oversight

University of Illinois at Chicago's (UIC) Upward Bound Math and Science (UBMS) project

Published by the Department of Education, Office of Inspector General on 2004-12-17.

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

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                                                                    Control Number ED·OIG/AOS-EOOI8

           Dr. Sylvia Manning, Olancellor
           Universily of Illinois at Chicago
           601 South Morgan, MC 102
           Chicago, IL60607-7 128

           Dear Dr. Manning:

          This Final Audit Report presents the resulls of our audi t of the University of llIioois at
          Chicago', (UIC) Upward Bound Math and Science (UB MS) project. UIC was awarded
          5274,493 in UBMS funds for the period August 31, 200 1, through August 31, 2002
          (2001 -2002 grant year), to operate the third year ofthc grant (P047M990 103). The
          objectives of our audit were to dctennine if UIC ( I) maintained support demonstrating
          that it achieved the project's objectives as reported to the U.S. Departmenl of Education
          (Department); (2) provided only eligible services to Ihe number of eligible students
          required unde r its agreement wilh the Departmenl; (3) properly accounled for its use of
          UB MS program funds; and (4) only claimed ex penses that were allowable and adequalely
          supponed for the 200 1-2002 granl year.

           Our ludil disclosed Ihal UIC misrepresented its UBMS project's accomplishments 10 lhe
           Departmenl. 1 UIC ( I) did not mai ntain documentation supporting that it achieved the
           project's objectives as reported to the Departmenl, (2) served ineligible participants and
           did not provide all required services, (3) di d not appropri ately account for grant funds. (4)
           could not support all ils expendilures, and (5) charged unallowable costs 10 Ihe grant.
           Based on the significance of the findin gs. we recommend that the Chief Financial Offi cer
           (CFO), Office of the Chief Financial Officer, in conjUllCtion with the Assistant Secretary,
           Office of Postsecondary Education (OPE), require UIC to return to the Department
           5214,493 in UBMS funds it received fOf'the 2001-2002 grant year, and lake appropriate
           aclion pursuant to 34 C.F.R. § 14.62 10 pl'()lecl future UBMS grant funds .

           We provided UIC wi th a draft of th is repon on July 23, 2004. In its response dated
           August 23, 20(14,1 UIC disagreed with the recomme ndation to return to the Depanrnent
           the full amount of the funds it received for the UBMS program, agreeing to refund only
           $2 1,295 in UBMS funds for the 200 1-2002 grant year. However, UIC acknowledged
           that:                      .

           , Sec Appendi. A and Findin8 No. t for the pro;ea ob;eo:tiws prOpOSed by UIC. Sec Appendix 8 for !he 

           results of !he project n;pont:d to the l)epanmcnl. 

           I Sec Au.c: hmelll. 




                     0..-_ .. 1 0 _ ..... _ . _ _                  _ _ _ _ ... _
                                                              10
• 	 Sixty-seven percent of its UBMS participants did not qualify as both low-income
    individuals and first-generation college students; 80 percent of its participants did not
    maintain at least a 3.5 grade point average (GPA); and UBMS did not have
    documentation to support pre-to-post test score gains on the California Achievement
    Test (CAT) subtests (See Finding No. 1);
• 	 Three students were not eligible participants because they were neither low-income
    individuals nor first-generation college students, and it did not offer a foreign
    language component during the 2002 summer session (See Finding No. 2);
• 	 Its University Financial and Administrative System (UFAS) was not set to track
    awards by individual award years (See Finding No. 3);
• 	 Staff members were not always required to complete time and effort certifications
    (See Finding No. 4); and
• 	 Stipends were received by three students who were neither low-income individuals
    nor first-generation college students (See Finding No. 5).

We made minor changes to our draft report based on UIC’s response and the additional
documentation provided with the response. However, we did not delete any findings or
change our recommendation to return all 2001-2002 grant funds to the Department
because UIC did not demonstrate it operated the UBMS program as proposed.




Final Audit Report	                           2                            ED-OIG/A05E0018
                                        AUDIT RESULTS 


Finding No. 1 UIC Misrepresented the Results of Its Project and Did Not Maintain
              Documentation Supporting Achievements Reported to the
              Department

UIC submitted incorrect data via its performance report covering the period August 31,
2001, to August 30, 2002, stating all of its measurable objectives were complete. Of the
nine objectives in the grant proposal,1 only one (Objective 2) had sufficient
documentation to support the annual performance report. Three (Objectives 1, 3, and 4)
did not have documentation that validated the objective was achieved as stated in UIC’s
annual performance report.2 The remaining five objectives were not measurable.3

By signing its annual performance report, UIC certified that the information submitted to
the Department was accurate, complete, and readily verifiable to the best of its
knowledge. Pursuant to 34 C.F.R. § 74.51,4 recipients are responsible for managing and
monitoring each project, program, subaward, function or activity supported by the award.
Performance reports must generally contain a comparison of actual accomplishments
with the goals and objectives established for the period and, if appropriate, the reasons
why established goals were not met. According to 34 C.F.R. § 74.53(b), all records
pertinent to an award shall be retained for a period of three years.

Our audit disclosed that UIC did not retain documentation showing that the information
in its annual UBMS performance report was accurate, complete, and readily verifiable.5
Sufficient documentation was not available because UIC officials did not monitor the
UBMS project in an effective manner.

Objective #1
Pursuant to 34 C.F.R. § 645.4(a), at least two-thirds of the eligible participants a grantee
serves must, at the time of initial selection, qualify as both low-income individuals and
potential first-generation college students.6 The remaining participants must qualify as
either low-income individuals or potential first-generation college students.
1
  See Appendix A for a list of the objectives in the grant proposal.
2
  See Appendix B for the achievements reported in the annual performance report.
3
  Four of the 5 objectives could have been measured if the UBMS program retained students from year to
year. Thirty-one of the 39 participants for the 2001-2002 grant year entered the program in the summer
2002 session. As of August 31, 2003, only 2 (5%) of the 39 participants remained in the program (See
Appendix A summarizing all 9 proposed objectives).
4
  All regulatory citations are as of July 1, 2001, unless otherwise noted.
5
  UIC did not submit a written performance agreement for UBMS that showed it received approval to
revise the scope of the project as outlined in its grant proposal. Because we did not have evidence that UIC
received approval to revise the scope of its UBMS project, we audited to the objectives outlined in the grant
proposal.
6
  According to Section 402A of the Higher Education Act of 1965, as amended, the term “first-generation
college student” means an individual whose parent(s) did not complete a baccalaureate degree. The term
“low-income individual” means an individual from a family whose taxable income from the preceding year
did not exceed 150 percent of an amount equal to the poverty level determined by using criteria of poverty
established by the Bureau of the Census.


Final Audit Report                                    3                                 ED-OIG/A05E0018
In its grant proposal, UIC stated that it would enroll 60 eligible participants. Sixty-seven
percent (or 40) would qualify as both low-income individuals and first-generation college
students, and 33 percent (or 20) would be either low-income individuals or first-
generation college students. UIC later received oral approval from the Department to
serve only 40 students. Therefore, 27 of the participants should have qualified as both
low-income individuals and first-generation college students, and 13 should have
qualified as either low-income individuals or first-generation college students.

UIC did not address the percentages associated with this objective in its annual
performance report, but the student roster UIC provided us showed that only 51 percent
(20) of the 39 participants qualified as both low-income individuals and first-generation
college students, 41 percent (16) qualified as either low-income individuals or first-
generation college students, and 8 percent (3) did not qualify as low-income individuals
or first-generation college students.

In an attempt to verify the validity of the student roster UIC provided us, we reviewed all
39 UBMS participants’ files. We determined that only 23 percent (9) of the participants
qualified as both low-income individuals and first-generation college students, 67 percent
(26) qualified as either low-income individuals or first-generation college students, and
10 percent (4) should not have been enrolled as participants because they did not qualify
as low-income individuals or first-generation college students (See Appendix A).

