oversight

Audit of the District of Columbia Public Schools' Administration of the Safe Schools Grant.

Published by the Department of Education, Office of Inspector General on 1998-01-23.

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

  Audit of the District of
 Columbia Public Schools’
 Administration of the Safe
     Schools Grant


                                  AUDIT REPORT


                        Control Number: 03-70001
                              January 1998

                                                 NOTICE
This draft of a proposed Office of Inspector General report is being made available for review and comment
by officials having management responsibility for the matters discussed. This report should not be
considered final as it is subject to further review and revision. Please safeguard it against unauthorized use.




                            U.S. DEPARTMENT OF EDUCATION
                             OFFICE OF INSPECTOR GENERAL
                                     Philadelphia, PA
                             TABLE OF CONTENTS


EXECUTIVE SUMMARY .            .     .      .     .     .     .      .     1

BACKGROUND         .     .     .     .      .     .     .     .      .     5

AUDIT SCOPE AND METHODOLOGY          .      .     .     .     .      .     5

STATEMENT ON MANAGEMENT CONTROLS .                .     .     .      .     6

AUDIT RESULTS      .     .     .     .      .     .     .     .      .     8

     FINDING 1 -   EMPLOYEE SALARIES WERE SUBSIDIZED BY STIPEND PAYMENTS   8

     FINDING 2 -   GRANT FUNDS WERE IMPROPERLY SPENT ON EMPLOYEE SALARIES 10

     FINDING 3 -   STIPEND PAYMENTS WERE MADE FOR AN UNALLOWABLE PROJECT 12

     FINDING 4 -   GRANT FUNDS WERE USED TO PAY UNALLOWABLE, QUESTIONABLE
                   AND UNSUPPORTED STIPEND PAYMENTS                       14

     FINDING 5 -   ADEQUATE SUPPORTING DOCUMENTATION WAS NOT AVAILABLE
                   FOR EXPENDITURES PAID FROM THE DCPS IMPREST FUND        16

     FINDING 6 -   DCPS DID NOT EXPEND ALL OF THE GRANT FUNDS DRAWNDOWN 19

     FINDING 7 -   GRANT FUNDS WERE USED TO SUPPLANT OTHER DCPS FUNDS      20

     FINDING 8 -   UNALLOWABLE AND QUESTIONABLE EXPENDITURES WERE
                   CHARGED TO THE GRANT                                    22

     FINDING 9 -   DCPS DOES NOT HAVE AN ACCOUNTING POLICIES AND PROCEDURES
                   MANUAL                                                  24


OTHER MATTERS .          .     .     .      .     .     .     .      .     26


     ATTACHMENT
                             EXECUTIVE SUMMARY

The District of Columbia (the District) was designated by the Safe Schools Act of 1994 (The Act)
as a National Model City to carry out a comprehensive program to address school and youth
violence. To conduct the program the District of Columbia Public Schools (DCPS) was awarded a
$1,000,000 grant, as directed by The Act. The grant period was from November 14, 1994 to October
31, 1996.

The DCPS Safe Schools Initiative (Safe Schools) involved six schools in the District’s Marshall
Heights neighborhood. The six schools were: Nalle Elementary, Richardson Elementary, Shadd
Elementary, Fletcher-Johnson K-9, Evans Junior High, and H. D. Woodson Senior High.

During the grant period DCPS received $773,443 of the $1,000,000 and expended approximately
$763,833. Our audit covered the entire grant period.

Our audit disclosed significant management control weaknesses and mismanagement of the grant
funds. As a result of the audit, we have determined $74,337 in unallowable costs, $4,200 in
questioned costs, $5,480 in unsupported costs, $117,024 in supplanted grant funds, and unexpended
drawdowns of $9,610. Also, DCPS does not have an accounting policies and procedures manual.

       UNALLOWABLE COSTS

       Ž       $17,135 - Stipend payments were paid to the two Community Liaisons in
               addition to their regular salaries. This was done because DCPS promised the
               individuals the salary that was included in the Memorandum of Agreement
       (MOA) between the U. S. Department of Education (ED) and DCPS, which.
       defined the terms and conditions of the grant. The individuals hired for these
       positions did not qualify for this salary according to the District personnel   guidelines.

       Ž      $27,538 - Two individuals were hired as Educational Aides and paid from grant
              funds, however, the MOA did not include any Educational Aide positions. Also,
              approval was not requested or given by the U. S. Department of Education\Office
              of Elementary and Secondary Education\Safe and Drug Free Schools Division
              (ED\OESE) to hire these individuals as employees under the grant.

       Ž      $14,414 - Grant funds were used for stipend payments to staff members who
              were working on a project that was not a Safe Schools project. It was noted
              during our review of stipend payments that DCPS does not have written stipend
              processing policies and procedures, and no documentation is required to be
              submitted when a stipend payment is requested.

       Ž      $14,750 - Expenditures that were charged to the grant for a DCPS Project that was
              not part of the Safe Schools Initiative. The project, entitled Project Daisy, was an

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                            3
             intervention program for students prenatally exposed to drugs. Project Daisy had
             its’ own funding source. The Project Daisy expenditures included $9,750 for
             transportation costs and $5,000 for consulting services.

      Ž      $500 - Grant funds were used to pay a stipend to an individual performing a
             graduate school internship. The stipend payment should not have been paid from
             grant funds, as this was not an approved expenditure.

      QUESTIONED COSTS

      Ž      $4,200 - Grant funds were used to pay for consultant services, which in our
             opinion, do not appear to be related to the Safe Schools Initiative. We are
             questioning $1,500 in stipend payments made to one consultant for services that
             we could not determine were provided for grant related activities, and $2,700 in
             payments made to another consultant for services rendered for observation and
             evaluation of training offered to DCPS by an outside agency.

      UNSUPPORTED COSTS

      Ž      $5,030 - Expenditures paid from DCPS’s Imprest Fund for which adequate
             supporting documentation was not available. During our review of these
             expenditures we noted that DCPS does not have written policies and procedures
             for the processing of Imprest Fund payments.

