oversight

The U.S. Department of Education's Monitoring of Adherence to Matching Requirements.

Published by the Department of Education, Office of Inspector General on 2006-03-22.

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

                          UNITED STATES DEPARTMENT OF EDUCATION 

                               OFFICE OF INSPECTOR GENERAL 


                                            400 MARYLAND AVENUE, S.W.
                                             WASHINGTON, DC 20202-1500




                                                        March 22, 2006

                                                                                                  Control Number
                                                                                                  ED-OIG/A05F0015
William McCabe
Acting Chief Financial Officer
U.S. Department of Education
Office of the Chief Financial Officer
400 Maryland Avenue, SW
Washington, DC 20202

Dear Mr. McCabe:

This Final Audit Report, entitled The U.S. Department of Education’s Monitoring of Adherence
to Matching Requirements, presents the results of our audit. The purpose of the audit was to
determine if the U.S. Department of Education (ED) had adequate procedures in place for
monitoring grantees’ adherence to matching fund requirements of applicable ED programs. Our
audit covered the period October 1, 2003, through September 30, 2004 (FY 2004).




                                                   BACKGROUND 



The Office of the Chief Financial Officer (OCFO) has the primary responsibility for serving as
the principal advisor to the U.S. Department of Education on all matters related to discretionary
grant-making, cooperative agreements, and procurement, as well as financial management,
financial control, and accounting. The OCFO's mission is to provide accurate, timely, and useful
grant, contract and financial management information and services to all of ED’s stakeholders.
The OCFO supervises the Grants Policy and Oversight Staff (GPOS), which is divided into two
components, the Grants Policy and Analysis Team and the Grants Management Improvement
Team.

Match, which is also referred to as cost-share, is defined as the portion of program costs
contributed by a grant applicant. It is either a statutorily specified percentage of program costs
that must be contributed by a grant applicant in order to be eligible or where the applicant
voluntarily shares in the costs of the program. Matching contributions must

       • 	 be comprised of cash or in-kind contributions
       • 	 be fully documented and accounted for in the grantee’s expenditure records and
           reports, and
          Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Final Report
ED-OIG/A05F0015                                                                                      Page 2 of 22

        •    meet the same standards for allowable costs as the federal share.

Matching contributions are a significant factor in the overall success of achieving program goals
and objectives. In FY 2004, ED had at least 41 programs in 6 Principal Offices with matching
requirements. ED awarded over $5.4 billion to grantees during FY 2004 for these 41 programs.
Using FY 2004 appropriations and the minimum percentage of match required for each of the 41
programs, we concluded that these programs required at least $1.5 billion1 in matching
contributions. (See Attachment 1.)




                                            AUDIT RESULTS 



ED administers at least 41 discretionary and formula grants, in 6 Principal Offices, with specific
requirements for matching contributions. Based on a survey of monitoring plans and further
review at a number of program offices, we found that ED did not have adequate procedures in
place for monitoring grantees’ adherence to matching requirements for the majority of these
programs. The program offices did not consistently monitor match in part because GPOS did not
provide adequate guidance, training, and oversight of procedures and practices to monitor cost-
sharing/match. The inadequate coverage of match represented a significant weakness in ED’s
internal controls over the grant monitoring process.

We received your response dated March 2, 2006, which provided corrective action for each of
our recommendations in our draft report dated January 17, 2006. The response is summarized
following the finding and recommendations and is included in its entirety as Attachment 3.

FINDING – GPOS Did Not Assure That Program Offices Adequately Monitored
          The Estimated $1.5 Billion In Grant Resources Provided By Matching
          Contributions

We determined that the guidance and training GPOS provided was not adequate in assisting
Principal Offices to monitor grantees’ compliance with matching requirements, which is a goal
included in GPOS’ responsibilities. In addition, the monitoring plans Principal Offices
submitted to GPOS were not specifically reviewed for measures to monitor compliance with
matching requirements, and only 6 of the 41 programs had program-specific monitoring plans
that included specific measures to monitor match. Therefore, we could not rely on the
monitoring plans to document the procedures in place to monitor match.

The absence of specific measures to monitor match in the monitoring plans was consistent with
the observed procedures in place at the program office level. Our review of 13 judgmentally
selected programs, summarized in Attachment 2, revealed that the programs were not monitoring
match adequately. We determined that only three programs: Even Start – State Educational
Agencies, Adult Education - State Grant Program, and Vocational Education – Basic Grants to

1
 The stated amount is a conservative estimate using the smallest required match for all programs. Principal Office
officials have stated that for a number of programs, the actual match required is much larger.
Final Report
ED-OIG/A05F0015                                                                                  Page 3 of 22

States, were able to document a thorough understanding of the match provisions in the following
areas: Monitoring Plans, Monitoring Instruments, and Site Visit Reports. In these areas, the
other 10 programs addressed their matching requirements either minimally or not at all. Our
review also revealed that none of the programs adequately documented an in-depth monitoring
of their matching requirements in the Program Grant Files. Without adequate monitoring of
matching requirements, ED cannot ensure that program recipients are receiving full benefits and
services.

According to its mission statement and the Handbook for the Discretionary Grant Process2
(Handbook), GPOS is responsible for providing ED-wide oversight to ensure that policies
relative to the grant award and administration process are effectively communicated to Principal
Offices and to assist them in their efforts to adhere to the approved policies. GPOS’ oversight
includes several interrelated responsibilities and functions carried out in partnership with ED’s
Principal Offices’ officials and their staff. These responsibilities include, but are not limited to,
the following:
    • 	 Establishing clear policies that are based on statutes, regulations, and other requirements
        that enable consistent policy interpretation and implementation on grant administration
        issues.
    • 	 Providing training and technical assistance to Principal Offices. Principal Offices must
        have a working knowledge of grant policy and how it applies to different situations for
        effective grant administration.
    • 	 Collaborating with program officials responsible for grant programs to achieve effective
        monitoring of grant programs and to ensure that monitoring activities and processes are
        conducted consistently and comply with ED regulations and policies.
    • 	 Collaborating with program officials to conduct periodic reviews and evaluate the 

        internal policies and procedures of ED’s overall discretionary grant process. 

    • 	 Maintaining and updating the Handbook.