Objective #3
According to the grant proposal, UIC would maintain documentation to support that 80
percent of all UBMS participants would maintain at least a C+ (3.5 on a 5.0 grading
scale) GPA on a yearly basis through high school graduation. In its annual performance
report narrative, UIC asserted that at least 80 percent of the UBMS participants
maintained a 3.5 GPA during the reporting period.

Only eight of the 39 participants from the 2001-2002 project year continued participation
in the program until the summer of 2002. Therefore, only 8 participants had enough
GPA data to make the determination of whether they maintained at least a C+ GPA on a
yearly basis. The student roster UIC provided us showed that, of the 8 participants who
were in the program for at least a year, only 3 (38 percent) maintained at least a C+ GPA
on a yearly basis. Our file review verified that only 38 percent (3 of 8) of the students
who had data available maintained a C+ GPA (See Appendix A).

Objective #4
In its grant proposal, UIC stated that it would evaluate its UBMS participants' academic
performances as indicated by a pre-to-post test gain. Upon completion of the six-week
summer program, 75 percent of the participants were to show a 40 percent gain. By June
of the subsequent year, 75 percent of the participants were to show a 20 percent gain on
the math and science subset of the California Achievement Test. UIC did not address the
academic performances associated with the objective in its annual performance report
and did not retain documentation to support the completion of this objective. We
reviewed all 39 participants’ files and found that none of the participants had their


Final Audit Report                           4                            ED-OIG/A05E0018
academic performance evaluated according to the grant proposal. Fifteen percent (6 of
39) of the participants did not have pretest scores, and 0 percent (none) had post test
scores in their files (See Appendix A).

Program Not Operated as Intended
UIC misrepresented the achievements of its UBMS program because it did not operate
the program as written in its grant proposal. Instead, UIC only operated the summer
component of the program. It did not serve its UBMS participants during the academic
year as it originally proposed.

Because UIC misrepresented the results of its UBMS program, the Department did not
have the information it needed to make future funding decisions. UIC was awarded
$274,493 in UBMS funds for the 2001-2002 grant year. Had the Department known that
UIC might not be contributing to the success of its participants’ pre-college performance
and, ultimately, their higher education pursuits, it might not have continued funding
UIC’s UBMS program.

Recommendations

We recommend that the CFO, in conjunction with the Assistant Secretary, OPE,

1.1 Require UIC to return to the Department $274,493 in UBMS funds it received for the
    period August 31, 2001, through August 31, 2002; and

1.2 Take appropriate action pursuant to 34 C.F.R. § 74.62 to protect future UBMS grant
    funds.

Auditee Comments
UIC did not entirely agree with the finding and disagreed with the recommendations.

OIG Response
After reviewing the additional documentation UIC provided, and after taking into account
the supporting documentation from the student files we reviewed during our audit, we
revised the finding slightly. We dropped the issue concerning achievement of Objective
#2 (assessing the needs of newly admitted participants within 30 days following their
admittance into the UBMS program). However, we did not revise our recommendations.

Auditee Comments (Objective #1)
UIC asserted that only three students were neither low-income nor first-generation
college students. Of the 40 participants, UIC claimed that 20 (50 percent) were low-
income individuals and first-generation college students, 4 (10 percent) were low-income
individuals only, and 13 (33 percent) were first-generation college students only. UIC
added that while its enrollment did not contain the exact percentages as outlined in the
grant proposal (67 percent both low-income and first-generation college students and 33
percent either low-income or first-generation college students), 37, or 92.5 percent of the
participants, were eligible for the program based on one or more of the criteria. UIC
provided us a table that it claimed contains the names and eligibility status of all 37


Final Audit Report                           5                            ED-OIG/A05E0018
participants enrolled for the 2001-2002 grant year. UIC also said it provided the
documentation used to establish each participant’s eligibility.

OIG Response (Objective #1)
UIC’s claim that 92.5 percent of its participants satisfied at least one of the eligibility
criterion is without merit. The regulation at 34 C.F.R. § 645.4(a) clearly states that at
least two-thirds of the eligible participants a grantee serves must, at the time of initial
selection, qualify as both low-income individuals and potential first-generation college
students. UIC did not serve at least 27 participants who were both low-income
individuals and first-generation college students.

Auditee Comments (Objective #3)
UIC asserted that, for the 2001-2002 grant year, only 8 participants had been enrolled in
the program for one year. Therefore, only 8 participants had a yearly GPA calculated for
the reporting period. UIC acknowledged that 80 percent of the participants did not
maintain a 3.5 GPA and provided supporting documentation (a table that included the
GPAs of the 8 students and a Demographic Profile of Grades from Section II of its
annual performance report). The grades in Section II reflect the actual grades of the
participants. UIC acknowledged that the narrative within the annual performance report
and the demographic information that included the GPAs were inconsistent due to
carelessness and stated that it has taken steps to assure that reporting errors such as these
do not recur.

OIG Response (Objective #3)
We did not revise the finding. UIC’s documentation (the table of GPAs as well as the
Demographic Profile of Grades) did not include the source of the documentation
(participants’ grade reports). According to the documentation UIC provided, only 25
percent (2 of 8) of the students who had data available maintained a C+ GPA on a yearly
basis. The results of our file review disclosed that 38 percent (3 of 8) of the students who
had data available maintained a C+ GPA. Neither percentage supports the annual
performance report.

Auditee Comments (Objective #4)
UIC acknowledged that UBMS did not have pre-to-post test scores for the CAT subtests
and stated it has taken steps to assure that it assesses the progress of its students through
the use of the CAT. However, UIC disagreed that none of the participants had their
academic performance evaluated while participating in the program. UIC said that all
students were evaluated by the instructors of the courses on a regular basis and received
grade reports at the end of the course. UIC provided documentation that included the
home school grades (baseline grades) in the math and science courses and the UBMS
program grades (post grades) for the same subjects. UIC said that a calculation of
average home school grade and average program grade in math and science shows the
gains made by the program participants.

OIG Response (Objective #4)
We did not revise the finding. In its grant proposal, UIC stated that it would evaluate its
UBMS participants' academic performances as indicated by a pre-to-post test gain. UIC


Final Audit Report                             6                            ED-OIG/A05E0018
did not address the academic performances associated with the objective in its
performance report and did not retain documentation to support the completion of this
objective. Per 34 C.F.R. § 75.700, a grantee shall comply with applicable statutes,
regulations, and approved applications, and shall use Federal funds in accordance with
those statutes, regulations, and applications.

Finding No. 2 	 UIC Served Ineligible Participants and Its Summer Component Did
                Not Provide All Required Services

Five of the 39 UBMS participants did not meet all of the requirements to be considered
eligible to participate in the UBMS program. Four participants were not low-income
individuals or potential first-generation college students, and one participant's file did not
have documentation of a demonstrated need for academic support.

According to 34 C.F.R. § 645.3, an individual is eligible to participate in a Regular,
Veterans, or Math and Science Upward Bound project if the individual is a potential first-
generation college student or a low-income individual and has a need for academic
support, as determined by the grantee, in order to pursue successfully a program of
education beyond high school.

In addition, UIC's UBMS 2002 summer core curriculum did not include a foreign
language class. Pursuant to 34 C.F.R. § 645.11(a), all UB projects that have received
funds for at least two years shall include as part of its core curriculum, instruction in
mathematics through pre-calculus, laboratory science, foreign language, composition, and
literature.

By enrolling ineligible students and not providing students the foreign language
component in the UBMS program, UIC could prevent eligible students from receiving
the services needed to succeed in pre-college performance and, ultimately, their higher
education pursuits may be hindered.

Recommendations

We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require
UIC to

2.1 Return $35,1917 to the Department; and

2.2 Include a foreign language class in its summer core curriculum.

Auditee Comments
UIC partially agreed with the finding and the recommendation to return $35,191 to the
Department. However, UIC agreed to refund $21,115 ($274,493 divided by 39 and

7
  Total UBMS funds received of $274,493 divided by 39 and multiplied by 5. The funds to be returned to
the Department are an estimate and are not derived from a statistically valid projection. The recommended
recovery is included in the recovery in recommendation 1.1.