      Ž      $450 - Five individuals were paid stipend payments for which we could not
             determine the purpose for the payments. Supporting documentation for these
             expenditures was not available.

      UNEXPENDED DRAWDOWNS

      Ž      $9,610 - DCPS drewdown $773,443 in grant funds and expended $763,833,
             thereby having unexpended grant funds. A probable cause for the unexpended
             funds appears to be that the expenditure records were not accurate.

      SUPPLANTING

      Ž      $117,024 - DCPS used grant funds to pay for conflict management training that
             was provided to the entire school system and was being provided prior to the Safe
             Schools grant being awarded. In our opinion, it appears that DCPS needed funds
             to pay for these services and used the grant funds.



RECOMMENDATIONS:

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                        4
We recommend that ED\OESE require DCPS to:

(1)    Refund the $74,337 in unallowable costs;

(2)    Refund the $4,200 in questioned costs or provide documentation to show that these
       expenditures are for services provided for grant related activities;

(3)    Refund the $5,480 in unsupported costs or provide adequate documentation to show that
       these expenditures are reasonable and allowable grant expenditures;

(4)    Refund the $9,610 in unexpended funds;

(5)    Refund the $117,024 used to supplant other DCPS funds, and establish procedures
       to ensure that funds designated for specific programs or purposes are not used to supplant
       other funds;

(6)    Develop written stipend processing policies and procedures, perform periodic reviews to
       assure that employees are being paid stipends for allowable purposes, and maintain
       adequate supporting documentation with each stipend payment request;

(7)    Develop written Imprest Fund payment policies and procedures; and

(8)    Develop and maintain an accounting policies and procedures manual.



Auditee Response:

In its’response to our draft of this report, DCPS concurred with our findings and recommendations
to repay $500 in unallowable costs relating to the intern stipend payment, $1,500 in questionable
costs relating to a consultant’s stipend payment, $5,480 in unsupported costs relating to stipend and
imprest fund payments, and $9,610 relating to the unexpended drawdown of funds; partially
concurred with $19,414 in unallowable costs relating to Project Daisy and the Safe Start Violence
Prevention Project, $117,024 relating to supplanting, and $2,700 in questionable costs relating to
consultant payments; and did not concur with $54,423 in unallowable costs relating to the employee
stipend payments, the Educational Aides salaries, and the transportation costs relating to the Project
Daisy expenditures.

DCPS also did not concur with our finding relating to the accounting policies and procedures manual.


Our findings and recommendations did not substantially change from the draft report. We generally
disagreed with DCPS’positions on which they did not concur or partially concurred with our findings


DCPS Review of the Safe Schools Grant-ACN: A03-70001                                                5
and recommendations.




DCPS Review of the Safe Schools Grant-ACN: A03-70001   6
B    ACKGROUND


The District of Columbia (the District) was designated by the Safe Schools Act of 1994 as a National
Model City to carry out a comprehensive program to address school and youth violence. The Act
also directed the U. S. Department of Education (ED) to give the District $1,000,000 to conduct the
program.

The program was conducted by the District of Columbia Public School’s (DCPS) Center for Systemic
Educational Change (CSEC)1. A cooperative agreement, titled Memorandum of Agreement (MOA),
was established between ED and DCPS. The MOA defined the terms and conditions, including
budgetary amounts, under which DCPS was to carry out the program. The period of performance
initially was from November 14, 1994 to April 30, 1996, however, DCPS requested and was granted
a six month no-cost extension. The period of performance was extended to October 31, 1996.

The DCPS Safe Schools Initiative (Safe Schools) involved six schools in the Marshall Heights
neighborhood of the District. These Safe Schools were -- Nalle Elementary, Richardson Elementary,
Shadd Elementary, Fletcher-Johnson K-9, Evans Junior High, and H. D. Woodson Senior High.

DCPS received $773,443 of the $1,000,000, and obligated and expended approximately $763,833.




A    UDIT SCOPE AND METHODOLOGY


The objective of our audit was to determine whether the expenditures made from the grant funds
were reasonable, allowable, and allocable. The audit covered the entire period of the grant, from
November, 1994 to October, 1996.

To accomplish our audit objective, we reviewed DCPS’s accounting and program records, personnel
records, canceled checks, vendor contracts, the Single Audit Report for the period ended September
30, 1995, and DCPS internal audit reports. We also interviewed DCPS officials and vendors. The
CSEC provided us with a list of expenditures for the audit period, which included 84 separate
expenditures, totaling $776,4392. We judgementally selected 26 of these expenditures for review,
totaling $410,571 [53%]. We also reviewed two expenditures that were charged to Safe Schools


       1
           The CSEC is now the Office of the Chief Academic Officer.
       2
           The CSEC expenditure list included some expenditures that were not paid and did not
           include some that were paid from grant funds, and therefore did not accurately reflect
           the total Safe Schools grant expenditures. The actual amount expended is detailed
           above.

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                                7
grant funding, but were not included on the CSEC expenditure list. The expenditures totaled
$26,370.

We conducted our fieldwork at the auditee’s offices in Washington, D.C. from November 19, 1996
to June 4, 1997.

We conducted the audit in accordance with government auditing standards appropriate to the scope
of review described above.




S   TATEMENT ON MANAGEMENT CONTROLS


As part of our review we assessed the system of management controls, policies, and procedures, and
practices applicable to DCPS’s administration of the Safe Schools Initiative. Our assessment was
performed to determine the level of control risk for determining the nature, timing, and extent of our
substantive tests to accomplish the audit objective.

For the purposes of this report, we assessed and classified the significant controls into the following
categories:

       ,       General Control Environment;
       ,       Record keeping; and
       ,       Disbursement of Grant Funds.

