NYCDOE
to:

3.1 	   Return $36,901 paid for disconnected phone lines.

3.2 	   Prepare and provide to ED the results of a complete analysis of the $7.2 million
        NYCDOE charged ED grant funds for telecommunication services as additional
        phone lines may have been disconnected.

3.3     E
        	 stablish internal control procedures to ensure telecom services exist and are
        properly allocated to ED grants prior to payment.

NYSED Comments

NYSED concurred with our recommendations.

NYCDOE Comments

NYCDOE concurred with Finding 3. NYCDOE concurred with two of three
recommendations of this finding.

NYCDOE agreed to return $36,901 paid for disconnected phone lines. NYCDOE agreed
with the intent of Recommendation 3.2, but stated that the $7.2 million charged to ED
grants for telecommunication services included charges other than recurring telephone
costs. NYCDOE stated it will analyze those recurring charges associated with telephone
lines (Object Code 402) to insure those lines are inspected.

OIG Response

We considered NYCDOE’s response to Finding 3 and the related recommendations, but
our position remains the same. As NYCDOE apportioned its telecommunication services
among many grants using estimates, we cannot determine if other telephone costs, for
example, recurring data lines expenses, were also disconnected.


                   OBJECTIVES, SCOPE, AND METHODOLOGY

The primary objective of this audit was to determine if ED funds disbursed for NYCDOE
telecommunication services were for services that were excessive or erroneous. An
additional objective was to ensure that the use of ED funds for telecom purposes was
allowable.



                                             7
Audit of ED Funds Disbursed for                                       Final Report
NYCDOE Telecommunication Services                                     ED-OIG A02-E0008

To accomplish our audit objectives, we interviewed officials from NYCDOE, reviewed
NYCDOE’s Standard Operating Procedures for Telecommunications, and reviewed ED
documentation regarding the allowability of charges for telecommunication services. We
also obtained electronic data files extracted by NYCDOE from the Financial Accounting
Management Information System (FAMIS).

To achieve our audit objectives, we assessed the reliability of computer-processed data
extracted by NYCDOE from FAMIS and found the data sufficiently reliable for meeting
our audit objectives. We tested the accuracy and completeness of the data by comparing
details of selected transactions with files that we created from the extract. Based on these
tests, we conclude that the data are sufficiently reliable to support the findings,
conclusions, and recommendations and using the data would not lead to an incorrect or
inaccurate conclusion.

We obtained an extract from NYCDOE’s FAMIS for all Federally funded
telecommunications services from July 1, 1999 through June 30, 2003. From the extract,
only ED funded transactions were included in our population.

We then classified the transactions based on whether they related to a targeted assistance
or school-wide school, as this differentiation determines how funds may be spent.
NYCDOE did not readily have a year-by-year list of targeted assistance and school-wide
schools. To expedite receipt of this required information, we assisted NYCDOE in
compiling the data.

Subsequently, we stratified each of the classifications on an annual basis, and selected
transactions for sampling, as follows:

Targeted Assistance              2003         2002          2001         2000          Total
$20-$499                           25           25            25           25           100
$500-$99,999                       25           25            25           25           100
Judgmentally Selected               3            0            15            0            18
                                   53           50            65           50           218
School-Wide
$999 and Below                     19            27           29            22              97
$1,000 and Above                   10             8           13             3              34
                                   29            35           42            25             131

Total                              82            85          107            75             349

All transactions in the stratified sample were randomly selected, with the exception of 18
targeted assistance transactions, which were judgmentally selected. Three from 2003
were selected because of their high dollar value, and 15 from 2001 relate to a credit and
associated debits. In total, for our four-year audit period of July 1, 1999 through June 30,
2003, we sampled 349 transactions equaling $2,013,794.




                                             8
Audit of ED Funds Disbursed for                                       Final Report
NYCDOE Telecommunication Services                                     ED-OIG A02-E0008

We conducted the fieldwork at NYCDOE offices and schools during the period January
2004 to October 2004. Our audit was performed in accordance with generally accepted
governmental auditing standards appropriate to the scope of the review described above.


                           ADMINISTRATIVE MATTERS

Statements that managerial practices need improvements, as well as other conclusions
and recommendations in this report represent the opinions of the Office of Inspector
General. Determinations of corrective action to be taken will be made by the appropriate
Department of Education officials.

