oversight

Review of the Division of Vocational-Technical Education's Monitoring of Formula Grants.

Published by the Department of Education, Office of Inspector General on 2001-09-25.

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

                      UNITED STATES DEPARTMENT OF EDUCATION

                                         OFFICE OF INSPECTOR GENERAL

                                                                                                  THE INSPECTOR GENERAL
                                                       SEP 25 2001
MEMORANDUM


TO:               Carol D' Amico
                  Assistant Secretary
                  Office of Vocational and Adult Education



FROM:

SUBJECT:          FINAL AUDIT REPORT
                  The Division of Vocational- Technical Education's
                  Monitoring of Formula Grants
                  Control No. ED-OIG/AO4-BOOlO

This Final Audit Report presentsthe results of our review of the Division of Vocational
-Technical Education's Monitoring of Formula Grants. The objective of our audit was
to determine if the Office of Vocational and Adult Education (OV AB), Division of
Vocational- Technical Education (DVTE) was monitoring vocational education formula
grants for compliance with appropriate laws and regulations.

A draft of this report was provided to OV AB for comments. In their response,OV AB
concurred with the recommendations. We have summarized OV AB's responseafter the
recommendation section of the report. A complete copy of the responseis provided as
an attachment to the report.

                                               A UD IT RESUL               TS

In Fiscal Year (FY) 1999, new legislation was introduced for Perkins fonnula grants
(Perkins III). At that time, the DVTE did not have a monitoring system in place and it
was not conducting on-site monitoring visits. In FY2000, the DVTE developed a State
monitoring system that focuses on compliance and other aspectssuch as educational
refonn and interagency cooperation in the delivery of vocational educational services.
Under DVTE's monitoring system, on-site reviews are conducted by a five member
team. The compliance aspectsof the reviews include fiscal issues, administration, local
applications, and special populations.

We followed up with the DVTE to ascertainthe current status of its monitoring of
formula grants. As of February 28,2001, the DVTE had performed four on-site reviews
and issued two reports. Additionally, the DVTE had scheduled six on-site reviews for
the remainder ofFY2001. The DVTE also plans to visit eight Statesin FY2002. The


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        Our mission is to ensure equal access to education and to promote educational excellence throughout the Nation.
DVTE has achieved staffing goals outlined in its FY2000 proposal and it has conducted
the number of reviews planned for FY2000. The DVTE has also made progresstoward
completing the number of on-site reviews planned for FY 2001.

Currently, the DVTE has developed a draft monitoring instrument, which includes a
checklist to monitor compliance items. However, the DVTE has not yet developed
written procedures covering all aspects of its on-site reviews. To ensure continuity in its
reviews, the DVTE should formalize its monitoring process by writing a procedures
manual for its on-site reviews that includes all aspects of its monitoring process.

As part of our review, we surveyed the States' monitoring of sub-recipients of
vocational education formula grants. The Education Department General
Administrative Regulations (EDGAR), found in 34 CFR, §SO,contain provisions
requiring Statesto monitor sub-recipients to ensure compliance with applicable Federal
requirements. As a result of our on-site visits to three States and the responsesto
questionnaires we sent to ten States,we concluded that State program officials are
monitoring vocational education formula grant sub-recipients in accordancewith
applicable existing statutory andfegulatory provisions. Currently, there are no specific
laws or regulations that require a particular monitoring method or prescribe the
frequency of monitoring activities. Therefore, we did not evaluate the monitoring
methods used by the various States.

A DVTE official stated that the DVTE does look at a State to seeif there is a process in
place for sub-recipient monitoring, but it does not perform any in depth review of the
State's sub-recipient monitoring. Therefore, the DVTE should, as part of its federal
monitoring of the States,determine whether States' monitoring is sufficient to comply
with provisions contained in EDGAR.

We encouragethe DVTE to continue its current monitoring processin order to ensure
adequateoversight of vocational education formula grants for compliance.