Because of inherent limitations, a study and evaluation made for the limited purposes described above
would not necessarily disclose all material weaknesses in the management controls. However, our
assessment disclosed significant management control weaknesses which adversely affected DCPS’s
ability to administer the Safe Schools program. These weaknesses included deficient file maintenance
[Findings No. 4, 5, & 6], outdated and nonexistent written procedures [Findings No. 1, 3, 4, 5, & 9,
and Other Matters], and management’s circumvention of policies and procedures [Findings No. 1,
2, 3, & 4] .

In our opinion, the management controls reviewed were inadequate and were a significant factor in
allowing unallowable and questionable expenditures to be made from grant funds. As stated in 34
CFR 80.20(3),”Effective control and accountability must be maintained for all grant cash....”
[emphasis added]. These weaknesses and their effects are fully discussed in the AUDIT RESULTS
section of this report.




DCPS Review of the Safe Schools Grant-ACN: A03-70001                                                 8
                              AUDIT RESULTS
The results of our review of the Safe Schools grant expenditures disclosed that the majority of the
expenditures paid from grant funds were not reasonable, allowable, and allocable grant expenditures.


FINDING NO. 1 - EMPLOYEE SALARIES WERE SUBSIDIZED BY STIPEND PAYMENTS
Two employees, who were the Community Liaisons for the Safe Schools Initiative, were paid both
a salary and stipend payments. During the grant period the two employees received a total of
$17,135 in stipend payments, in addition to their salaries.

The Safe Schools Initiative Memorandum of Agreement (MOA) included a budgeted salary amount
of $35,000 for each Community Liaison position. When the two individuals were hired, neither met
the District’s qualifications to be paid a salary of $35,000. One individual was hired and paid a salary
of $21,060, and the other was hired and paid a salary of $26,000. DCPS officials informed us that
the employees were paid stipends because they were promised the $35,000 salary by the Safe Schools
Project Director, and the stipend payments were used to make up the difference between their
“official” salaries and the $35,000 they were promised. One employee received stipend payments
totaling $14,028, and the other received payments totaling $3,107.

DCPS should not have paid the two employees stipends to supplement their salaries. Even though
the MOA allocated $35,000 for the positions, if the individuals did not qualify for this salary, they
should only have been paid the salary that they qualified for. Federal regulation 34 CFR 80.20 (a)
states that “A State must expend and account for grant funds in accordance with State laws and
procedures for expending and accounting for its own funds....”. DCPS should have followed their
own policy and only paid the employees what they were qualified to receive.

Also, DCPS did not request or obtain permission to supplement the Community Liaisons salaries with
stipend payments from the U.S. Department of Education\Office of Elementary and Secondary
Education\Safe and Drug Free Schools Division (ED\OESE).

During our review of stipend payments we found that DCPS does not have written policies and
procedures relating to the payment and processing of stipend payments. Furthermore, when the
stipend payment requests are made to the Finance office, no documentation for the reason why the
stipend should be made is forwarded with the Stipend Computation Worksheets (SCW). There is
no check to determine if the payment is reasonable and allowable.

A total of $17,135 should not have been expended from grant funds.

RECOMMENDATION:

We recommend that ED\OESE require DCPS to:

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                                  9
(1)   Repay the $17,135;
(2)   Develop written stipend payment policies and procedures;
(3)   Maintain adequate supporting documentation with the Stipend Computation Worksheets
      for each stipend payment; and
(4)   Perform periodic reviews to assure that employees are being paid stipends for allowable
      purposes.


Auditee Response:

(1)   We do not concur with the $17,135 audit findings and recommendation. The audit report
      clearly states that the project included a budgeted salary amount of $35,000 for each
      Community Liaison position. The individuals hired did meet the project qualifications
      for the Community Liaison position, however, there is no such job title in the DCPS
      personnel grade series. This is a very different programmatic focus and skill set that
      varies greatly from the regular educational series. Therefore, the Community Liaisons
      were appointed to the nearest equivalent grade series with stipends to support a salary
      comparable to similar positions in community-based organizations. The salary does not
      exceed the budgeted amount. We believe that each position should be allowed at
      $35,000.

(2)   Written stipend payment policies and procedures are currently being developed in the
      Office of Categorical Programs and Development for grants administration purposes.
      This draft was developed after reviewing many other policies and procedures from the
      Council of Great City Schools.

(3)   The use of the Stipend Computation Worksheet will be incorporated into the new policy
      and procedures mentioned in Recommendation #1 above.

(4)   Better communication/liaison work and interpretation of regulations will be provided by
      the Office for Categorical programs and Development.

OIG Response:

(1)   We do not take issue with the fact that the two individuals hired as Community Liaisons
      were qualified for the position of Community Liaison. According to DCPS officials, the
      two individuals only qualified for salaries of approximately $20,000 based on the
      District government’s rating system. Therefore, their salaries were supplemented with
      stipends to pay them the $35,000 salary. We believe this was an inappropriate use of
      grant funds, for the reasons stated above. Also, it was DCPS policy not to use stipends as
      a substitute for payroll, which appears to have been done in this case. DCPS’ proposed
      Stipend Policy also agrees with this position. It states that stipends are a payment for
      additional services and are not intended to be used as an alternative to the normal payroll
      process. We believe the stipends payments were an unallowable grant expenditure. The


DCPS Review of the Safe Schools Grant-ACN: A03-70001                                          10
       finding remains the same as in the draft report.

(2)    The draft Stipend Policy should address this recommendation, however, we recommend
       that the policy, under the Approval Process, be amended to state that the Authorization
       Form should be used for approval of stipend requests. The policy should also state that
       the Approval Form, the Stipend Computation Worksheet and the time and attendance
       sheets be maintained together, as support for the stipend payment.

(3)    The Stipend Computation Worksheet should continue to be used, however, the proposed
       Worksheet should also include a column for the period of time worked relative to the
       stipend payment. The supporting documentation for the payment, such as the Approval
       Form, and time and attendance records should be maintained with the Worksheets.