Final Audit Report	                                 7                                ED-OIG/A05E0018
multiplied by 3) because three students were neither low-income individuals nor first-
generation college students. UIC acknowledged that it did not offer a foreign language
component during the summer of the program year that was the subject of the audit.
Instead, it offered a computer language course.

OIG Response
We did not revise the finding or the corresponding recommendation. The fourth student
we identified as not being a low-income individual or a first-generation student was
classified as a first-generation student. However, the student’s income statement shows
that the mother obtained a baccalaureate degree. UIC did not acknowledge the one
participant whose file did not have documentation of a demonstrated need for academic
support in its response. Therefore, we still conclude that 5 of the 39 participants did not
meet all the requirements to be considered eligible to participate in the UBMS program.

Finding No. 3 UIC Did Not Appropriately Account for Grant Funds

UIC did not completely and accurately account for its UBMS funds by award year.
UIC's UBMS accounting records did not identify the budget period from which funds
were expended, and UBMS staff did not perform regular reconciliations to ensure that
expenditures were tied to specific awards. UIC’s UFAS tracked all awards on a
cumulative basis (for the entire life of the grant). UFAS does not segregate expenses by
individual award years.

According to 34 C.F.R. § 74.21(b), recipients' financial management systems shall
provide for accurate, current, and complete disclosure of the financial results of the
project. Records must adequately identify the source and application of funds. These
records shall contain information pertaining to awards, authorizations, obligations,
unobligated balances, assets, outlays, income, and interest. Recipients should compare
outlays with budget amounts for each award. According to 34 C.F.R. § 75.730, a grantee
shall keep records that fully show (a) the amount of funds under the grant, (b) how the
grantee uses the funds, (c) the total cost of the project, (d) the share of the cost provided
from other sources, and (e) other records to facilitate an effective audit.

By not accounting for funds by award year, UIC may request and use Federal funds in
excess of its award for any given year. Our review disclosed that UIC might have used
$22,987 in 2001-2002 grant year funds to pay for 2000-2001 expenses. Therefore,
subsequent award years might not have enough funding to provide adequate (as defined
in the grant application) services to participants. In addition, UIC loses its ability to
accurately forecast its needs for subsequent budget periods.




Final Audit Report                            8                            ED-OIG/A05E0018
Recommendation

We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require
UIC to

3.1 Ensure its accounting system tracks grant funds by award year or develop and
    implement policies and procedures to perform regular reconciliations, tying
    expenditures to specific award years.

Auditee Comments
UIC acknowledged that UFAS was not set to track awards by single grant years.
However, UIC has instituted a new financial and administrative system, BANNER, that
will allow UIC to segregate expenses by individual award years. Additionally, UIC
agreed to perform bi-monthly reconciliations, tying expenditures to specific award years.

Finding No. 4 UIC Could Not Support All Its Expenditures

Because UIC did not monitor its UBMS project in an effective manner, UIC could not
provide documentation sufficient to support

• 	 $43,419 of salary expenses. We selected all expenses for the 3 months with the
    highest salary expenses recorded for the 2001-2002 grant year. The salary expenses
    for these 3 months totaled $56,146 of the total 2001-2002 grant year personnel
    expenses of $138,668. Our review disclosed that salaried employees were not
    required to complete after-the-fact certifications to verify work was performed on the
    UBMS project. Also, timesheets for wage employees were not always provided by
    UIC.

• 	 $1,328 in non-personnel expenses. We reviewed a judgmental sample of non-
    personnel expense categories. We selected 18 UBMS expense categories (45 actual
    expenses) totaling $97,415 that were large or appeared unusual in relation to similar
    expenses for other months from the total non-personnel expenses of $128,665
    recorded during the period August 31, 2001, through August 31, 2002. We reviewed
    supporting documentation such as purchase orders, invoices, and canceled checks.
    UIC personnel did not always approve vouchers, and the vouchers did not have all
    supporting receipts attached. In addition, purchase orders did not always correspond
    with accounting records, and the purchase orders did not have all supporting invoices
    attached.

According to the Office of Management and Budget (OMB) Circular A-21, Attachment,
(J)(8)(c)(2)(a) and (e), Principles for Determining Costs Applicable to Grants, Contracts,
and Other Agreements with Educational Institutions (1998), activity reports should
reflect the distribution of activity expended by employees covered by the system. For
professorial and professional staff, the reports will be prepared each academic term, but
no less frequently than every six months. For other employees, unless alternate
arrangements are agreed to, the reports will be prepared no less frequently than monthly


Final Audit Report	                          9                           ED-OIG/A05E0018
and will coincide with one or more pay periods. According to 34 C.F.R. § 75.730, a
grantee shall keep records that fully show how the grantee uses the funds. Pursuant to 34
C.F.R. § 74.53(b), financial records, supporting documentation, statistical records, and all
other records pertinent to an award shall be retained for a period of three years.

By not retaining adequate documentation, UIC cannot prove that it used $44,747 ($1,328
plus $43,419) on allowable expenses.

Recommendation

We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require
UIC to

4.1 Return $44,747 to the Department.8

Auditee Comments
UIC acknowledged that it did not always require the staff to complete time and effort
certifications. Because most of the staff referred to in the finding continue to work for
the UBMS project, UIC submitted the faculty activity reports and time sheets from which
the time and effort documentation was derived. Staff completed the time and effort
forms, and they and their supervisors signed the forms indicating the time spent by each
staff member on the UBMS project. UIC also provided additional documentation to
support the questioned non-personnel expenses. According to UIC, the documentation
contained receipts, signed vouchers, and purchase orders that have been reconciled with
supporting invoices.

OIG Response
After reviewing the additional supporting documentation provided by UIC to support the
$43,419 in salary expenses, we concluded that we could not revise the finding or the
recommendation to return $43,419 in salary expenses. The time and effort
documentation was signed and dated in 2004, after the completion of our audit.

UIC provided additional documentation sufficient to support $13,674 of the total $15,002
in non-personnel expenses we originally questioned. Therefore, we revised the draft
report finding and are now reporting that UIC could not provide documentation sufficient
to support $1,328 in non-personnel expenses. We also revised our recommendation.

Finding No. 5 UIC Charged Unallowable Costs to the Grant

UIC charged unallowable costs to the UBMS program totaling $4,102. UIC charged the
following to the UBMS program:

• 	 $4,111 in telecom expenses. UIC charged telecom costs as a direct cost to the UBMS
    grant, failing to treat the expenses consistently throughout the University. For other
    programs and departments within UIC, telecom expenses are included in the indirect

8
    The recommended recovery is included in the recovery in recommendation 1.1.


Final Audit Report	                                 10                            ED-OIG/A05E0018
      cost pool. Per OMB Circular A-21, Attachment, (D)(1), costs incurred for the same
      purpose in like circumstances must be treated consistently as either direct or facilities
      and administrative costs.

• 	 $180 in stipends. Three students did not qualify as first-generation college students
    or low-income individuals. Pursuant to 34 C.F.R. § 645.42(a), an Upward Bound
    project may provide stipends only to those participants who participate on a full-time
    basis. An individual is eligible to participate in a Regular, Veterans, or Math and
    Science Upward Bound project if the individual is a potential first-generation college
    student or a low-income individual (34 C.F.R. § 645.3).

In addition, UIC incorrectly computed and charged indirect costs to the UBMS program.
Based on our calculations for the 2001-2002 grant year, UIC undercharged indirect costs
to the UBMS program by $189.9 OMB Circular A-21, Attachment, (G)(2) states, in part,
that the institution may apply the indirect cost rate to the modified total direct costs for
individual agreements to determine the amount of indirect costs.

Unallowable costs charged to the grant constitute a debt to the Federal Government and
harms the Federal interest. When a grantee uses Federal funds for unallowable costs,
those funds are not available to pay for items and services that will advance the project.