RECOMMENDA TIONS

We recommend that the Assistant Secretary of the Office of Vocational and Adult
Education:

1 Formalize DVTE's new monitoring processby writing a proceduresmanual for its
   on-site reviews that includes all aspectsof its monitoring process,and

2. Determine as a part of the monitoring process whether the States' monitoring of sub-
   recipients is sufficient to comply with EDGAR provisions.




                                               2
AUDITEE'S     RESPONSE


The Office of Vocational and Adult Education concurs with the two recommendations, and
agrees that they represent a means to strengthen the DVTE on-site monitoring process. In
response to the first recommendation, DVTE has already taken steps to develop a procedures
manual that outlines all aspects of the monitoring process. While various portions of a
State's monitoring efforts are evaluated in DVTE's current monitoring process, a more
formal analysis of a State's implementation of EDGAR's monitoring requirements can be
easily included as part of the on-site monitoring initiative.

OV AB anticipates that the two recommendations will be integrated into the DVTE
monitoring process with the advent of its monitoring visits scheduled for 2002.



                               BACKGROUND

The Division of V ocational-Technical Education administers the Carl D. Perkins
Vocational and Technical Education Act, which provides formula grants to state
agenciesto help provide vocational-technical education programs and services to youth
and adults. In 1998, the Carl D. Perkins Vocational and Technical Education Act of
1998 (Perkins ill) was signed into law. The central goals of this law are to improve
student achievement and to prepare students for postsecondaryeducation, further
learning, and careers. Vocational Education formula grants received an appropriation of
approximately $1 billion dollars in FY2000.

There are no statutory or regulatory provisions directing the Department to monitor
State compliance with the Perkins ill programs. However, the Department has an
implicit obligation to ensure that recipients of funds under Elementary and Secondary
Education programs comply with applicable statutory and regulatory requirements. This
obligation is further supported by 0MB Circular A-133, which requires Federal
agenciesto monitor non-Federal entities' use of Federal awards.

            OBJECTIVE,        SCOPE, AND METHODOLOGY

The objective of our audit was to determine whether the DVTE was monitoring vocational
education formula grant programs for compliance with appropriate laws and regulations. In
order to determine this, we:

.   researchedand summarized laws and regulations applicable to DVTE formula grant
    monitoring,

.   interviewed staff at the DVTE office to obtain a clear understanding of the type of
    monitoring performed and its current monitoring approach,




                                              3
.   obtained and reviewed DVTE's     written monitoring proposal,

.   conducted site visits to three States to interview State vocational education program
    officials and State audit officials to determine the level of monitoring for compliance
    regulations, and

    conducted a survey via a questionnaire of ten randomly selected States. The
    questionnaire was sent to State program offices to identify the level of monitoring in the
    three program areas in our scope, which included State vocational education offices.

The original audit period was limited to fiscal year 2000. Additionally, we conducted a
follow up interview with a DVTE official on February 26,2001 to ascertain the current status
ofDVTE's monitoring. We are therefore reporting on the status of the DVTE's monitoring
for FY2000 and FY2001. The scope of our audit included only formula grants authorized by
Perkins ill. We did not review Adult Education programs. We conducted an on-site visit to
DVTE offices and held interviews with DVTE personnel in Washington, DC on March 28,
2000 and during the week of May 8,2000. We conducted site visits to the Statesof Georgia,
Tennessee,and South Carolina in July and August of 2000. Information from our survey
questionnaire was collected during July and August 2000.

Our review was conducted in accordancewith government auditing standardsapplicable to
the scope of the review described above.

           STA TEMENT         ON MANAGEMENT                CONTROLS

Our review was limited to the objective of the audit, which was to determine if the
Department's program offices were monitoring vocational education formula grant programs
for compliance with appropriate laws and regulations.

Since the DVTE was in the process of developing its monitoring system for vocational
education formula grant programs, we decided not to perform any additional audit work.
Therefore, we did not assessthe DVTE's systems of managementcontrols over its
monitoring activities.

                      ADMINISTRA TIVE MA TTERS

Statementsthat 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.