(4)    Better communication and interpretation of regulations will help to assure that stipends
       are paid for allowable purposes, however, along with this, the Finance office should also
       be required to perform periodic reviews of stipend payments to assure that all of the
       supporting documentation is maintained and that stipend payments are being made for
       allowable purposes.




FINDING NO. 2 - GRANT FUNDS WERE IMPROPERLY SPENT ON EMPLOYEE SALARIES

Two individuals were hired as Educational Aides to work for the Safe Schools Initiative. The
employees were paid a total of $27,538 from grant funds. The position of Educational Aide was not
included as a position to be funded by the grant in the MOA.

From the description of the duties of the two employees, as described to us by DCPS officials, it
appears that the two employees performed the same tasks or tasks similar to those that should have
been performed by the Community Liaisons. This appears to be a duplication of effort that should
not have been necessary. Also, the hiring of the two Educational Aides was not included in the
agreement with ED\OESE.

Both employees were hired around the same time [May, 1995 and June, 1995] the Community
Liaisons were hired. Although one Community Liaison resigned in August, 1995, these employees
were not hired to replace him. Also, DCPS did not obtain approval from ED\OESE to hire the two
employees as Educational Aides and use grant funds to pay their salaries, nor did they inform
ED\OESE that they did so. The head of the Center for Systemic Educational Change (CSEC) or the
Project Director should have obtained approval to modify the terms of the MOA and hire the two
employees.

By hiring the two individuals, DCPS was not in compliance with 34 CFR 75.700, which states that
a grantee shall use Federal funds in accordance with applicable approved applications, which in this

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                             11
case was the MOA.

In our opinion, the $27,538 is an unallowable expenditure based on the above and 34 CFR 80.20(5),
which states that allowable costs will be determined by the terms of grant agreements. As stated,
DCPS did not follow the terms of the grant agreement, nor did they request an amendment to the
terms of the agreement. The individuals should not have been hired and the grant funds should not
have been expended for their salaries.


RECOMMENDATION:

We recommend that ED\OESE require DCPS to repay the $27,538.


Auditee Response:

We do not concur with the audit finding and recommendation to repay $27,538. Due to the delay
in hiring Community Liaisons the scope of the project required additional human resources that were
not anticipated from the outset. The two full-time community aides were hired to support the role
of community liaisons. These community aides provided a vital resource and link to the community
throughout the course of the project. The monies expended for this activity was within the budgeted
amount for Community Liaisons.

The Division of Finance is currently developing written policies and procedures regarding charges
to appropriate funding sources.

OIG Response:

Although the funds expended for the salaries of the Educational Aides did not exceed the budgeted
amount for the Community Liaison positions, the two individuals should not have been hired and paid
from grant funds without the approval of ED\OESE and an amendment to the Safe Schools
Initiative’s governing document, the MOA. We believe the $27,538 to be an unallowable grant
expenditure. The finding remains the same as in the draft report.

We also recommend ED\OESE require DCPS to submit the written policies and procedures for
review when developed.
FINDING NO. 3 - STIPEND PAYMENTS WERE MADE FOR AN UNALLOWABLE PROJECT

Grant funds were used for stipend payments to staff members of a DCPS project that was not a Safe
Schools project funded under the Act. DCPS expended $21,621 for the stipend payments.

The project was entitled the Safe Start Violence Prevention Project. Individuals who worked on the
Project were paid stipends funded from the Safe Schools grant. The services were provided at three

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                            12
DCPS schools from August, 1995 and were continuing as of April, 1997. The services provided to
DCPS included teacher training on various topics of violence prevention, a violence prevention
workshop, tutoring, development of curricula, and an after-school program. The three schools were
Nalle Elementary School, Martin Luther King, Jr. Elementary School and Moten Elementary School.
Nalle Elementary was the only school that was a Safe School. The service provided at Nalle
Elementary was teacher training, whose focus was the development of a in school violence prevention
intervention for third graders.

The stipends paid to the individuals to perform these services should not have been paid from grant
funds because:

       T Martin Luther King, Jr. Elementary and Moten Elementary were not Safe Schools;

       T this project was not a part of DCPS’s Safe Schools programs; and

       T the project was not included as an activity in the MOA.

The terms of the grant agreement [the MOA], which included the types of activities to be performed
under the grant, were not followed. According to 34 CFR Part 80.20(5), the allowability of costs will
be determined by the terms of grant agreement. The stipend payments were not included in the
MOA, therefore, we have determined $14,4143 to be an unallowable grant expenditure.

The stipend payments were processed through the CSEC. The individual in charge of the project
would submit the SCW to the CSEC. The CSEC would process the stipends for payment. The
CSEC would contact the responsible individual from the project when the stipend checks were ready
to be picked up. The manner, timing, and amount of the stipend payments were authorized by the
head of the CSEC.

The unallowable stipend payments occurred because, as stated previously, DCPS did not have any
written policies and procedures for stipend payments, and documentation was not submitted or
reviewed when a stipend payment was requested. Also, the head of the CSEC appeared to determine
what was to be paid from grant funds without concern as to whether or not the services were
allowable Safe Schools services.

Also, showing that the project was not Safe School related is the fact that the project was not
included as a Safe School activity in DCPS’s final report to ED\OESE.


RECOMMENDATION:



       3
           The $21,621 prorated between the three schools = $7,207; the unallowable
           expenditure amount for the services rendered to Martin Luther King, Jr. and
           Moten = $7,207 * 2.

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                              13
We recommend ED\OESE require DCPS to:

(1)    Repay the $14,414;
(2)    Develop written stipend payment policies and procedures, which should include policies
       and procedures that will ensure that stipend payments are not made from inappropriate
       funding sources.