The Principal Offices did not adequately monitor match requirements because GPOS did not (1)
consider the requirements to be significant, (2) provide sufficient guidance on the requirements,
(3) provide sufficient training on the requirement, or (4) require monitoring plans to include
specific measures to monitor the requirements.

Significance
In response to an interim exception report, the Director of GPOS stated that matching
requirements are not a significant concern or risk because it only affects 20 percent of all
programs. In addition, there has been no indication from grantee audits or other sources that
improper or insufficient match contributions have been a significant problem. For those reasons,
GPOS (1) rejected the notion that match is an inherent “risk” area; and (2) did not think it was
necessary to single out match through its issuances or presentations. Further, GPOS believed
that increasing the awareness of match would result in implying that there is a problem with

2
  Handbook OCFO-04, dated 3/31/2003. (GPOS published a revised version of the Handbook on February 24,
2006. In reviewing the revised Handbook, we did not note any significant changes from the previous version
relating to monitoring matching contributions.)
Final Report
ED-OIG/A05F0015                                                                         Page 4 of 22

match when none exists. Lastly, GPOS believed that any risk associated with match falls within
the responsibility of the grantee, not with the actual match cost category. Therefore, the
associated risk would involve the grantee’s own funds and not federal funds.

Given that matching requirements are contained in 20 percent of ED programs (at least 41
individual programs in 6 Principal Offices with an estimated $1.5 billion in matching
contributions), we believe matching requirements are significant enough to merit specific
monitoring efforts. Matching contributions symbolize services and benefits program recipients
receive. Matching contributions are not just entity funds; they are a major part of the entire
program. Without matching contributions, programs jeopardize successful accomplishment of
their goals and objectives. Improper and insufficient match has been identified as an issue, as
noted in OIG Audit Reports (e.g., A05-D0017 issued January 14, 2004, and A07-B0011 issued
May 8, 2003). These two reports recommended a recovery amount of over $2.8 million, due to
the matching contributions not meeting federal requirements. We agree that match does not need
to be singled out for separate training; however, because of the dollars and benefits at risk, in
addition to match being a specific requirement of the programs’ statutes enacted by Congress,
GPOS should ensure that match is adequately covered in existing training and guidance.

Guidance
GPOS provided limited information on match in its published guidance and individual program
offices were on their own to determine how to monitor grantees’ compliance with matching
requirements. Our discussions with program staff revealed that some within the Principal
Offices did not use or did not know that GPOS was available as an active resource for match-
related issues because GPOS provided only limited guidance. Therefore, these program staff
generally sought guidance from the Office of General Counsel.

The Handbook includes limited guidance on match.

    • 	 Section 5.7 Other Project Costs: Section 5.7.1-Grantee Cost Sharing or Matching (Non-
        Federal Share), defines the meaning of cost-sharing or matching. It covers basic
        information that a grantee’s application must include on match. The second section,
        5.7.2-Calculating Cost Share Amounts, presents examples on calculating the applicants’
        matching contributions. Although the Handbook references Education Department
        General Administrative Regulations (EDGAR) and states that the non-federal share of
        the project must be allowable, it does not provide information to program staff on
        valuing contributions, types of allowable contributions, or what constitutes adequate
        documentation to support a grantee’s match.

    • 	 Section 6.4 Monitoring: The monitoring guidance in Section 6.4.3-Purposes, lists nine
        purposes that must be addressed in its monitoring procedures including Fiscal
        Accountability, which is defined as “Verifying that federal funds are being managed
        according to federal cash management requirements and expended for authorized
        purposes.” Section 6.4.5-Monitoring Procedures and Requirements, outlines special
        requirements for fiscal monitoring. It states that program staff is required to pay
        particular attention to grantees’ fiscal activities as part of the monitoring process, using
        GAPS as the primary tool for fiscal oversight. Although GAPS can capture grantees’
        proposed match contribution, it cannot capture grantees’ actual matching contributions.
        The Handbook also makes no reference to fiscal responsibility other than drawdowns of
Final Report
ED-OIG/A05F0015                                                                     Page 5 of 22

        federal funds. Further, nowhere in the Handbook is monitoring a program’s matching
        requirement clearly and specifically addressed.

    • 	 Section 6.4 Monitoring: The section also addresses the required monitoring plans and
        states that each Principal Office must design its monitoring procedures to address
        compliance and fiscal accountability. It further states that the monitoring plans must
        address several considerations, including Grantee or Program Risk Factors, and that the
        Director of GPOS shall review the plans and work with Principal Office staff to
        incorporate suggestions for improvement to the plan or resolve issues of concern.

The Handbook should be the primary resource for program staff and serve as the foundation for
all grant-related activities. By compiling, highlighting, and summarizing information on match-
related topics, such as valuing contributions, types of allowable contribution, and adequate
documentation to support match contributions, program staff will have effective and efficient
access to information to answer any match-related questions they have. In addition, the
Handbook should direct program staff to resources that can provide clear and detailed answers to
program or grantee-specific questions.

Training
The training GPOS provided was consistent with its guidance. We reviewed GPOS training and
found the only training related to match covered the ED 524B form (an annual reporting form
GPOS created for grantees to report fiscal and performance data simultaneously). In this
training, match was only briefly addressed and attendance was not mandatory. GPOS did not
provide any in-depth training on how to monitor matching requirements. The training that was
offered did not provide coverage or examples on evaluating the value of match contributions,
allowable in-kind contributions, or adequate documentation to support in-kind contributions.
The ED 524B training slide for ED staff on Budget Expenditures relating to match consisted of
one line, “Breakdown expenditures between Federal and Non-Federal funds,” in the entire
presentation. In addition, the ED 524B form does not include sufficient detail on match
contribution sources.

Monitoring Plans
ED issued memoranda requiring some Principal Offices to submit a FY 2003 and FY 2004
program-specific monitoring plan for every formula and discretionary grant program. In FY
2004, Principal Offices were also required to submit office-wide monitoring coordination plans.
As stated in the memoranda, the purpose of the monitoring plans was to emphasize the need for
monitoring to focus on performance and results, compliance with the law, and protection against
fraud, waste, and abuse. The monitoring plans were also to provide GPOS with an overview of
the actual monitoring practices within ED. When creating the monitoring plans, program offices
were to describe their respective monitoring activities, while addressing all considerations
identified in the memoranda and related guidance, including “Grantee or Program Risk Factors.”
The plans were to also benefit the Principal Offices by articulating, in writing, the monitoring
procedures each office follows. However, the instructions for developing program-specific
monitoring plans did not sufficiently emphasize the importance of including high-risk areas, such
as non-federal match, in the plans.