Recommendation

We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require
UIC to

5.1 Return $4,10210 to the Department.

Auditee Comments
UIC agreed to return $180 in stipends that were received by the 3 students who were
neither low-income nor first-generation college students. However, UIC asserted that
because the telecom expenses were a line item in the Department-approved budget, and
because it was able to isolate the charges directly to the UBMS budget, UIC believes that
it was within the guidelines of the proposal and the budget line items. UIC disagreed
with the recommendation to return $3,922 to the Department (telecom charges less the
undercharged $189) because it acted in good faith based on its understanding of the line
item in the Department-approved budget.

OIG Response
We did not revise the finding or the corresponding recommendation. UIC did not include
additional supporting documentation as part of its response. Therefore, we could not
determine whether the telecom charges were excluded from UIC’s indirect cost pool and
only included as direct charges to the UBMS project.


9
    We reduced the total amount of allowable costs ($4,111 + $180) by the undercharged amount of $189.
10
    The recommended recovery is included in the recovery in recommendation 1.1.


Final Audit Report	                                  11                               ED-OIG/A05E0018
                                  BACKGROUND 

The Upward Bound program provides support to participants by preparing them for
college entrance. The program provides opportunities for participants to succeed in pre-
college performance and ultimately in higher education pursuits. Upward Bound projects
should serve high school students from low-income families, high school students from
families in which neither parent holds a bachelors degree, and low-income, first-
generation military veterans who are preparing to enter postsecondary education. The
goal of an Upward Bound project is to increase the rates at which participants enroll in
and graduate from institutions of postsecondary education.

The Upward Bound Math and Science program allows the Department to fund
specialized Upward Bound math and science centers. The program is designed to
strengthen the math and science skills of participating students. The goal of the program
is to help students recognize and develop their potential to excel in math and science and
encourages them to pursue postsecondary degrees in these fields.

UBMS is authorized by Part A, Subpart 2 of Title IV of the Higher Education Act of
1965, as amended. It is subject to the provisions in 34 C.F.R. Parts 74, 75, 77, and 645.
Institutions of higher education that operate UBMS projects also are required to adhere to
the requirements in OMB Circulars A-21 (Cost Principles for Educational Institutions)
and A-110 (Uniform Administrative Requirements for Grants and Other Agreements with
Institutions of Higher Education, Hospitals and Other Non-Profit Organizations).

UIC was awarded $274,493 in UBMS funds for the period August 31, 2001, through
August 31, 2002, the third year of the grant (P047M990103).

              OBJECTIVES, SCOPE, AND METHODOLOGY
The objectives of our audit were to determine whether UIC’s UBMS program
(1) maintained support demonstrating that it achieved each program’s objectives as
reported to the Department; (2) provided only eligible services to the number of eligible
students required under its agreements with the Department; (3) properly accounted for
its use of funds; and (4) only claimed expenses that were allowable and adequately
supported for the period August 31, 2001, through August 31, 2002.

To achieve our objectives, we

1. 	 Gained an understanding of UIC’s internal controls over its UBMS program and
     accounting for Federal funds. We did not assess the adequacy of the internal controls.
     Instead, we relied on compliance testing of student files, non-personnel expenses, and
     salaries and fringe benefit expenses.
2. 	 Reviewed the performance report for the 2001-2002 grant year.
3. Reviewed accounting records.
4. 	 Reviewed all 39 2001-2002 UBMS participants’ files.
5. 	 Reviewed a judgmental sample of non-personnel expense categories. We selected 18
     UBMS expense categories (45 expenses) totaling $97,415 that were large or appeared


Final Audit Report	                         12                           ED-OIG/A05E0018
     unusual in relation to similar expenses for other months. Total non-personnel
     expenses recorded during the 2001-2002 grant year were $128,665. For each expense
     tested, we reviewed supporting documentation such as purchase orders, invoices, and
     canceled checks.
6. 	 Reviewed a judgmental sample of salaries and fringe benefit expenses for three
     months. We selected the three months from the 2001-2002 grant year with the
     highest recorded salary expenses. The sample of salaries and fringe benefit expenses
     for three months totaled $56,146 of the 2001-2002 grant year total personnel
     expenses of $138,668.
7. 	 Reviewed additional documentation provided by UIC in response to the draft of this
     report.

We also relied, in part, on computer-processed data recorded in UIC’s UFAS. UIC uses
the system to record expenses charged to the project. To assess the reliability of the data,
we reviewed accounting records for the 2001-2002 grant year for expenses applicable to
the grant year as identified by UIC staff. The data did not appear to be entirely complete
or accurate. The accounting records for the 2001-2002 grant year included charges from
the prior grant year and omitted charges applicable to the 2001-2002 grant year.
However, the accounting records, as a whole, reflect every transaction related to the
UBMS program. Because we had corroborating evidence11 on which we could rely, and
because we only intended to use the accounting records to select transactions for
determining the allowability of costs charged to the UBMS grant, the computer-processed
accounting data was sufficiently reliable for the purposes of our audit.

We performed our audit work at UIC’s administrative offices and our Chicago office
from August 2003 through June 2004. We discussed the results of our audit with UIC
officials on July 9, 2004. Our audit was performed in accordance with generally accepted
government 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 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 Department
officials who will consider them before taking final Departmental action on the audit.




11
  Corroborating evidence is evidence such as purchase orders, invoices, and canceled checks that supports
information in UFAS.


Final Audit Report	                                 13                               ED-OIG/A05E0018
                                              Jack Martin, Chief Financial Officer
                                              Office of the Oaief Financial Officer
                                              U.s. Dcpanmcnt of Education
                                              R:lB-6, Room 4E313
                                              400 Maryland A venue. SW
                                              Washington, OC 20202

                                              Sally Stroup, Assistant Sccretary
                                              Office of Postsecondary Edocation
                                              U.S. Department of Education
                                              Room711S
                                              1990 K Sttcct, NW
                                              Washington, DC 20006

               It is the policy of the U.S. Department of Education to expedite the resolution o f audits
               by initiating timely action on the findings and recomme ndation s contained therein.
               1bcrefore, receipt of YOUT comments within 30 days wou ld be greatly appreciated.

               In accordance with the Freedom of Infonnalion Act (S U.S.C. § S52). reporu iuued by
               the Office of Inspector General are available to members of the press and general public
               to the extent information contained therein is 11()( subjcct 10 exemptions in the Act.


                                                                     Sincerely,




               AppcndiCC5
               Attachment




               Fk>al Audit Report                           14                            E[).()IGlA051lOO18




Final Audit Report                                        14                                        ED-OIG/A05E0018
                                                                                                                     APPENDIX A 