Auditee Response:

(1)     We partially concur with this finding. The Safe Start Violence Prevention Project training
was totally different from the focus of the training funded by the Safe School        Grant. Its focus
was to provide support for children who had witnessed violence and            needed support. Nalle
was a school identified as having a high evidence of violence and it was determined that the
training would be appropriate. The training provided to Nalle         was within the projects scope of
training. The two schools that were inadvertently charged to this project are not allowable,
therefore, the cost should be prorated across the      three schools resulting in a disallowance of
$14,414, rather than $21,621.

(2)    Written stipend payment policies and procedures are currently being developed in the
       office of Categorical Programs and Development for grants administration purposes.

OIG Response:

(1)    Based on the auditee’s response, we amended our finding and recommendation to have
       ED\OESE require DCPS to repay $14,414, rather than $21,621, for the unallowable
       stipend payments made from grant funds for the Safe Start Violence Prevention Project.

(2)    See our response to Finding No. 1, Recommendation #2 [page 10].




FINDING NO. 4 - GRANT FUNDS WERE USED TO PAY UNALLOWABLE, QUESTIONABLE &
                        UNSUPPORTED STIPEND PAYMENTS


We reviewed stipend payments made to consultants and others that were paid from grant funds, and
determined a total of $500 to be unallowable, $1,500 to be questionable and $450 to be unsupported.

Our review disclosed that one consultant was paid a total of $3,000 from grant funds, of which we
determined that $1,500 was for services that do not appear to be related to the Safe Schools
Initiative. During our review of stipend payments, we also noted stipend payments to an individual
who was performing an internship, and payments to five other individuals. The intern was a student

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                               14
from a local University, who was performing her graduate school internship with DCPS under the
Safe Schools Initiative. The intern was paid a stipend payment of $500. The payment was a “bonus”
for the intern’s good performance. We could not determine the purpose of the stipend payments to
the five individuals, who received a total of $450.

                              Three stipend payments were made to the consultant for services
 CONSULTANT                   provided. One payment for $2,000 was included on an December,
 STIPEND PAYMENTS             1994 Stipend Computation Worksheet (SCW) for services rendered in
                              December, 1994. Another payment for $1,000 was included on an
                              March, 1995 SCW for services rendered in January, 1995. The last
payment for $1,500 was included on an July, 1995 SCW for services rendered in July, 1995. To
determine if the payments were reasonable and allowable, we reviewed the SCW and invoices
submitted by the consultant. The SCW did not indicate the purpose of the payments. We reviewed
invoices from the consultant, which included a brief description of the services provided. We also
telephonically interviewed the consultant.

During our review of the SCWs, we noted that the $1,500 stipend payment, in July, 1995, was not
charged to Safe Schools grant funds. However, from the description of services provided on the
related invoice, it appears that the services were for Safe Schools related activities. However, the
date of performance on the invoice [January, 1995] and the date on the SCW [July, 1995] do not
correspond, but the number of days worked and the hourly rates do correspond.

The invoice for $1,000 was for services provided in July, 1995. As stated, the SCW is dated March,
1995 for services provided in January, 1995. The description of services does not appear to be
related to the grant.

There was no invoice for the $2,000 payment for services provided in December, 1994. We
therefore, could not determine if this stipend payment was reasonable and allowable.

During our interview with the consultant, he stated that he had performed consulting services for the
Safe Schools Initiative in approximately 1994. His services included data collection and statistical
graphics design for report writing. These services correspond with the services listed as being
provided on the invoice for $1,500 for services rendered in January, 1995. During an interview with
DCPS officials, we were told that the consultant provided services to assist the Safe Schools
Collaborative [ a body of individuals, like a Board of Directors, who provided guidance, information
and advice to the Safe Schools Initiative] in selecting the Safe Schools community, by providing
demographic data for several Washington, D. C. communities. This work would have had to been
performed soon after the grant was awarded, for example, December, 1994 or January, 1995. Based
on the above stated information, we believe the stipend payment [$1,500] for the services provided
in January, 1995 appears to be a reasonable and allowable grant expenditure.




DCPS Review of the Safe Schools Grant-ACN: A03-70001                                              15
However, we are questioning the remaining $1,5004 that was charged to the grant. As required by
34 CFR 75.730, a grantee shall keep records that fully show how the grantee uses the funds. The
records available do not fully show how the stipend payments were used. The supporting
documentation is not adequate to determine if the funds were for a reasonable and allowable purpose
because (1) the invoices and the SCW contain conflicting information, (2) no invoice is available for
one payment, and (3) the services performed, as described, do not show a clear relation to the grant.


                          A $500 stipend payment was made to an intern. The individual was
 INTERN STIPEND           performing the internship to fulfill the field instruction requirements for a
   PAYMENT                Masters degree in social work. The Safe Schools Project Director
                          submitted a request for the intern to be awarded a stipend. This request
                          was not approved by ED\OESE prior to the payment, nor was ED\OESE
informed that an intern was working for the Safe Schools Initiative. According to DCPS officials,
interns are normally not paid when they are performing internships. Since a payment was made to
the intern, DCPS did not abide by its’own rules. This is not in accordance with 34 CFR 80.20(a),
which states “A State must expend and account for grant funds in accordance with State laws and
procedures for spending and accounting for its own funds...”

In our opinion, based on the above, and the fact that the internship was not included in the MOA, we
are questioning the $500 stipend payment. Also, since DCPS did not follow the grant agreement,
which according to 34 CFR 80.20(5), following the terms of the agreement determines allowability
of costs, the stipend payment is not an allowable expenditure.

                         Our review of stipend payments also disclosed that stipend payments were
 OTHER STIPEND           made to five other individuals. Four of the stipend recipients received
   PAYMENTS              payments of $100 each and one recipient received a $50 payment. No
                         documentation was available to determine the purpose of the stipend
                         payments. DCPS officials were not able to explain to us the purpose of the
payments. As stated above, 34 CFR 75.730 requires that a grantee keep records to show how grant
funds are used, and this was not done for these stipend payments. We are questioning the $450 as
unsupported costs.

The $2,450 in grant funds spent for these stipend payments could have been used to fund additional
Safe School violence prevention activities.