GPOS officials informed us that the Grants Management Improvement Team was delegated the
responsibility of collecting, reviewing, analyzing, and reporting on the program-specific
Final Report
ED-OIG/A05F0015                                                                      Page 6 of 22

monitoring plans and office-wide monitoring coordination plans. The Team reviewed the
monitoring plans to determine if Principal Offices complied with the memoranda and the policy
in the Handbook for (1) procedures to identify risky programs and monitor the different levels of
performance; and (2) best practices applied strategically for frequency of monitoring, monitoring
techniques, and training for staff. Specific measures to monitor match were included in the
monitoring plans for only 6 of the 41 programs. None of the office-wide plans contained such
measures. Nevertheless, the Team did not consider the plans to be incomplete.

Matching contributions represent a significant portion of the funding for each program. Without
adequate monitoring of match, ED does not know if grantees are providing their required match
contribution, which is essential to achieving program goals and objectives. In addition, non-
compliance with match requirements results in program recipients not receiving the full benefits
of a program’s services. Furthermore, if grantees are non-compliant with match and then draw
down federal funds, those funds may be classified as unallowable (see 34 C.F.R. §§ 80.43 and
80.44 and Title 20 U.S.C. Chapter 31, Subchapter IV §§ 1234-1234i).

Finally, GPOS’ inattention to match requirements within ED resulted in the lack of procedures to
monitor match at the program level as identified in the extended review of the 13 programs
reported above and in Attachment 2. Discussions with program staff for the 13 programs also
revealed that many do not review grantees’ Single Audit reports as part of their monitoring
process. In addition, program staff told us that many of the programs do not place match as a
high priority when monitoring grantees. This represents a significant weakness in ED’s internal
controls over the grant monitoring process. By not providing adequate oversight to Principal
Offices, GPOS missed an opportunity to compile and publish best practices from program offices
that understood and monitored match well. In Attachment 2, we have documented the better
practices observed at the 13 program offices we reviewed.

Recommendations:
We recommend that the Office of the Chief Financial Officer require the Grants Policy and
Oversight Staff to

1.1 	 Revise the Handbook to include specifics on monitoring match, such as how to value a
      matching contribution, examples of allowable in-kind contributions, and acceptable
      documentation to support matches involving cash and/or in-kind contributions. Also,
      ensure that the Handbook incorporates descriptions of various matching requirements.
      This information could be included in the Monitoring Plan section of the Handbook.

1.2 	 Ensure that staff with oversight responsibilities for grant programs with a matching
      component receive training on monitoring match. Ensure that the training includes any
      noted best practices and issues identified in audits and/or program reviews.

1.3 	 Require Principal Offices to update their monitoring plans to include specific measures for
      monitoring grantees’ adherence to program matching requirements.

1.4 	 Review all monitoring plans to ensure that specific measures for monitoring match are
      included.
Final Report
ED-OIG/A05F0015                                                                      Page 7 of 22

1.5 	 Conduct program reviews to ensure program staff are monitoring match as prescribed in
      their respective monitoring plans.

1.6 	 Advise program staff to review grantees’ Single Audit reports for applicable findings as
      part of the match monitoring process.

1.7 	 Establish a mechanism for publishing best practices regarding monitoring match for
      Principal Offices to reference. The best practices may include examples of monitoring
      tools and forms.

Auditee Comments

The OCFO stated that it recognized that policy and training related to monitoring grantees’
matching requirements could be strengthened and improved.

The OCFO also commented on the audit sample. It stated that a majority of the programs and
dollars examined were formula programs, and that a larger sample of discretionary grant
programs would have given the OCFO a better understanding of any deficiencies related to
monitoring matching requirements. The OCFO also stated that the “OCFO only has oversight
responsibility regarding discretionary grantmaking.”

OIG Response

The majority of the programs and dollars examined in the audit sample were discretionary
programs. Of the 13 programs sampled, only 3 (23%) were formula programs representing only
$277 million (37%) of the $744 million minimum match for the 13 programs. Thus, the results
of our review should provide GPOS with a better understanding of the deficiencies related to
monitoring matching requirements. We acknowledge that for the 41 ED grants with a matching
requirement, the total minimum match for the 6 formula grants exceeded the dollar amount for
discretionary grants.

We also note that the OCFO’s oversight is not limited to discretionary programs as evidenced by
the ED memoranda requiring both discretionary and formula grant programs to submit their
monitoring plans for OCFO’s review and analysis.




                  OBJECTIVE, SCOPE, AND METHODOLOGY 



The objective of our audit was to determine if ED has adequate procedures in place for
monitoring grantees’ adherence to matching fund requirements of applicable ED programs. The
audit covered the period October 1, 2003, through September 30, 2004 (FY 2004).

To achieve the audit objective, we
   • 	 Conducted interviews with ED officials and program staff of selected programs from the
       Office of Postsecondary Education (OPE), Office of Elementary and Secondary
Final Report
ED-OIG/A05F0015                                                                                    Page 8 of 22

         Education (OESE), Office of Vocational and Adult Education (OVAE), Office of Special
         Education and Rehabilitative Services (OSERS), Office of English Language Acquisition
         (OELA), and Office of Innovation and Improvement (OII).
    •	   Conducted interviews with the Director of GPOS, along with staff from the Grants Policy
         and Analysis Team and the Grants Management Improvement Team.
    •	   Identified 41 discretionary/formula grant programs within 6 Principal Offices that have
         specific requirements for matching contributions.
    •	   Reviewed legislation and regulations governing each of the 41 programs.
    •	   Reviewed policies and procedures GPOS developed for monitoring ED programs.
    •	   Reviewed policies and procedures from each Principal Office and all 41 program offices
         related to monitoring grantees’ adherence to matching requirements.
    •	   Obtained and reviewed all program-specific and office-wide monitoring plans submitted
         to GPOS for FY 2003 and FY 2004. We reviewed a total of 77 (403 FY 2003 plans and
         374 FY 2004 plans)5 program-specific monitoring plans and 5 office-wide monitoring
         plans.
    •	   Performed a risk assessment to determine which of the 41 programs had adequate
         procedures in place to monitor their grantees' adherence to matching fund requirements of
         applicable programs.
    •	   Classified 13 of the 41 programs as high-risk.