                         Grant Proposal Objective                                  Achievement          Achievement                Achievement
                                                                                   According to       According to UIC's         According to Files
                                                                                   Performance              Data
                                                                                     Report
1 UIC will identify and select 401 eligible participants from an identified
                                                                                   39 participants       39 participants           39 participants
  pool of low-income and potentially first-generation college students in
  UIC's UBMS target areas by June 1 of each academic year.
  •     67% or 26 of the participants will qualify as both low-income
                                                                                   Not Addressed        20 (51%) LI & FG          9 (23%) LI & FG
    individuals and first-generation college students.
                                                                                                       16 (41%) LI or FG         26 (67%) LI or FG
  •     33% or 13 will be either low-income individuals or first-
                                                                                   Not Addressed      3 (8%) Neither LI/FG     4 (10%) Neither LI/FG
    generation college students.2
2 100% of the newly, admitted participants will have their needs                       100%           No Supporting Data                  58%
  assessed and an Individual Educational Action Plan (IEAP) will be
  developed within 30 days following their acceptance in UBMS.
3 80% of all UBMS participants will maintain at least a C+ (3.5 grade                   80%                   38%                         38%
  point average on a 5.0 grading scale) on a yearly basis through high
  school graduation.
4 All UBMS participants will enroll in pre-collegiate mathematics and                  100%           No Supporting Data                  97%
  laboratory science in a research-oriented summer program to improve
  their academic performance and literacy.
  •     Upon completion of the 6-week summer program, 75% of the                   Not Addressed      No Supporting Data                  0%
    participants will show a 40% pre-to-post test gain on a criterion
    reference math and science test.
  •     By June of the subsequent year, 75% of the students will show a            Not Addressed      No Supporting Data                  0%
    20% pre-to-post gain on the math and science sub test of the
    California Achievement Test.
5 70% of the UBMS participants entering the program as high school                      70%                   72%                  Not Measurable
  sophomores or juniors will be retained in UIC's UBMS program
  through their senior year.3
6 At least 90% of the UBMS participants who have attained the grade                Not Measurable        Not Measurable            Not Measurable
  level of a senior will graduate from high school with the assistance of
  UIC's UBMS.
7 Establish a summer math/science-oriented college transition (bridge)             Not Measurable        Not Measurable            Not Measurable
  program. As a result 90% of the summer bridge students will
  complete the summer program with 60% attaining a grade point
  average of 3.5 or above on a 5.0 scale.
8 100% of all UBMS seniors will apply for admission to a post-                     Not Measurable        Not Measurable            Not Measurable
  secondary educational institution. As a result:
  •     90% of those program participants will gain admission and enroll
    in a post-secondary educational institution
  •     75% of the program participants will indicate their major
    declaration by providing a copy of their course program.
9 70% of all UBMS graduates who enter post-secondary educational                   Not Measurable        Not Measurable            Not Measurable
  institutions will graduate in at least 5 years or be making progress
  toward a degree. At least 50% of those graduating will graduate with
  a math/science related degree.




      1
        Total number of participants was revised from 60 in the grant proposal to 40 in the performance report because UIC’s UBMS
      program received oral permission to serve 40 students.
      2
        Revisions made to number of participants who qualify as low income and/or first generation because number of total
      participants (#1a) revised from 60 to 40. Only 39 participants were served.
      3
        The achievements as stated in the performance report and according to UIC’s data only measure the percentage of students
      maintained in the program as of August 31, 2002, which is immediately after the summer session concluded. Because all the
      participants were either sophomores or juniors during the 2001-2002 award year, it could not be determined for the performance
      report period whether the students were retained in the program until their senior year. We reviewed exit dates for the 39
      participants occurring during the 2002-2003 grant year to determine whether they remained in the program until their senior year.
      Of the 39 participants, only 2 (5%) participants remained in the program through their senior year.


                Final Audit Report                                            15                                ED-OIG/A05E0018
                                                                                                  APPENDIX B


                                 Objectives and Achievements as Listed in the
                                   2001-2002 Annual Performance Report

                         Objective1                              Extent to Which Project Achieved Objective
1   Identify and select 40 eligible participants from an       39 participants were identified and selected during the
    identified pool of low-income and potentially first-       reporting period 2001-2002. Documented by student
    generation college students in UIC’s Regional Math         applications and eligibility and enrollment reports.
    - Science Center (RMSC) target area by June 1 of
    each academic year.
2   100 percent of the newly admitted participants will        98 percent of all project participants were assessed
    have their needs assessed and an Individual                using the CAT’s pre-test. An IEAP was developed for
    Educational Action Plan (IEAP) will be developed           all participants. Documented by assessment results
    within 30 days following their acceptance into             and participant IEAPs.
    RMSC.
3   80 percent of all RMSC participants will maintain at  As a result of intensive curriculum, tutoring, and
    least a C+ (3.5 grade point average on a 5.0 grading  advising system, at least 80 percent of participants
    scale) on a yearly basis through high school          have maintained a 3.5 GPA during the reporting
    graduation.                                           period. Documented by program curriculum, tutor
                                                          reports and logs, high school transcripts, classroom
                                                          reports.
4   All RMSC participants will enroll in pre-collegiate   The Project provided an intensive pre-collegiate,
    mathematics and laboratory science in a research-     math-science focused research based curriculum to its
    oriented summer program to improve their academic thirty-nine participants. Documented by curriculum,
    performance and literacy.                             participant IEAPs, classroom schedules and reports
                                                          and high school transcripts.
5   70 percent of RMSC participants entering the          70 percent of current sophomores and juniors are
    program as high school sophomores or juniors will     being retained in the RMSC project. Documented by
    be retained in UIC’s RMSC program through their       eligibility and enrollment records.
    senior year.
6   At least 90 percent of the RMSC participants who      No participants had attained senior level during this
    have attained a grade level of senior will graduate   reporting period.
    from high school with the assistance of the UIC’s
    RMSC.
7   Establish a summer mathematics/science-oriented       RMSC participants during this reporting period were
    college transition (Bridge) program. As a result, 90 sophomores and juniors. There were no senior
    percent of summer bridge students will complete the participants.
    summer program with 60 percent attaining a grade
    point average of 3.5 or above on a 5.0 scale.
8   100 percent of all RMSC seniors will apply for        RMSC participants during this reporting period were
    admission to a postsecondary educational              sophomores and juniors. No participants had attained
    institution.                                          senior level during this reporting period.
9   70 percent of RMSC graduates who enter                Not available for this reporting period.
    postsecondary educational institutions will graduate
    in at least five years or be making progress toward a
    degree.

        1
          UIC did not submit a written performance agreement for UBMS that showed it received approval to
        revise the scope of the project as outlined in its grant proposal. Because we did not have evidence that UIC
        received approval to revise the scope of its UBMS project, we audited to the objectives outlined in the grant
        proposal (See Appendix A).
                                                                                                    ATTACHMENT 


   ' .' .


                                                   UN I VERSITY OF I LLINOIS
                                                          AT CH I CAGO


            Off"" of II\., O>anceltor (MC 11l'2)
            2833 UniV<:T"$ily Holt
            601 Soulh Morgan 51"""
            Chi<:ago, lIlinoi. 60607·7128

                                                                August 23, 2004



                 Mr. Ricbard J. Dowd
                 Regionallnspeclor General for Audit
                 U.S. Department of Education
                 Office of Inspector General
                 I I I Nortb Canal Street, Suite 940
                 Cbicago, Illinois 60606-7204

                  Re: Control Number ED-OIGfA05-EOO I8

                  Dear Mr, Dowd:

                    I am in receipt of the Draft Audit Report for the University of Illinois at Chicago's
                 (UIC) Upward Bound Math and Science (UBMS) project and am providing the following
                 responses to tbe findings in accordance with tbe instructions listed under "Administrative
                 Matters" in the Draft Audit Report.

                     The University appreciates tbe opportunity to respond to the Draft Audit results. We
                  have provided additional infonnation and documentation about: ( I) achievement of the
                  project's objectives as reported to the U.S. Department of Education (Department); (2)
                  services provided to eligible students; (3) accounting properly for the use of UBMS
                  program funds; and (4) claiming only expenses that were allowable and adequately
                  supported for the 2001-2002 grant year.


                                                              Sincerely,


                                                              >:;u;,,0~
                                                              Sylvia Manning
                                                              Chancellor



                  attachments


                                                                     UIC
                                                    Phone (312) 4] 3-3350 ' Fax (3 ]2)4 13-3393


'- --------------------------------------------------T
            '   ..


                UNIVERSITY OF ILLINOIS AT CHI CAGO RESPONSE TO THE DRAIT AUDIT
                   REPORTOFTKE UPWARD BOUND MATH AND SCIENCE PROJECT



           OIG
           Finding No. 1 VI C Misreprestntw UBMS's Projtc:t Acto mpllshmeou to the
                           ~p . nmeot


           "UIC submitted incorrect data via its perfonnance repon. stating al1 of its measurab le objectives
           were complete. However, or lhe 9 objectives in the grant proposal, 4 (objectives 1, 2,3, and 4)
           did not have documentation that validated the objective was achieved as stated in UIC's annual
           perfonnance report. The remaining 5 objectives were not measurable."