If you have any additional comments or information that you believe may have a bearing
on the resolution of this audit, you should send them directly to the following Education
Department official, who will consider them before taking final Departmental action on
this audit:

                      Jack Martin 

                      Chief Financial Officer 

                      U.S. Department of Education
                      400 Maryland Avenue, SW
                      Washington, DC 20202

It is the policy of the U.S. Department of Education to expedite the resolution of audits
by initiating timely action on the findings and recommendations contained therein.
Therefore, receipt of your comments within 30 days would be greatly appreciated.

In accordance with the Freedom of Information Act (5 U.S.C. § 552), reports issued by
the Office of Inspector General are available to members of the press and general public
to the extent information contained therein is not subject to exemptions in the Act.


                                      Sincerely,


                                         /s/

                                      Daniel P. Schultz
                                      Regional Inspector General
                                       for Audit




                                               9

                                               Exhibit 1 


         New York City Department of Education Unsupported Telecommunication Funds 

                         Flow Through and Direct Grant Distribution 

                     For the Period of July 1, 1999 through June 30, 2003




Flow-Through Grants


 CFDA4                Description             2000           2001      2002        2003         Total
   No.
84.010      Title I                           $45,147     $284,121     $40,742    $160,364     $530,374
84.027      Special Education                   8,091        5,663      14,138      10,013        37,905
84.048      Vocational Education                             1,259       1,150       1,895         4,304
84.173      Special Education – Preschool      12,260        8,358      15,363         230        36,211
84.186      Safe and Drug Free Schools          6,446           93         895      14,888        22,322
84.213C     Even Start                                         500       6,658      10,000        17,158
84.281      Eisenhower Prof. Development                     2,000                                 2,000
84.298A     Innovative Programs                   222           88                                   310
84.318X     Education Technology                             1,086                  806,187      807,273
84.367A     Improving Teacher Quality                                                13,484       13,484
               Total                          $72,166     $303,168     $78,946   $1,017,061   $1,471,341




Direct Grants

  CFDA                Description             2000           2001      2002        2003         Total
   No.
84.165A     Magnet Schools Assistance         $15,258                   $2,523                  $17,781
84.184F     Safe and Drug Free Schools          4,940                                             4,940
84.215E     Fund for the Improv. of Ed.                                  1,500                    1,500
84.287A     21st Cent. Comm. Learn. Centers                              5,500      $1,000        6,500
84.290U     Bilingual Ed. – Comprehensive       6,385         $3,335       195                    9,915
84.303A     Technology Innovation Chal.         3,960                    2,000                    5,960
               Total                          $30,543         $3,335   $11,718      $1,000      $46,596




   4
       CFDA is the acronym for the Catalog of Federal Domestic Assistance.


                                                     10
                                            Exhibit II 


        New York City Department of Education Supported Telecommunication Funds 

               Charges to Direct Grants and Applicable Indirect Cost Rates 

                    For the Period July 1, 1999 through June 30, 2003




     Direct Grant Charges
        CFDA                Description          2001         2002      2003     Total
         No.
      84.165A Magnet Schools Assistance               $456      $772       $57    $1,285
       84.215E Fund for the Improv. of Ed.             418        87                 505
      84.215X Fund for the Improv. of Ed.                                  619       619
      84.287B 21st Cent. Comm. Learn. Centers         1,800                        1,800
      84.290U Bilingual Ed. – Comprehensive           2,229                        2,229
      84.303A Technology Innovation Chal.                       1,004              1,004
      84.364A Literacy through School Lib.                                 154       154
         Supported Charges to Direct Grants          $4,903   $1,863      $830    $7,596
      Indirect Cost Rates                            16.1%    16.1%      13.1%
      Indirect Cost Rates Applied                       789      300       109    $1,198
         Unallowable Charges to Direct Grants        $5,693   $2,163      $939   $8,7955




5
    Amounts are rounded.


                                                11
                                                                                                Attachment 1 





                 THE STATE EDUCATION DEPARTMENT I THE UNIVERSITY OF THE STATE OF NEW YORK I ALBANY, NY 12234

                 CHIEF OPERATING OFFICER
                 DEPUTY COM~ I SSIONER FOR THE
                  OFFICE OF MANAGEMENT SERVICES
                 Tel. (518) 474·2547
                 FiX (518) 473·2827
                 E·mail: tsavo~aiLnysed.llov