RECOMMENDATION:

We recommend ED\OESE require DCPS to:



       4
        $4,500 total stipend payments less $1,500 not charged to the grant = $3,000; $3,000
       charged to the grant less $1,500 allowable charge= the remaining $1,500.

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                                16
(1)    Repay the $1,500 for the stipend payments made to the consultant or provide
       documentation to show that the services are for grant related activities;
(2)    Repay the $500 for the unallowable stipend payment to the intern;
(3)    Repay the $450 for the unsupported stipend payments, or provide ED with adequate
       supporting documentation to show that the stipend payments were for reasonable and
       allowable purposes; and
(4)    Develop and adhere to written stipend policies and procedures, which should include
       submitting and maintaining adequate supporting documentation with the Stipend
       Computation Worksheets.


Auditee Response:

We concur with the finding and will comply with recommendations 1, 2, 3, 4.

OIG Response:

The finding remains the same as in the draft report. Also see our response on page 10, #2 & #3.




FINDING NO. 5          - ADEQUATE SUPPORTING DOCUMENTATION WAS NOT AVAILABLE                  FOR
                      EXPENDITURES PAID FROM THE DCPS IMPREST FUND


We were unable to determine whether $5,030 expended from DCPS’s Imprest Fund were reasonable
and allowable grant expenditures.

During our review we obtained a report of Safe Schools grant expenditures from the District of
Columbia Financial Management System (FMS). The report included expenditures made during
DCPS’s fiscal years 1995 and 1996 [October through September]. The report included expenditures
that were paid from DCPS’ Imprest Fund. The report listed the expenditures by payee [vendor],
except for those paid from the Imprest Fund. The payee for these expenditures was listed as Imprest
Fund Cashier. We, therefore, could not determine the payee or the purpose of the expenditures.
Below is a breakdown of the expenditures.


    TOTAL
 EXPENDITURES

                               1995                   1996                   Total

No. of Expenditures           10                     19                     29
Amount                        $3,393                         $6,696                        $10,089

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                            17
We attempted to obtain the supporting documentation and canceled checks for these expenditures
to determine if they were reasonable and allowable grant expenditures. DCPS’s Finance office
provided us with vouchers and canceled checks for 59% of the expenditures. We obtained vendor
invoices for the expenditures from the CSEC. The following details the results of the review of the
Imprest Fund expenditures:


 REVIEW
 RESULTS

                                      1995            1996            Total

All Support Found
       Number                         6              11               17
       Amount                         $1,185                 $3,873                $5,058

No Support Found
      Number                          4              5                9
      Amount                          $2,208                 $1,970                $4,178

No Invoices Found
       Number                         0              3                3
       Amount                         $0             $852             $852


Federal regulation for financial administration [34 CFR 80.20(6)] requires that accounting records
be supported by source documentation, such as canceled checks, and paid bills. As detailed above,
DCPS could not provide us with adequate supporting documentation for all of the Imprest Fund
expenditures. Without adequate supporting documentation we could not determine if the
expenditures were reasonable and allowable. Therefore, we are questioning $5,030 as unsupported
costs; $4,178 for the nine expenditures that we were unable to obtain any supporting documentation
and $852 for the three expenditures for which no supporting invoices could be found. Grant funds
may have been expended for unallowable purposes.

DCPS does not have written policies and procedures for Imprest Fund payments. The payments for
the expenditures were made from the Fund without the knowledge of the CSEC. The CSEC would
send the voucher to the Finance office for payment and the Finance office would determine how the
payment was to be made. During the grant period, eight Finance office employees, who were
supervisors or managers, were authorized to sign the Imprest Fund checks. Such practices are not
considered reasonable business accounting procedures.

Currently, DCPS has revised their policies and procedures for processing Imprest Fund payments.


DCPS Review of the Safe Schools Grant-ACN: A03-70001                                            18
If an office requires an expense payment from the Imprest Fund, they must complete and submit an
‘Expedited Check Request’form. The form includes pertinent information, such as, the purpose of
the payment, and whether or not invoices are attached. The request is approved by the Controller.
Only three individuals, the Controller, the Assistant Controller, and the Cash Management
Supervisor, are authorized to sign the checks. Two signatures are required. These policies and
procedures appear adequate, however, they were not documented in writing.


RECOMMENDATION:

We recommend ED\OESE require DCPS to:

(1)    Provide ED\OESE with adequate documentation to show that the unsupported
       expenditures are reasonable and allowable grant expenditures or refund any of the $5,030
       for which they cannot provide such documentation;
(2)    Continue to use the ‘Expedited Check Request’form and ensure that adequate
       documentation is obtained before the expenditure is paid. The documentation submitted
       should be maintained with the form, to provide for an adequate audit trail; and
(3)    Develop written policies and procedures for the processing of Imprest Fund payments.


Auditee Response:

We concur with the finding and recommendations 1, 2, 3.


OIG Response:

The finding remains the same as in the draft report. We also recommend that ED|OESE require
DCPS to submit the completed Imprest Fund policies and procedures for review.




FINDING NO. 6 - DCPS DID NOT EXPEND ALL OF THE GRANT FUNDS DRAWNDOWN

Our review disclosed that DCPS did not expend approximately $9,610 of grant funds that were
drawndown during the grant period.

We compared the amount expended to the amount drawndown according to ED’s Payment
Management System [PMS]\Expenditures Statement. DCPS drewdown $773,443 during the grant
period. As stated previously, we obtained a report of Safe Schools grant expenditures from the
District of Columbia Financial Management System (FMS). From the report we determined that
DCPS expended approximately $716,563, which shows an excess of $56,880. However, during our

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                          19
review of a sample of expenditures [Finding No. 8] we determined that DCPS made additional
expenditures of $47,270 that were not included on the FMS report. These expenditures appear to
be reasonable and allowable grant expenditures. Therefore, the total expenditures are approximately
$763,833. DCPS did not expend approximately $9,610.