           OIG
           Objective #1
           "In its grant propoul, UlC stated that it would enroll 60 eligible participants. Sixty-seven
           percent would qualify as both low-income individuals and first-generation college students, and
           33 pen:ent would be either low-income individuals or first-generation college students. U1C
           later received oral approval from the Department to serve only 40 students.
           participants qualified as both low-inoome individuals and first-generation eollege students, 41
           percent (16) qualified as either low-income individuals or first-generation college st udents, and 8
           percent (3) did not qualify as low-income individuals or first-generation eollege students."

           "We reviewed all 39 UBMS participants' files and determined that only 23 percent (9) of the
           participants qualified as both low-income individuals and first-generat ion oollege students, 67
           percent (26) quali fied as either low-income individuals or first-generation oollege students, and
           10 percent (4) did not qualify as a low-income individ uals or first-generation college student and
           should not have been enrolled as participants."

           UIC's Response

           Of the 40 participant files thai were provided for OIG's review, 20 participants were low-income
           and first generation (SO%); 4 were low-income only (I O"~) and 13 were first generation oollege
           students. Only three students were nei ther low- ineome nor first-generation eollege students.
           While our enrollment did not contain the exact percentages outlined in the grant proposal (670/.
           both low-income and first-generation college students and 33% either low income or first
           generation college students), 37 or 92.50/. of the participants were eligible for the program based
           on one or more of the criteria noted above. Appendix A oontains the names and eligibility status
           of all 37 eligible participants enrolled in the 200 1-2002-grant year. We have also provided the
           documentation we used to establish the participants' eligibility (e.g., Parent Income
           Applieations). We acknow ledge that titree participants were ineligible based on eligibility
           eriteria.




Final Audit Report                                         18                                        ED-OIG/A05E0018
           .... '
           UIC UBMS Response




           OIG
           Objective #2
           "In its grant proposal, UIC stated that 100 percent of the newly admilled participants would have
           thei r needs assessed usi ng an Individual Educational Action Plan (lEAP) within 30 days
           following their acceptance into the UBMS program. According to the performance repon. an
           lEAP was developed. for all participants. The performance report did not address whether the
           lEAPs were developed within 30 days following the student's acceptance into the program, and
           UIC's student fOSter did not contain data concerning lEAPs. As a !W;ult, we could not detennine
           how utC reached the conclusion stated in its performance report."

           Ule's Respon se

           All 3 1 newly admitted participants ( 100%) had their lEAPs developed. The statement in the
           performance report was accurate. We reached the conclusion. stated in the performance report,
           that an lEAP was developed. for all students by reviewing all 31 newly admi tted participants'
           files. All 31 participants had an lEAP in thei r files, as noted in the next OIG finding.

           OIG
           Objective #2 (continued)
           "Our review ofall39 participants' files disclosed that. of the 31 students who entered the UBMS
           program during the 2000-2001 award year, only 18 (58 percent) had their lEAPs developed
           within 30 days follOwing their acceptance into the UBMS program. The remai ning 13 (42
           percent) had their lEAPs completed 93 days following their acceptance into the program."

           VIC's Res ponu

           Of the 31 newly admitted students, 13 were admined on March 15,2002 and 18 students were
           admitted on May 22, 2002 (see Appendix A). All 3 1 students were assessed and an lEAP was
           developed on June 16,2002. Wh ile our proposal (p.57) states that "within 30 days after students
           are accepted inlO the program, they are assessed," pages 80 and 81 of our proposal provide the
           timeline for doing this. Recognizing that UBMS SClVes many students who live outside the ci ty
           and the state, logistics for assessment must be carefully planned and within the purview and
           security of UBMS ptrSOJUlel, the Departmenl approved our proposal's limeline so that
           assessment could be conducted when the students arrived on UIC's campus. As is stated in our
           proposal, the major focus of our program is the intensive summer component and is the time
           when we develop lEAPs for placement of students in summer classes (pagts 57, 80 and 81 •
           Appendll B). The timeline (pp.80-81) we provided in the proposal indicates that our assessment
           takes place in June.

           We agr« that the 13 lEAPs were not developed within 30 days of date of acceptance into the
           program; however, the 31 participants were assessed within 30 days of entry into the summer
           program, as specified in the ti meline we provided in our proposal.




Final Audit Report                                        19                                       ED-OIG/A05E0018
           UIC UB MS Responsoe
           .., d



           OIG
           Objective #3
           "According to the grant proposal, UIC would maintain documentation to support that 80 percent
           of all UBMS participants would maintain at least a C+ (35 on a 5.0 grading scale) grade point
           average (GPA) on a yearly basis through high school graduation. According to the perfonnance
           report narrative, at least 80 percent of the UBMS participants maintained a 3.5 GPA during the
           reporting period."

           "According to UIC, only 8 participants had enough GPA data to make the detennination of
           whether they maintained at least a C+ GPA on a yearly basis. The studenl roster provided to us
           by UlC showed that, of the 8 participants who were in the program for at least a year, only 3 (38
           percent) maintained at least a C+ GPA on a year ly basis. Our Iile review veri fied that only 38
           pCll:ent (3 of 8) ofthc students who had data availab le maintained a C+ GPA"

           Vl C's Rts ponst

           For the 2001-2002 grant period, 8 participants had been enrolled in the program for one year;
           therefore only 8 participants had a yearly GPA calculated for the reporting period. All the data
           to make the determination of GPAs were contained in the files of those 8 participants. We
           acknowledge that 80-; ' of the participants did not maintain a 3.5 GPA.
           AppeDdiJ: C shows the GPAs of the 8 participants as well as the Demographic Profile of grades
           from Seclion II of the annual perfonnance report. The grades in Section II reflect the actual
           grades orlhe participants.

           We recognize that the narrat ive (Section III of tho Perfonnance Report) and tho demographic
           inronnation thai included the GPA's (Section II of the Perfonnance Report) were inconsistent
           due to carelessness, and we have taken steps 10 assure that reporting errors such as these do not
           recur. We have assigned a compliance staff person who will review and monitor all program
           data, files, and programmatic activities. The staff person will also review all supporting
           documentation prior to submission of the Perfonnance Report. In addition, the University wi ll
           arrange to have selected programs periodically audited by an independent auditor to assure that
           the programs are not only meeting the needs of the students they serve, but are adhering to all
           rules and regulations and guidelines governing the program.

           OIG
           Objective 4
           " In its grant proposal, UIC stated that it would evaluate its VBMS participants' academic
           perfonnanccs as indicated by a pre-to-post test gain. Upon completion of the six-week summer
           program, 75 percent of the participants were to show a 40 percent gai n. By June of the
           subsequent year, 75 pell:ent of the participants were to show a 20 pell:enl gain on the math and
           science SUbsel of the California Achievemenl Tesl. VIC did nOI address the academic
           perfonnances associated with the objective in ils pcrfonnance report and did not relain
           documenlation 10 support the completion of this objective. We reviewed all 39 panicipants' files
           and found that none of the participants had their academic performance evaluated while
           participat ing in the program. Fifteen percent (6 of 39) of the participants did not have pretest
           scores, and 0 percent (none) had post-test scores in their files."

           VIC'. Res ponu


                                                                                                               T




Final Audit Report                                        20                                      ED-OIG/A05E0018
           UIC UBMS Response
           Page 4




           We acknow ledge that UBMS did not have pre- to post· test gain scores on the California
           Achievement Test (CAT) sub-tests. We have taken steps to assure that we assess the progress of
           our students through the use of the C AT. The compliance staff will review all programmatic
           activities to assure that they follow the dictates of our proposal and will review all s upponing
           docwnentation for completeness and aocuracy. In addition, the university will arrange to have
           selected programs periodically audited by an independent auditor to assure that the programs arc
           not onl y meeting the needs of the students they serve, but arc adhering to the proposal, an rules,
           regulations and guidelines governing the program.