For our review of 12 of the 13 programs identified as high-risk, we judgmentally selected from
available program grant files and site-visit reports that covered FY 2003 and FY 2004. For one
program, grant files were not made available during our site visit. We reviewed between 16 and
5 program grant files for each program. The file review was conducted only for the purpose of
confirming reported controls and procedures over the process for monitoring match
requirements. We are not projecting the results of our file review to each program’s universe of
grantees. For site-visit reports, program staff informed us which grantees received site-visits,
and we judgmentally selected reports for review.

To achieve our audit objective, we relied, in part, on data from the General Services
Administration’s Catalog of Federal Domestic Assistance to determine the number of grant
programs with matching requirements. We verified the accuracy of the list of programs with
officials from each Principal Office. We also obtained FY 2004 appropriations from each
Principal Office’s homepage as shown on ED’s website (www.ed.gov) and obtained FY 2004
funding from the U.S. Department of Education’s Grant Award Database.

Fieldwork was performed at OPE, OESE, OVAE, OSERS, OELA, OII, and GPOS offices in
Washington, D.C. during the periods of April 18-22, May 16-20, and July 25-29, 2005. We
conducted an exit conference with GPOS on October 27, 2005. Our audit was conducted in
accordance with generally accepted government auditing standards appropriate to the scope of
the review described above.

3
  The State Charter School Facilities Incentives Grant Program, CFDA 84.282D, first received funding in FY 2004, 

so an FY 2003 program-specific monitoring plan was not required.

4
  OSERS did not submit four program-specific FY 2004 monitoring plans. 

5
  In FY 2004, Principal Offices were required to only submit updates to the FY 2003 program-specific monitoring

plans. Therefore, we reviewed both the FY 2003 and FY 2004 plans to achieve our audit objective. 

6
   We reviewed fewer than three files only when there were no other files available to review.

Final Report
ED-OIG/A05F0015                                                                       Page 9 of 22




                            ADMINISTRATIVE MATTERS



Statements that managerial practices need improvements, as well as other conclusions and
recommendations in this report, represent the opinions of the Office of Inspector General.
Determinations of corrective action to be taken will be made by the appropriate Department of
Education officials. An electronic copy has been provided to your Audit Liaison Officer.

Corrective actions proposed (resolution phase) and implemented (closure phase) by your office
will be monitored and tracked through the Department’s Audit Accountability and Resolution
Tracking System (AARTS). ED policy requires that you develop a final corrective action plan
(CAP) for our review in the automated system within 30 days of the issuance of this report. The
CAP should set forth the specific action items, and targeted completion dates, necessary to
implement final corrective actions on the finding and recommendations contained in this final
audit report.

In accordance with the Inspector General Act of 1978, as amended, the Office of Inspector
General is required to report to Congress twice a year on the audits that remain unresolved after
six months from the date of issuance.

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

We appreciate the cooperation given us during this review. If you have any questions, please
call Richard J. Dowd, Regional Inspector General for Audit, at (312) 886-6503.


                                             Sincerely, 




                                             Helen Lew /s/ 

                                             Assistant Inspector General for Audit Services 





Attachments
Final Report
ED-OIG/A05F0015                                                                                      Page 10 of 22


                                                  Attachment 1
                    U.S. Department of Education Programs With Matching Requirements
                                                                                                      Estimated
                                                               Minimum                                Minimum
                                                              Percentage7          Total               Match
                                                                Match          Appropriations        Contribution
Program Office        Program/Grant              CFDA#        Required 8         for FY 04            Required
Office of        Rehabilitation Services-
Special          Vocational Rehabilitation
Education and    Grants to States                  84.126      21.30% of PC       $2,553,362,000        $691,062,396
Rehabilitative   Rehabilitation Services-
Services         Service Projects: Migrant
(OSERS)          and Seasonal Farm Workers        84.128G         10% of PC           $2,321,223            $257,914
                 Rehabilitation Services-
                 Service Projects: Special
                 Recreation Programs for
                 Individuals with Disabilities    84.128J         25% of PC           $2,563,784            $854,595
                 Rehabilitation Long-Term
                 Training                          84.129       10% of TPC           $18,882,472          $2,098,052
                 Independent Living-State
                 Grants                            84.169         10% of PC          $22,020,309          $2,446,701
                 Rehabilitation Services-
                 Independent Living Services
                 for Older Individuals Who
                 are Blind                         84.177         10% of PC          $31,811,200          $3,534,578
                 Assistive Technology:
                 Alternative Financing
                 Program*                         84.224C         50% of PC                   $0                  $0
                 Projects With Industry            84.234         20% of PC          $21,798,625          $5,449,656
                 Rehabilitation Short-Term
                 Training                          84.246         10% of PC             $449,992             $49,999
                 Rehabilitation Services-
                 American Indians with
                 Disabilities                      84.250       10% of TPC           $30,800,000          $3,422,222
                 Rehabilitation Training-
                 Experimental and
                 Innovative Training               84.263         10% of PC             $297,710             $33,079
                 Rehabilitation Training-
                 Continuing Education              84.264         10% of PC          $10,388,010          $1,154,223
                 Rehabilitation Training-
                 State Vocational
                 Rehabilitation Unit In-
                 Service Training                  84.265         10% of PC           $5,873,934            $652,659
                 Special Education Research
                 and Innovation to Improve
                 Services and Results for
                 Children with
                 Disabilities/Model
                 Demonstration Projects for
                 Children with Disabilities *    84.324M          10% of PC                   $0                  $0




7
  For those programs that have a progressive match requirement during the grant cycle, we used the minimum

percentage of match required during the entire grant cycle to provide a conservative estimate of the total funds 

required from matching contributions in FY 2004.

8
  For those programs that have a match requirement as a percentage of federal funds, we used the acronym “FF.” 

For those programs that have a match requirement as a percentage of total project costs or project costs, we used the 

acronym “TPC” or “PC,” respectively. 