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



                                               4
Copies of this audit report have been provided to the offices shown on the distribution list
enclosed in the report.

Pleaseprovide the Supervisor, Post Audit Group, Office of the Chief Financial Officer and
the Office of Inspector General, with quarterly status reports on promised corrective actions
until all such actions have been completed or continued follow-up is unnecessary.

We appreciate the cooperation given us in this review. If you have any questions, please
call Carol Lynch, Regional Inspector General for Audit, at (404) 562-6462. Please refer
to the control number in all correspondence related to the report.


Attachment




                                               5
-)'
                                                                                                                                                  Attachment

                                     UNITED STATES DEPARTMENT OF EDUCATION

                                                OFFICE OF VOCATIONAL AND ADULT EDUCATION




                                                                                     AUG      2 8 2001

      MEMORANDUM




      TO:                       Lorraine Lewis
                                Inspector General

      FROM:                      Robert D.
                                 Deputy

      SUBJECT:                   DRAFT     AUDIT   REPORT
                                 The Division ofVocational-Technical                                Education's              Monitoring           of
                                 Formula Grants
                                 Control No. ED-OIG/AO4-BOOlO

      This memorandum is a responseto the draft audit report (Control No. ED-OIG/ A04-
      BO010) issued by your office on July 23,2001. This report presentsthe results of your
      review of the Division of Vocational and Technical Education's (DVTE's) monitoring
      effort of Federal Perkins funds flowing to State and local recipients. This audit not only
      reviewed DVTE's monitoring procedures,but also assessedthe degree to which ten
      Statesimplemented the monitoring requirements of section 34 CFR 80.40.

      This draft report concludes with two recommendationsto strengthenthe DVTE
      monitoring process, namely

                  .        Fonnalize DVTE's monitoring processby developing a procedures manual
                           for on-site reviews that includes all aspectsof the monitoring process, and

                  .        Detennine as part of the monitoring processwhether State monitoring of
                           subrecipients is sufficient to comply with the EDGAR provisions.

      The Office of Vocational and Adult Education concurs with these two recommendations,
      and agreesthat they represent a meansto strengthenthe DVTE on-site monitoring
      process.

      In responseto the first recommendation, DVTE has already taken stepsto develop a
      procedures manual that outlines all aspectsof the monitoring process. This manual is
      moving towards a final draft state.

      While various portions of a State's monitoring efforts are evaluated in DVTE's current
      monitoring process, a more formal analysis of a State's implementation of EDGAR's


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                                                                    www.ed.gov

            Our       mission   is to ensure   equal   access   to education   and   to promote   educational   excellence     throughout   the   Nation.
monitoring requirements can be easily included as part of the on-site monitoring
initiative.

We anticipate that the two recommendations will be integrated into the DVTE monitoring
process with the advent of our monitoring visits scheduled for FY 2002.

Should you have further question, please call Ron Castaldi, Director, Division of
Vocational and Technical Education, at (202) 205-9444.
                            REPORT DISTRIBUTION    LIST
                           CONTROL NUMBER ED-OIG/AO4-BOOlO



                                                                                       No. of
                                                                                      Copies

Action   Official


Carol D' Amico
Assistant Secretary
Office of Vocational and Adult Education



Other    ED    Officials


Director, Office ofVocational-Technical Education
General Counsel, Office of General Counsel
Assistant Secretary, Office of Intergovernmental and Interagency Affairs
Chief of Staff, Office of the Secretary
Under Secretary
Deputy Secretary
Supervisor, Post Audit Group, Office of the Chief Financial Officer                       1
Director, Office of Public Affairs                                                        1
Audit Liaison, Office ofVocational and Adult Education                                    1



Office   of   Insvector    General                                         (Electronic Copy)

Inspector General
Deputy Inspector General
Counsel to the Inspector General
Assistant Inspector General for Audit Services
Assistant Inspector General for Investigative Services
Deputy Assistant Inspector General for Audit Services
Director, State & Local Advisory & Assistance                                             1
Regional Offices                                                                     1 each