           We disagree that "none of the panicipants had their academie performance evaluated while
           panicipating in the program." We conducted an intensive s ummer program with a broad
           curriculum taught by qualified instructors. All s tudents were evaluated by the instructors of the
           courses on a regular basis and received grade rcpons at the end of the count. That grade repon
           was contained in each of the panicipants ' fil es reviewed by the 010. Appe ndb: D provides the
           home school grades (baseline grades) in the math and science courses and the UBMS program
           grades (post grades) for the same subjects. A calculation of average home school grade and
           average program grade in math and science shows the gains made by program panicipants.

           OIG
           Program No t Operated as Intended
           "VIC misrepresented the achievements of its UBMS program because it did not operate the
           program as wrillen in its gnmt proposal. Instead, VIC only operated the swnmer component of
           the program. II did nOI serve its UBMS panicipants durin g the academ ic year as it originally
           proposed."

           "Because V IC misrepresented the results of its UBMS program, the Department did not have the
           information it needed to make future funding decisions. UlC was awarded $274, 493 in UBMS
           funds [or the 2001.2002-grant year. Had the Dcpanment known thaI VIC could be hindering the
           success of its panicipant's pre-collcge performance and ul timatcly, their higher education
           pursuits. it might not have continued funding UlC's UBMS program."

           OIG
           Recommend ations

           "We recommend thaI the CFO, in conjunction wi th the Assistant Secretary, OPE,
           1.1 Require UIC to ret urn to the Depanment $274, 493 in UBMS funds it received for the period
               August 31, 2001, through August 31, 2002; and

           1.2 Take appropriatc action pursuant to 34 C. F.R.I; 74.62 to protect future VBMS grant funds."

           UIC ' 5 Response

           VIC did not misrepresent the achievements orits UBMS program.
           •      Achievement of Obje<:tive # 1: We were gnmted penni55ion from the Depanment to
                  reduce the number of panicipants served from 60 to 40 and reported in our performance
                  repon that we identified and sele<:ted 39 students during the reponing period. We
                  e)(cluded the participant who did not participate in the summer program. We also




Final Audit Report                                         21                                       ED-OIG/A05E0018
           ..""
           UIC UBMS Response




                  reponed in the Performance Repon that three students were neither low-income nor first­
                  generation college students.
           •      We documented eligibility in our Performance Report. While our eligible participant
                  population did not meet the 213, 113 distribution, all 37 of them met one o r both criteria
                  and their eligibility stat us was reported in our performance report, Se<:tion II.
           •      Achievement of Objective #2: We completed all students' lEAPs within the time!'nune
                  outlined in the proposaltimeline.
           •      Achievement of Objective #3: Our files verified which of our students maintained the
                  required grade point averages, an ambitious goal which we acknowledge was not met. In
                  one section of the Performance Report we reported this accurately (Section II); in another
                  section, we did not. We acknow ledge this as an inconsistency, inaccuracy, and as
                  carelessness; however, with increased focus in the summer, our participants did show
                  gains in program grades over their home school grades in math and science. The suecess
                  of the students was enhanced.
           •      Achievement of Objective 4: UIC operated the summer component of the UBMS
                  program and provided the academie and cultural experiences stated in the proposal:
                  college visitation, rec;reational and cultural activities, and a simulated college-going
                  experienee in addition to a rigorous academic curriculum (p. 70). Additionally, we
                  showed significant gains in students' program grades
           •      Although we did not have pre- to post-test gain scores on the CAT, the UBMS project
                  compared home school grades with program grades, a more meaningful comparison. We
                  also followed the proposal's dictate that a criterion re ferenced test be used, realizing that
                  what students know and are able to do may be better detennined by the criteria they set
                  forth and the assessments their individual teachers perform regularly. Criterion
                  referenced testing waS done in each of the summer classes and is a part of how grades are
                  determined (see Appendix D).
           •      We served students during the academic year with activities stated in our proposal such
                  as: informi ng students about expectations; maintaining contact through newsletters,
                  telephone calls; and notification (by cmail) of special events (p. 7 1 of the proposal). We
                  are providing examples of some of the correspondences and newsletters we sent to
                  prognun participants as we ll as some of the correspondences we received from the
                  participants (Appendix E).

           We provided services to a group of students who needed academic assistance. We provided a
           rigorous summer curriculum, college visitation, cultural and other enrichment activities and
           helped participants simulate a college experience by spending six-weeks in the residence halls of
           UIC. Our UBMS program did not hindcr th e success of any of our part icipams; in fact, because
           of their improved acadcmic performance as presented in Appendix D, we enhanced the
           prospects of partici pants' pre-college performance and ultimately, their hi gher ed ucational
           pursuits.

           Therefore, we disagree with the recommendation to return to the Department the full amount of
           thc funds re<:eived for the oper1ltion of the UBMS program. We have operated a program that
           has served 37 eligible students. We have provided strong academic instructors and mentors, we
           have visited colleges to heighten the expectations of o ur participaotl and we have completed
           activities as outlined in the proposal and have abided by the ti meline we proposed for the
           conduct o rthose activi ties.




Final Audit Report                                         22                                         ED-OIG/A05E0018
           VIC U8MS Response
           Pog< ,




           The ~ut$t for the return of the total grant amount appears not to take into considen.tion the
           documented services we have provided, the students we have served, the intent of the proposal
           and the accomplishments we have achieved for the students we served. Again, we disagree with
           the finding 10 return the total amount of the grant funds awarded that supported the services we
           provided.

           We have initiated additional steps to enhance further the operalion of the program and the
           report ing of results and have put in place the actions described above. Namely: Compliance staff
           person will review all programmatic activities to assure that they follow the dictates of OUT
           proposal and will review all supporting documentation and reports for completeness and
           accuracy. In addition, the university will arrange to have selected programs periodically audited
           by an independent auditor to assure that the programs are not only meeting the needs of the
           students they serve, but are adhering to all rules, regulations and guidelines governing the
           program.



           OIG
           Finding No. 2    UlC Sen 'cd Ineligible Plrticipl nts I nd Its Surnm er Corn ponent Did Not
                            Provide All Requ ired Services

           " Fi ve of the 39 UBMS participants did not meet all of the ~uirements to be eonsidered eligible
           to panicipale in the UBMS program. Four participants were not potential first- generation
           college students or low-income individuals, and one panieipant's file did oot have
           documentation of a demonstrated need for academic support."

           "In addition, UIC's UBMS 2002 summer core curriculum did nol inc lude a foreign language
           class. Pursuant 10 34 C.F.R. 64S. 11 (I), all UB projects that have received funds for at least two
           years shall include as part of its core curriculum, instruction in mathemat ics through pre­
           calculus, laboratory science. foreign language, composition, and literature."

           "By enrolling ineligible students and not providing students the foreign language component in
           the UBMS program, UIC could prevent eligible students from receiving the services needed to
           succeed in pre-college perfonnance and ultimate ly, their higher education pursuits may be
           hindered,"




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          Ule UBMS RC$pOI1!ie
          Page 7



          OIG
          Recommendations

          "We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require UIC 1(1

          2. 1   Retum535,19110theDepartmenl;and

          2.2    Include a foreign language class in its s ummer core curriculum."


          VlCs Response

          Appendix A, with the accompanyi ng documentat ion, shows th e eligibili ty status of each of the
          students served by the UBMS program. Only three students were neither low-income nor first­
          generation college students. The fourth participant was both low-income and first generation.
          While his test scores were very good, the student attended an inncr-city high school and in pan,
          because of the UBMS program, the student was able to maintain good grades in college
          preparatory courses al his home school. Moreover, he was accepted inlo Michigan State
          University. The services he received from the UBMS program will enable him to succeed in thai
          academically rigorous environment.

          We acknowledge that we did not offer a foreign language component during the summer of the
          program year that is the subject of this audit. We, instead, offered a computer language course,
          where students learned the basics of writing computer programs and algorithms, a necessary skill
          for st udents to succeed in higher educational pursuits and the world of work. However, in the
          future, our summer curric ulum will offer trlIditional foreign language courses to each of the
          program participants.