Final Report
ED-OIG/A05F0015                                                                              Page 11 of 22


                                                                                              Estimated
                                                           Minimum                            Minimum
                                                           Percentage         Total            Match
  Program                                                    Match        Appropriations     Contribution
   Office             Program/Grant             CFDA #      Required        for FY 04         Required
OSERS             Special Education Research
                  and Innovation to Improve
                  Services and Results for
                  Children with
                  Disabilities/Outreach
                  Projects*                      84.324R      10% of PC                $0                $0
Office of         Star Schools                    84.203      25% of PC       $20,362,150        $6,787,383
Innovation and    State Charter School
Improvement       Facilities Incentives Grant
(OII)             Programs                       84.282D      10% of PC       $18,700,000        $2,077,778
                  Ready To Teach **              84.286B     100% of FF        $2,091,228        $2,091,228
                  Parent Information and
                  Resource Center ***             84.310    No minimum        $41,974,878
Office of
English
Language
Acquisition       Foreign Language
(OELA)            Assistance                      84.293     100% of FF       $16,545,800       $16,545,800
Office of         Adult Education - State
Vocational and    Grant Program*******            84.002    25% of TPC       $564,220,084      $188,073,361
Adult Education   Vocational Education -
(OVAE)            Basic Grants to States****      84.048       5% of PC     $1,195,007,610      $62,895,137
                  Community Technology
                  Centers                         84.341    50% of TPC         $9,941,000        $9,941,000
Office of         Even Start - State
Elementary and    Educational
Secondary         Agencies********                84.213    10% of TPC       $246,909,587       $25,788,335
Education         Even Start - Migrant
(OESE)            Education                       84.214    10% of TPC         $4,600,000          $511,111
                  Even Start - Indian Tribes
                  and Tribal Organizations        84.258    10% of TPC         $4,938,192          $548,688
                  Eisenhower Regional
                  Mathematics and Science
                  Education Consortia             84.319      20% of PC       $14,814,078        $3,703,520
                  Comprehensive School
                  Reform-Quality Initiatives
                  Technology Assistance          84.332B      10% of FF        $5,670,000          $567,000
                  Early Childhood Educator
                  Professional Development       84.349A    50% of TPC        $14,814,000       $14,814,000
Office of
Postsecondary
Education         Undergraduate International
(OPE)             Studies and Foreign
                  Language Program                84.016    50% of TPC         $4,490,000        $4,490,000
  Final Report
  ED-OIG/A05F0015                                                                                             Page 12 of 22


                                                                                                              Estimated
                                                                    Minimum                                   Minimum
                                                                    Percentage            Total                Match
     Program                                                          Match           Appropriations         Contribution
      Office         Program/Grant                   CFDA #          Required           for FY 04             Required
  OPE                Higher Education -
                     Institutional Aid-
                     Historically Black Graduate
                     Institutions*****                 84.031B         100% of FF           $53,100,000           $35,100,000
                     Higher Education -
                     Institutional Aid-
                     Historically Black Colleges
                     and Universities******            84.031B         100% of FF           $82,941,697           $82,941,697
                     Business and International
                     Education Projects                  84.153         50% of PC            $4,490,000            $4,490,000
                     Graduate Assistance in
                     Areas of National Need              84.200        25% of TPC           $30,616,000           $10,205,333
                     Centers for International
                     Business Education                  84.220         10% of PC           $10,700,000            $1,188,889
                     Institute for International
                     Public Policy                       84.269         50% of PC            $1,639,330            $1,639,330
                     Gaining Early Awareness
                     and Readiness for
                     Undergraduate Programs              84.334        100% of FF          $298,230,000          $298,230,000
                     Teacher Quality
                     Enhancement Grants                  84.336         25% of FF           $88,887,451           $22,221,863
                     International Education -
                     Technological Innovation
                     and Cooperation for Foreign
                     Information Access                  84.337     33.33% of TPC            $1,700,000              $849,873
                     Preparing Tomorrow's
                     Teachers to Use
                     Technology*                         84.342        50% of TPC                     $0                    $0
                     Underground Railroad
                     Educational and Cultural
                     Program                             84.345         80% of FF            $2,222,000            $1,777,600
                                                                                      $5,440,174,344        $1,508,495,001

Notes:
* Program has active non-competing continuation grants, but no new appropriations in FY 2004. 

** The match requirement was only for a subprogram: 84.286B. Because the appropriation was for the total program, we used the 

award funding for the subprogram instead of total appropriations. 

*** This program has no minimum match requirement. Therefore, we assumed zero funds at risk from match. 

**** This program has a match only for administrative costs. Because administrative costs cannot exceed 5%, we calculated the 

match as 5% of the appropriations.

***** The match requirement is for funds above $1,000,000 per grantee. Because there are 18 grantees, we subtracted $18,000,000 

from the total appropriations to get the amount of funds grantees must match.

****** The match requirement is only for grantees that participate in the endowment challenge. Therefore, we used the FY 2004 

funding for those grantees participating in the endowment challenge. 

******* The stated match requirement is the requirement for the States. Outlying areas such as Guam and American Samoa are 

required to provide a match of 12%. 

******** Because grantees are allowed to reserve up to 6% of its allocation for State-level activities for which no match is 

required, we reduced the appropriations 6% before calculating the minimum match contribution required. 


The rows highlighted in yellow represent the 13 programs we selected for review. (See Attachment 2.)
 Final Report
 ED-OIG/A05F0015                                                                                                 Page 13 of 22

                                                        Attachment 2
                                       OVERALL RANKING OF 13 PROGRAMS
                                        Overall Under-
                                                            Monitoring       Monitoring Program Grant
        Program               CFDA       standing of                                                                Site Visits
                                                              Plans          Instruments     Files
                                        Match/Grantees
Star Schools                  84.203       Sufficient           Red¢             Yellow              Red¢              Red¢
State Charter School
Facilities Incentives Grant 84.282D        Sufficient          Red **            Yellow              N/A**             N/A**
Program
Ready To Teach                84.286       Sufficient           Red¢             Yellow              Red¢              Red¢
Adult Education - State
                              84.002       Sufficient           Green             Green             Yellow             Green
Grant Program
Vocational Education -
                              84.048       Sufficient           Green             Green             Yellow             Green
Basic Grants to States
Even Start – State
Educational Agencies
                              84.213       Sufficient           Green             Green              Red¢              Green