                                                           May 20, 2005

                                                                                       Control Number
                                                                                       ED-OIG/A02-E0008

Daniel P. Schultz
Regional Inspector General for Audit
U.S. Department of Education
Offi ce of Inspector General
75 Park Place, Room 1207
New York, NY 10007

Dear Mr. Schultz:

       The New York State Education Department has the following response to recommendations
contained in the draft audit report entitled U.S. Department of Education Funds Disbursed for New
York City Department of Education Telecommunicatio n Services, received Apri1 25, 2005:

R ecommendation #1

The Education Department (ED) Chief Financial Officer through New York State Education
Department (NYSED) require NYCDOE to:

1.1    Provide sufficient documentation to support $1,517,937 charged to ED grants for
       telecommunication services, or return this amount to ED, incl uding the indirect costs
       attributable to unsupported. services, as discussed in Finding 2.

1.2    Provide sufficient documentation to support for the untested transactions totaling $5,193, 191
       charged to ED grants for telecommunication services, or return this amount to ED, including
       the indi rect costs attributable to unsupported services.

1.3    Establish and implement internal controls for proper record keeping and allocation of
       telecommuni cation charges to ED grants.




                                               12
                                                                                    Attachment 1 





We agree with this recommendation.

1.1    We will work with the NYCDOE to ensure that all additional supporting documentation is
       made available to the ED to support the $1,517,937 charged to ED grants.

1.2   We will work with the NYCDOE to ensure that they are diligent in pursuing the missing
      documentation. We do not think it is possible to provide invoices for all telecommunications
      services charged to ED grants. We will request that the ED conduct additional sampling
      based on existing documentation to determine a more accurate disallowance rate.

1.3   We are working with the NYCDOE to ensure that proper internal controls are established for
      proper record keeping and the allocation of telecommunication charges to ED grants. We
      wi ll work with the NYCDOE to ensure they receive training on internal controls.

Recommendation #2

The ED Chief Financial Officer through NYSED require NYCDOE to:

2.1   Return $8,795 in telecommunication services charged to direct grants inclusive of its
      applicable indirect cost rates.

2.2   Establish internal control procedures to ensure telecom services are properly allocated to ED
      grants prior to payment.

We agree with this recommendation.

2.1   We agree with the recommendation and will work with the NYCDOE to ensure that the
      $8,795 charged to direct grants inclusive of it applicable indirect rates is returned to the ED.

2.2   We are working with the NYCDOE to ensure that proper internal controls are established in
      order that telecommunication services are properly allocated to ED grants prior to payment.

Recommendation #3

The ED Chief Financial Officer through NYSED require NYCDOE to:

3.1   Return $36,901 paid for disconnected phone lines.

3.2   Prepare and provide to ED the results of a complete analysis of the $7.2 million NYCDOE
      charged ED grant funds for telecommunication services as additional phone lines may have
      been disconnected.

3.3   Establish internal control procedures to ensure telecom servIces exist and are properly
      allocated to ED grants prior to payment.

We agree with this recommendation.        13
                                                                                  Attachment 1 





3.1    We agree with the recommendation and will work with the NYCDOE to ensure that the
       $36,901 paid for disconnected phone lines is returned to the ED.

3.2    We will work with the NYCDOE to ensure that a complete review of recurring charges
       associated with telephone Jines is conducted. In particular we will ensure there is an analysis
       and review of contract vendors and lines charged to community school districts that no
       longer exist.

3.3   We are working with the NYCDOE to ensure that proper internal controls are incorporated in
      the NYCDOE Telecommunications Chapter of its Standard Operating Procedures Manual.
      We will work with the NYCDOE to ensure they receive training on internal controls.

      Also attached is NYC's response to the audit.         The response shows the NYCDOE           IS
committed to making the necessary improvements.

       The Department has established a work group to identify improvement opportunities for
NYCDOE's operations and processes related to grants management. The Department looks [olWard
to working with the ED to improve the grants management process.

                                                    Sincerely,



                                                    Theresa E. Savo




                                        14