          We disagree with the recommendation to return $35, 191 to the Department. As iodicated in
          OIG Flodlng No. S, only three students were neilher low-income nor first-generation college
          students; therefore, we agree to refund to the Department 52 1,I IS (S274,493 divided by 39 and
          multiplied by 3, as per O IG footnote).


          Qlli
          Finding No.3 UIC Did Not Appropriately Account ror Graot Funds

          "UIC did not completely and accurately account for its UBMS funds by award year. U IC's
          UBMS accounting records did not identify th e budget period from which funds were expended,
          and UBMS slaff did not pcrfonn regular reconciliations 1(1 ensure that cxpendi tures were tied to
          speci fic awards. UIC's Universily Financial and Administrative Systems (UFAS) tracked all
          awards on a cumulative basis (for the entire life of the grant). UFAS does not segregate
          expenses by individual award years."




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          UIC UBMS Response
          Page 8




          " By nOI accounting for funds by award year, UIC may request and use federal funds in excess of
          its award for any given year. Our review disclosed th at UIC might have used $22, 987 in 200 1-
          2002 grant year funds to pay for 2000-2001 expenses. Therefore, subseq uent award yell11 mighl
          not have enough fund ing 10 provide adequate (as defined in the grant application) services to
          participants. In addilion, utC loses its abi lity to accurately forecast ilS needs for subsequent
          budget periods."

          OIG
          Rec:o mme nd. tio n

          "We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require VIC to

          3.1 Ensure its accounting system tracks grant funds by award year or develop and implement
          policies and procedures to perform regular reconciliations, tying expenditures to specific award
          years."

          UIC R es ponse
          We acknowledge that the University's Financial and Administrati ve Systems (UF AS) was not set
          up to track awards by si ngle grant years. However. the universi ty has instituted a new financial
          and admini strative system, BANNER, which will allow us to enter new codes for each year of
          the life of the grant and will allow us to segregate expenses by individual award years.
          Additionally, the Office of the Vice Chancellor for Student Affairs (OVCSA) has d inx:led all
          programs to maintain a separate shadow accounting system by budget line item and issue a bi·
          monthly accounting repon to the OVCSA. The manual repons will be compared and reconciled
          within the BANNER system. Because we will enter a new code for each award year, we will be
          ab le to scgregate accounts by individual award years and will maintain our internal accounts by
          budget item. We will also be better able to forecast future programmatic needs.

          OIG
           Findin g No. 4 VIC Co uld Not S uppo rt All Us E lpenditurts

          "UIC could not provide documentation sufficient 10 suppon

           •   S43,419 of salary expenses. We selected all expenses for the 3 months with the highest
               salary expenses re<:orded for th e 2001·2002-grant year. The salary expenses for these 3
               months totaled $56, \ 46 of the total 2001-2002 grant year personnel ex penses of$ 138, 668.
               Our review disclosed Ihat salaried employees did not always sign a ner·the-fact cenifications
               to verify work was perfonned on the VBMS project. Also, limeshects for wage employees
               were not always provided by VIC.




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          UIC UBMS Response
          Pa~9




          •     $15,002 in non-personnel expenses. We reviewed ajudgmental sample o f non-personnel
                expense categories. We selected 18 UBMS expense categories (45 actual expenses) totaling
                $97,4 15 that were large or appeared unusual in relat ion to similar expenses for other months
                from the total non-personnel expenses of $128,665 recorded during the period August 31,
                2001, through August 3 1, 2002. We reviewed supporting documentation such as purdwe
                orden, invoices. and canceled checks. UIC ptBOnnel did not always approve vouchers, and
                the vouchers did not have all supporting receipls attached. In addition, purchase orders did
                not always correspond with accounting records, and the purchase orders did not have.l1
                supporting invoices attached."

          "By not retaini ng adequate documentat ion, UIC cannot prove that it used 558,412 ($15,002 plus
          $43,419) on allowable expenses."

          OIG
          Recommend a tion

          "We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require UlC to

          4.1      Provide documentation adequate to s upport $58,421 or return the funds to the
                   Departmcnt ..

          VIC's Res po nse

          We are providing documentation in Appendix F for the time and efTort spent on behal f o f thc
          UBMS program. Whi le it is the policy of the university to require that academic professional
          stafT comp lete faculty activity analyses and that hourly workers or civil service employees
          complete time sheets showing their d istribution of work on behalf of the program, we did not
          always require the staff to complete Time and Effort certification. Since most of the staffreferred
          to in the OIG Finding continues to work for the UBMS program, we are submitting their faculty
          activity reports and time sheets from which the Time and Effort Documentation was derived.
          Staff completed the Time and Effon fonns, and they and their supetVison have signed indicating
          the time spent, by each staff member, on the UBMS program. We have also instituted a
          requirement that all staff, including academic professionals, who work on behalf of the UBMS
          program, complete a Time and Effort fonn for each pay period and sign an aftcr-the-fact
          certification of time spent.

          We are providing documentation, in Appe ndix G, for the S15, 002 in a llowable expenses. The
          documentation contains receipts, signed vouchers, and purchase orders that have been reconciled
          with supporting invoices.

          OIG
           Finding No. S VIC C ba rged Una llowa ble Costs 10 th e Gra nt

          "Ul C charged unal10wable costs 10 the UBMS program totaling S4,102. UlC charged the
          following to the UBMS program:




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          OIC OBMS Response
          Page ]0



                •   $4,111 in telecom expenses. UIC charged telecom costs as a direct cost 10 the UBMS
                    grant, failing to treat the expenses consistently throughout the University.
                    For other programs and departments wi thin VIC, te lecom expenses are included in the
                    indirect cost pool. Per OMS Circular A-21, Allachment, (0)(1), costs incurred for the
                    same purpose in like circumstances must be treated consistently as either direct or
                    facilities and adm inistrative costs.

                •   $180 in stipends. Three students did not qualify as first-generation college students or
                    low-income individuals. Pursuant to 34 C.F.R. 645.42(a), an Upward BolUld project may
                    provide stipends only to those participants who participate on a full-time basis. An
                    individual is eligible to participate in a Regu lar, Veterans, or Math and Science Upward
                    BOlUld project if th e individ ual is a potenti al first-generation college student or low­
                    income individual (34 C.F.R. 645.3)."

          "In addition, UIC incorrectly computed and charged indirect costs to the UBMS program. Based
          on our calculations for the 2001-2002-grant year, UJC undercharged indirect costs to the UBMS
          program by $189. OMS Ci rcular A-2 1, Attachment, (G)(2) states, in part, that the insti tution
          may apply the indi rect cost rate to the modified total direct costs for individual agreements to
          detennine the amount orindirect costs."

          OIG
          Reco mm end at io n

          "We recommend that the CFO, in conjunction with the Assistant Secretary, OPE, require VIC to

          5.1       Return $4,102 to the Department."

          UlC's Res ponse

          Since the telecom expenses were a line item in the Department approved budget and we were
          able to isolate the direct charges to the UBMS budget, we believed that we were withi n the
          guidelines of the proposal and the budget line items. However, we are working with the
          University Accounting Office to treat the UBMS telecom charges consistent with other acCOlUlts
          throughout the University. We will work with the Department to change the line item in the
          budget for ruture UBMS funding so that the telecom charges are assigned to budget line items
          that provide additional services.

          We disagree with the finding to return S 3922 to the Department (telecom charges less the
          undercharged S189) since we acted in good raith based on our understanding orthe line item in
          the Department approved budget, and we were also able 10 isolate the telecom expenses made
          solely on behalr orUBMS. Also we are di ligently working with the University accounting office
          to make th e changes ronsistent with the OMB Circular A-2 1 and will rontact the Department so
          we can also make the changes in the proposal budget item.

          We agree to return $180 in stipends thaI were received by the three students who were neither
          low-inrome nor first-generation college students.

          August 20, 2004




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