Early Childhood Educator
Professional Development
                         84.349A           Sufficient           Red¢             Yellow             Yellow             Red¢

Higher Education -
Institutional Aid -
Historically Black
                          84.031B           Limited             Red¢              Red¢               Red¢              Red¢
Colleges and Universities
Higher Education -
Institutional Aid -
Historically Black
                          84.031B          Sufficient           Red¢              Red¢              Yellow             Red¢
Graduate Institutions
International Institute for
Public Policy
                              84.269       Sufficient           Red¢             Yellow             Yellow             Yellow

Gaining Early Awareness
and Readiness for       84.334             Sufficient           Green            Yellow               Red              Green
Undergraduate Programs
Teacher Quality
Enhancement Grants
                              84.336       Sufficient           Green            Yellow              Red¢              Yellow

Underground Railroad
Educational and Cultural      84.345        Limited             Red¢              Red¢               Red¢              Red¢
Program

 Overall Understanding of Match/Grantees: Whether the program staff clearly understood the match requirements and which 

 grantees had match requirements.

 Monitoring Plans: Whether the program-specific plans from FY 2003 and FY 2004 contain specific language regarding 

 monitoring match.

 Monitoring Instruments: Whether the instruments program staff use to monitor grantees include specific language regarding

 monitoring match.

 Program Grant Files: Whether the program grant files we reviewed contained documentation of match reviewed.

 Site Visits: Whether the FY 2003 and FY 2004 site visit reports we reviewed covered match.


 Red: Contains no indicators/language and/or documentation specifically related to match.

 Yellow: Contains minimal/vague language and/or documentation specifically related to match.

 Green: Contains specific indicators/language and/or documentation specifically related to match.


 ** This grant first received funding in FY 2004, and, for that reason, a FY 2003 program-specific monitoring plan was not 

 required. Because the grant did not exist in FY 2003, and first received funding in FY 2004, no site visits were conducted in

 either fiscal year.

Final Report
ED-OIG/A05F0015                                                                             Page 14 of 22

Based on our review, we have noted below the better practices observed at the 13 program offices.

Monitoring Plans:
We reviewed the program-specific monitoring plans for specific language indicating that monitoring for
match is incorporated as a step in the monitoring process for the programs. We found 5 of the 13
programs have program-specific monitoring plans that contain such language: Even Start – State
Educational Agencies, Adult Education – State Grant Program, Vocational Education – Basic Grants to
States, Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), and Teacher
Quality Enhancement Grants (TQE).

The Even Start monitoring plan defined monitoring and had an appendix that included monitoring
indicators. The indicators required the monitoring team to determine if the State Educational Agency
ensured that sub-grantees comply with statutory and regulatory requirements on use of funds and
matching. It provided the applicable regulations, acceptable supporting documentation, and information
to obtain during interviews with grantee staff.

The Adult Education monitoring plan included a technical review instrument that required program staff
to determine if the grantee met the match requirement. In addition, the instrument also stated what
evidence the program staff should review to determine compliance.

The Vocational Education monitoring plan stated that program officers are to use the ledgers of federal
and non-federal expenditures for State Administration for the monitored year and the year previous to the
monitored year to determine whether the grantee was in compliance with the matching requirement. The
program officers then write yes or no on the checklist. This checklist required program officers to
determine whether the grantee was in compliance with the match and also provided guidance as to the
supporting documentation the program officer should use to make such a determination.

The GEAR UP monitoring plan stated that matching requirements is an area where many grantees have
trouble. To resolve this high-risk performance area, the plan stated that the program office would provide
technical assistance on match to grantees. The program office would also work with a national
association to assist grantees in attracting new partners and matching contributions. Also, the program
would reduce awards for grantees that did not meet matching requirements.

The TQE plan stated that the program office flagged grantees that it noted were having trouble meeting
the match requirement. The program office flagged the grantees for monitoring to aid them in becoming
compliant with the fiscal issues. Monitoring would consist of phone contact on a scheduled basis and site
visits.

Monitoring Instruments:
Monitoring instruments consist of specific tools program staff use to monitor grantees on an ongoing
basis. These tools should include specific steps the staff must perform to indicate that match is reviewed.
We found 3 of the 13 programs have monitoring instruments that require program staff to review match:
Even Start – State Educational Agencies, Adult Education – State Grant Program, and Vocational
Education – Basic Grants to States.

For Even Start, the program staff was required to determine if the State Educational Agency ensured that
sub-grantees comply with statutory and regulatory requirements on uses of funds and matching. It
provided the applicable regulations, acceptable supporting documentation, and information to obtain
during interviews with grantee staff.

For Adult Education, program staff created spreadsheets that indicate the total amount of federal funds
allocated and the total amount of non-federal funds expended per state per federal fiscal year. This
Final Report
ED-OIG/A05F0015                                                                             Page 15 of 22

allowed staff to monitor whether the state met its matching requirements and to determine trends in non-
compliance with the matching requirement. Adult Education staff also used the State Program and
Technical Assistance Review Instrument to guide them in conducting site visits and as a tool for
monitoring program performance. Module 7 of the Review Instrument focused on the review of financial
considerations. It called for program staff to determine whether the state met the matching provisions for
the previous year. Program staff should also determine compliance to matching requirements in
preparation for site visits. The Review Instrument indicated that the program officers should use the prior
year’s fiscal report to determine whether the grantee met the matching requirements.

For Vocational Education, program staff used a Pre-Monitoring Checksheet for fiscal review. One
section required a review of the matching requirement to State Administration expenses (the program’s
matching requirement only applies to State Administration expenses). The Checksheet required program
staff to use ledgers of federal and non-federal expenditures for State Administration for the monitored
year and the year previous to the monitored year for secondary and postsecondary institutions as evidence
to determine whether the grantee complied with matching requirements. The final Financial Status
Report also has a checklist, which required program staff to review State administration expenditures.

Program Grant Files:
Program grant files include all grant-related information for individual grantees. The program grant files
should include evidence of in-depth monitoring of grantees’ match requirements, including, but not
limited to: grant award notifications with the correct match requirement, correspondence between
grantees and program officers, partial or complete source documentation of the match contributions,
calculations on the values of match contributions, and/or comments about the allowability and
reasonableness of the match contributions. We found that none of the 13 programs had program grant
files with evidence of in-depth monitoring of match.