Since DCPS is on the reimbursement method of payment [funds are drawndown after they are
expended], DCPS should not have drawndown the $9,610. DCPS expenditure data from the various
offices differs and shows that they did not know exactly how much was expended and should be
drawndown. According to DCPS policy, grant funds are drawn based on expenditures less revenue
received, however, this does not appear to be the case for the grant drawdowns. A probable cause
was the fact that expenditure records were not accurate. These excess funds should be returned, as
they were not used to meet the grant objectives.

RECOMMENDATION:

We recommend ED\OESE require DCPS to:

(1)    Refund the $9,610; and
(2)    Develop and implement policies and procedures whereby funds are only drawndown
       when they are actually expended and expenditure records are reviewed and reconciled to
       each other.



Auditee Response:

We concur with the finding and recommendation and will comply with 1 and 2.

OIG Response:

The finding remains the same as in the draft report. We also recommend that ED|OESE require
DCPS to submit the policy for review.




FINDING NO. 7 - GRANT FUNDS WERE USED TO SUPPLANT OTHER DCPS FUNDS

DCPS used $117,024 in grant funds to pay for conflict management training that was provided to the
entire school system.

During our review of a sample of grant expenditures we found that DCPS’s Multicultural\Values
Education Branch had contracted with an agency to provide conflict management\resolution training
to the school system. The contract with the agency began in December, 1993, approximately nine

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                            20
months prior to the start of the Safe Schools Initiative. The cost of the contract was $230,000. The
period of performance was from December, 1993 to September, 1996. The agency submitted
monthly invoices for payment, that included the contract number, to DCPS.

In October, 1995 the agency submitted a proposal to perform conflict mediation training for the Safe
Schools for the period October, 1995 to May, 1996. The total proposed cost was $60,996. No
contract was executed for this service. The invoices submitted for the Safe School related services
clearly indicated that the services were for the Safe Schools Initiative. Also, a memorandum written
by the Project Director states that the scope of work to be delivered by the agency is “separate and
independent of the current scope of work being delivered system-wide”. It is evident that the agency
provided services to the Safe Schools, as well as the rest of the school system under two different
agreements.

In April, 1995 a Contract Advisement, for the contract signed in December, 1993, was setup for
$137,327. The accounting codes charged were for the Safe Schools Initiative. The $137,327 was
included on the expenditure list provided to us by the CSEC. In September, 1995 a payment of
$113,409 was made to the agency, and another payment was made in approximately November, 1995
for $3,615. A total of $117,024 was charged to the grant, as payment for invoices submitted by the
agency for services rendered for the 1993 contract. Separate invoices and payments were made for
the Safe Schools related work.

DCPS used Safe Schools grant funds to pay for services that were being provided prior to the grant
project being established. Grant funds were used in lieu of other DCPS funds and therefore the grant
funds were used to supplant the other funding. DCPS was in violation of the grant terms. The MOA,
[which defines the terms and conditions of the grant], under the heading of Responsibilities, states

        “DCPS shall ensure that all funds expended under the agreement are used to supplement
       and enhance training and other violence prevention activities and are not used to supplant
       any funding that would, in the absence of funds provided under this agreement, be
       provided for these activities”.

DCPS did not use the grant funds for services which supplemented grant activities. The services were
already contracted for and being performed. DCPS should have had funds already obligated to pay
for these services. This was not a supplemental activity, as the training was not being performed at
the Safe Schools nor was it in addition to the training specifically provided for the Safe Schools.

From our review of DCPS’s contract file on the agency it appears that the CSEC needed funding to
pay the agency for its’services and decided to pay them using grant funds. It appears that adequate
controls are not in place to ensure that this does not happen. These funds could have been used to
provide other Safe Schools activities\services for the students in the six Safe schools.


RECOMMENDATION:



DCPS Review of the Safe Schools Grant-ACN: A03-70001                                             21
We recommend ED\OESE require DCPS to:

(1)    Repay the $117,024; and
(2)    Establish procedures to ensure that funds designated for specific programs or purposes
       are not used to supplant other funds.


Auditee Response:

We do not concur with the finding concerning “supplanting”, however, there was a mischarge. Based
on the auditors review of disbursements it appears that the finance department mischarged an invoice
from the vendor to the Safe Schools’ grant. While the Safe Schools project did have an approved
training agreement with the vendor for an approved additional scope of work, it was a separate and
distinct training activity. The payment in question was transacted between the procurement branch
and finance department without the knowledge of the Safe School project director.

(1)    Grant funds were mischarged and need to be repaid.

(2)     This was a problem with mischarging of services provided. A grants management manual
for grant directors and managers is being developed.

OIG Response:

(1)    We do not believe that there was a “mischarge”. From the review of the supporting
       documentation it appears that the funds were supplanted. The CSEC had knowledge that
       the payment to the vendor was made from the Safe Schools grant, as the expenditure was
       included on all three of the Safe Schools expenditure lists that were provided to us by
       CSEC officials. The finding remains the same as in the draft report.

(2)    We also recommend that ED\OESE require DCPS to submit the completed grants
       management manual for review.




FINDING NO. 8 -         UNALLOWABLE AND QUESTIONABLE EXPENDITURES WERE CHARGED TO
                       THE GRANT

The purpose of our review was to determine if expenditures charged to the grant were reasonable,
allowable, and allocable. We judgementally selected a sample of 28 Safe Schools expenditures to
review.

Our review of the expenditures disclosed that DCPS expended: (A) $14,750 of Safe Schools grant
funds to pay for expenditures of a non-Safe Schools project, and (B) $2,700 for consulting services
that do not appear to be grant related. Other issues noted during our review are detailed in Findings

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                              22
No. 4 and No. 7.

(A) The $14,750 was for expenditures relating to a DCPS project entitled Project Daisy. According
to DCPS officials, Project Daisy was a three-year intervention program for students prenatally
exposed to drugs. This project had its’ own funding source and had no relationship with the Safe
Schools Initiative.