Site Visit Reports:
Site visit reports summarize the results of program staff visits to grantees. These reports should include
evidence that match was reviewed to determine compliance with the requirements. In addition, the site
visit reports may include information related to grantees’ specific match questions. We found 4 of the 13
programs have site visit reports containing evidence of match reviewed: Even Start – State Educational
Agencies, Adult Education – State Grant Program, Vocational Education – Basic Grants to States, and
GEAR UP.

The site visit reports we reviewed for Even Start showed that the monitoring teams reviewed match and
discovered related findings. These findings included unallowable expenditures, such as indirect costs, as
part of the budget for the matching requirement for the program. Another finding indicated one grantee’s
grant application included budget forms allowing the use of funds for capital outlay for buildings, land,
and improvements, which also are not allowable under the Even Start program. The grantee was
informed that it must ensure that project staff do not charge indirect costs to the Even Start program and
should remove reference in the budget forms to the use of funds for capital outlay for sites, building, or
site improvements.

While there were no findings from Adult Education site visits, we did note that program staff did discuss
specific match-related questions with grantees. For example, the appendix of one site visit report listed
the grantee’s specific questions and the corresponding answers. One question was regarding a waiver of
the first $200,000 of non-federal share of outlays and how that would impact the reporting of non-federal
share of outlays on its Financial Status Report. The second question was regarding allowable matching
funds.

Our review of Vocational Education site visit reports revealed one finding related to match. The finding
stated that the grantee had not documented its non-federal administration match to ensure that it met the
Final Report
ED-OIG/A05F0015                                                                             Page 16 of 22

requirements of the program’s legislation. The monitoring team recommended that the grantee develop
policies and procedures to clearly delineate the various line-item expenditures that were merged together
to form the basis for the non-federal administrative match and explain how the expenditures were
calculated. Also, the grantee needed to report the amount of non-federal expenditures for administration
for previous fiscal years.

Our review of GEAR UP site visit reports indicated staff reviewed match and had related findings. One
grantee provided an itemized list of matching contributions to cover the five-year performance period.
However, during the site review, the grantee was unable to supply any documentation of the matching
contributions provided by the project. As corrective action, the monitoring team indicated that the project
staff needed to submit documentation of matching contributions for the 2001 budget period and develop
procedures to ensure that future matching contributions were documented adequately. Another site visit
report we reviewed noted a finding related to large adjustments in the annual performance report for the
match contributions during the first grant year. The monitoring team noted that the match reported in the
first year annual performance report was $12,158.65. However, in the second grant year’s annual
performance report, the match for the first grant year was adjusted to $203,940.95. This was a significant
change in the match reported. Because of the significant change in match reported for the first grant year,
the monitoring team requested the grantee to breakdown the match to: the specific GEAR UP activity and
date associated with the cost; who provided the in-kind match; and which line item is associated with the
in-kind match (salary, travel, etc.). The monitoring team also emphasized the importance of the match
component of the grant and the need for clear, complete, and concise records to document the match. The
monitoring team also stated that in the event of an audit, undocumented match would not be considered in
meeting the match commitment.
Final Report
ED-OIG/A05F0015                                                                      Page 17 of 22

                                                                                     Attachment 3
Auditee Response

                                          March 2, 2006

Memorandum

To:            Helen Lew
               Assistant Inspector General for Audit Services

From:          Danny A. Harris, PhD /s/
               Deputy Chief Financial Officer

Subject: 	     Draft Audit Report “The US Department of Education’s Monitoring of
               Adherence to Matching Requirements” ED-OIG/A05F0015

Thank you for the opportunity to comment on the Draft Audit Report, entitled The U.S.
Department of Education’s Monitoring of Adherence to Matching Requirements (Control
Number ED-OIG/A05F0015).

We share OIG’s concern that program offices monitor their grants properly, not only for cost-
sharing/matching requirements, but for grantees’ conformity to all other legal and administrative
requirements as well. Since the decentralization of the discretionary grantmaking functions to
the program offices in 1996, the Grants Policy and Oversight Staff (GPOS) within the Office of
the Chief Financial Officer (OCFO) has continually worked to ensure that better policy,
guidance, and training are made available to program offices on a wide array of grants
administration issues. The current Handbook for the Discretionary Grant Process (Handbook),
the product of a collaborative effort between OCFO and the cross-Department Grants Policy
Advisory Team, is the most comprehensive grants policy document on discretionary
grantmaking ever available to Department grant staff to support their work.

OCFO recognizes that policy and training related to monitoring of grantees’ adherence to
matching requirements can be strengthened and improved. However, while we understand your
reasoning leading to your finding that “GPOS did not assure that Program Offices adequately
monitored the estimated $1.3 billion in grant resources provided by matching contributions,” we
need to clarify the functional responsibilities of GPOS in the development of the Department’s
grants policy and training.

Discretionary Grants Policy Development

As noted above, the Handbook was a result of a joint effort between OCFO and the Grants
Policy Advisory Team, which was chartered in 2001 to ensure that all Department offices
involved in the discretionary grant process participate in the development of policy to improve
that process. All Department program offices and the Office of the General Counsel, Office of
Inspector General, Budget Service, and the Office of Planning, Evaluation and Policy
Development have team representatives.
During monthly team meetings, these offices bring the full Department perspective to the
discretionary grant process and highlight issues or concerns related to this process based on their
Final Report
ED-OIG/A05F0015                                                                     Page 18 of 22

unique roles within the Department. Because program staff were involved in the development of
a fundamental grants monitoring course described in the Training section to follow, we are
assured of the commitment of team members to more rigorous monitoring and improved
performance in all Department programs.

Grants Policy Training

OCFO’s role in providing training in Department grants management also requires clarification.
Since the devolution of discretionary grants management in 1996, training in this field has been
provided not only by GPOS, but also by the Department’s Training and Development Center, the
program offices themselves, and even other parts of OCFO on matters such as indirect cost. For
example, as we just mentioned, a Department-wide team recently worked with a contractor to
develop a fundamental monitoring course for discretionary and formula program staff.
Development of the course was a 2004 Discretionary Grant Improvement Team initiative, and
OCFO staff and senior program managers contributed significantly to the course’s content and
organization.