The expenditures for Project Daisy were charged to the grant as follows:

o      $9,750 for transporting Project Daisy enrolled students, over the period of February
       27, 1995 through April 30, 1995.

o      $5,000 for consulting services rendered for Project Daisy.

The invoices submitted by the vendors for these expenditures clearly stated that the services were for
Project Daisy. Since this was not a Safe Schools project, and had no relation to Safe Schools, these
expenditures are unallowable grant expenditures. These expenditures should never have been charged
to the grant. Using grant funds for these expenditures was in violation of the terms of the MOA,
which specifies the types of activities for which grant funds can be used. DCPS also did not assure
that grant funds were used solely for authorized purposes, which is a requirement of 34 CFR
80.20(3). It appears that funds were needed to pay for these expenditures and Safe Schools funds
were used because it was available. No controls were in place to prevent unallowable charges to the
grant.

(B) Expenditures totaling $2,700 were paid from grant funds for consulting services that do not
appear to be related to the Safe Schools Initiative. The services rendered were observation and
evaluation of School Resource Officer training, which was provided by an outside source to DCPS’s
Security Office. The consultant stated that she evaluated the training to determine if it could be
adopted for use by DCPS. Two payments to the consultant for these services were charged to the
grant; one for $1,500 and one for $1,200.

We believe these expenditures were charged to the grant because funds were available and the
training was for the Security Office. Although the MOA did allow for training of the security officers,
no funding was budgeted for training evaluation and observation. We are therefore questioning the
payments to the consultant.



RECOMMENDATION:

We recommend ED\OESE require DCPS to:

(1)    Repay the $14,750;
(2)    Repay the $2,700 or provide ED\OESE with adequate documentation to show that the


DCPS Review of the Safe Schools Grant-ACN: A03-70001                                                23
       payments to the consultant were grant related; and
(3)    Develop controls [policies and procedures] which would ensure that only allowable
       expenditures are charged to the appropriate funding source, and that future grant funds
       are used as delineated in the MOA and the applicable federal regulations.


Auditee Response:

(1)    We do not totally concur with the finding and recommendation. The transportation
       payment of $9,750 in question represents 39 days of transportation of disruptive students
       to a nine week intervention program. The voucher incorrectly refers to activity, Level 2,
       as a Project DAISY activity when in fact Weatherless was the site for Level 2, nine-week
       intervention program. We concur with the recommendation regarding repayment of
       consultant fees. The $5,000 Project DAISY charges will be repaid from the Project
       DAISY budget.

(2)    We should repay the $2,700.

(3)    The Chief Financial Officer is reorganizing the budget, personnel, and financial
       operations and we are developing a new grant operation and procedures manual.

OIG Response:

(1)    DCPS did not provide adequate supporting documentation to show that the transportation
       costs were for Safe Schools related activity. The invoice provided does not show the
       reason for the expenditure. Being that the voucher for this expenditure explicitly states
       “payment of services rendered to the Daisy Project”, and the fact that Business Manager
       of the CSEC prepared the voucher and the Director of the CSEC signed the voucher, we
       can only conclude that the expenditure was not related to Safe Schools. The finding
       remains the same as in the draft report.

(2)    The finding remains the same as in the draft report.

(3)    We also recommend that ED\OESE require DCPS to submit the grant operations and
       procedures manual for review.




FINDING NO. 9         - DCPS DOES     NOT HAVE AN     ACCOUNTING POLICIES     AND   PROCEDURES
                      MANUAL


During our audit we requested the Finance Office to provide us with a copy of DCPS’s accounting

DCPS Review of the Safe Schools Grant-ACN: A03-70001                                         24
policies and procedures manual. We made the request several times, however, a manual was not
provided.

In our opinion, the lack of written policies and procedures contributed to the findings detailed above.
In order to maintain adequate financial management, an entity should have written documentation of
its’accounting policies and procedures. This is a normal and prudent accounting practice. Without
an accounting manual employees have no reference to determine the correct policies and procedures
to follow, and new employees have nothing to follow to facilitate their learning of the policies and
procedures of the organization. Also, there is no documentation to show what the appropriate
policies and procedures are at any given period of time.


RECOMMENDATION:

We recommend ED\OESE require DCPS to develop and maintain written accounting policies and
procedures.


Auditee Response:

DCPS is required to use the City accounting policies and procedures because the DCPS financial
policies and procedures have been developed by the City.

OIG Response:

DCPS should have the manual available in the DCPS Finance office for the review and guidance of
the financial personnel. The finding remains the same as in the draft report.




DCPS Review of the Safe Schools Grant-ACN: A03-70001                                                25
                                   OTHER MATTERS

During our review of the procurement process we noted that DCPS’s Procurement Manual is dated
1987. It does not appear that the manual has been updated since then. Policies and procedures have
changed in 10 years. An up to date manual would help ensure that the correct policies and
procedures are being followed. This is especially critical at DCPS since its reorganization and hiring
of new employees. We recommend DCPS update its Procurement Manual as appropriate.




DCPS Review of the Safe Schools Grant-ACN: A03-70001                                               26
DCPS SAFE SCHOOLS GRANT                                                      ATTACHMENT
ACN: A03-70001



                                 SUMMARY OF AUDIT RESULTS



                     UNALLOWABLE            QUESTIONED      UNSUPPORTED      SUPPLANTED
                         COSTS                 COSTS            COSTS           COSTS
  FINDING #

       1                        $17,135

       2                        $27,538

       3                        $14,414

       4                             $500          $1,500            $450

       5                                                            $5,030

       7                                                                          $117,02

       8                        $14,750            $2,700



    TOTALS                      $74,337            $4,200           $5,480        $117,02




SUBTOTAL                                                                          $201,04

Unexpended grant Funds - Finding 6                                                  $9,61

GRAND TOTAL                                                                       $210,65