OCFO will continue to collaborate with all offices involved with discretionary grant training to
ensure that cross-cutting issues such as cost-sharing/matching are addressed where appropriate
and that any policy changes or clarifications are included in those training sessions. OCFO will
play a leading role in the development and/or enhancement of supplemental courses that cover
specific aspects of grant monitoring, as well as providing instruction on coursework covering
adherence to existing policies and regulations.

Further, OCFO will recommend to senior Department officials that they require attendance by
program staff at all grants training provided by the Department. Mandatory training will ensure
that staff are kept current on grants management policies, procedures and practices and are
knowledgeable about the landscape of issues related to important topics that cut across the grants
process such as cost-sharing and matching.

Audit Sample

We note that a majority of the programs and dollars examined in the audit are formula programs.
Numerous formula programs have specialized cost-sharing/matching requirements, often ones
indirectly implied through maintenance-of-effort or supplement-not-supplant requirements
contained in legislation. Since OCFO only has oversight responsibility regarding discretionary
grantmaking, our influence to effect changes in formula programs is limited. Except in specific
cases, the policies and procedures in the Handbook are not applicable to these formula programs.
Such programs evolve their own monitoring systems and procedures that meet their specific
requirements, often in conjunction with guidance from their OGC program attorneys.

In order to gain a better understanding of any deficiencies related to monitoring the matching
requirements of discretionary grants that might be occurring across the Department, a larger
sample of discretionary grant programs would have given OCFO a more complete picture of the
scope and nature of the issues and problems and help it better determine both policy and training
needs.
Final Report
ED-OIG/A05F0015                                                                     Page 19 of 22

Responses to Recommendations

OCFO’s responses and corrective actions to the audit’s recommendations and corrective actions
are as follows:

Recommendation 1.1 – Revise the Handbook to include specifics on monitoring match,
such as how to value a matching contribution, examples of allowable in-kind contributions,
and acceptable documentation to support matches involving cash and/or in-kind
contributions. Also, ensure that the Handbook incorporates descriptions of various
matching requirements. This information could be included in the Monitoring Plan section
of the Handbook.

CORRECTIVE ACTION:

OCFO will review the Handbook and identify which applicable sections can be modified to call
program staff’s attention to the issue of cost-sharing/matching, where that is appropriate. An
effective way to focus program staff’s attention to this issue is to “front-load” the process by
providing them more comprehensive information from grantees so as to keep cost-
sharing/matching at a high level of awareness. To accomplish this, OCFO will:

• 	 Develop standard language, based on text in Section 4.3.2.2 of the revised Handbook, which
    OCFO would direct program staff to include in their application packages, so that applicants
    would understand the kinds of information related to cost-sharing/matching that must be
    included when developing application budgets; and

• 	 Working with the Grants Policy Advisory Team, propose amendments to the ED 524B
    performance report 1) to ask whether a grantee has deviated significantly from the originally
    approved cost-sharing/matching portion of the budget—e.g., having made changes that
    would have required prior approval; 2) to require that grantees update the ED 524B soon
    after the previous budget period ends, with their final information on non-Federal
    contributions provided for the period; and 3) to amend the instructions for reporting cost-
    sharing/matching information to remind grantees of the requirements for acceptable
    documentation that they are required to maintain to support the dollar figures reported on the
    form for both Federal and non-Federal items. If changes to the ED 524B are approved by
    OMB, OCFO will recommend to program offices that they modify their program-specific
    reporting forms and instructions to include similar content when these documents next come
    up for OMB review and clearance.

Please note that non-Federal cost-sharing/matching contributions are part of the grantees’ total
project costs and must meet the same tests of allowability as Federal grant funds. Both Federal
and non-Federal funds are therefore treated similarly in terms of reporting and financial
monitoring by the Department. On both the ED 524B and the SF-269 Financial Status Report,
which is used widely across Federal grant-making agencies, both Federal and non-Federal funds
expended for the reported period are reported as a cumulative total only -- neither Federal nor
non-Federal expenditures are broken down by budget cost category. Just as the Department does
not routinely require grantees to provide detailed expenditure reports or documentation to justify
the allowability of Federal expenditures, likewise source documentation and other expenditure
information is not normally required of grantees to justify non-Federal matching contributions.
Final Report
ED-OIG/A05F0015                                                                       Page 20 of 22

Nonetheless, these efforts and accompanying training will ensure that matching requirements are
more carefully scrutinized during monitoring activities.

Recommendation 1.2 -- Ensure that staff with oversight responsibilities for programs with
a matching component receive training on monitoring match. Ensure that the training
includes any noted best practices and issues identified in audits and/or program reviews.

OCFO will update all relevant courses that include the issue of cost-sharing/matching to ensure
that program staff understand their responsibilities regarding monitoring for match.
Specifically, OCFO will ensure that the newly developed Department-wide monitoring training
is modified to include discussion of the aspect of cost-sharing/matching as an item on the list of
topics for monitoring review. The modifications could take into account such aspects as the
EDGAR guidance on valuing contributions and note best practices and issues identified in audits
and /or program reviews. OCFO will also review, and modify as necessary, the content for the
current “Cost Analysis and Budget Review” course to ensure that the issue of reviewing an
applicant’s proposed cost-sharing/matching contributions is adequately addressed. Future
training sessions on the ED 524B, Grant Performance Report, will also stress the importance of
monitoring for adherence to matching requirements when reviewing performance reports prior to
making non-competing continuation awards.

Furthermore, the OCFO all-Department briefing on the revised Handbook conducted on
February 28, 2006, highlighted sections in the Handbook that discuss cost-sharing/matching and
reminded program staff of their responsibility to monitor for match.

OCFO will coordinate with other offices that conduct training on this topic to ensure that their
training content reflects current policy.

As stated earlier, OCFO will strongly encourage senior Department officials to require that
program staff with responsibility for discretionary grants attend all grant training sessions offered
by the Department. OCFO will also recommend that line managers and supervisors use the new
Learning Management System to monitor the course-taking activity of program staff and ensure
that they are attending all grants training opportunities.

Recommendation 1.3 -- Require Principal Offices to update monitoring plans to include
specific measures for monitoring grantees’ adherence to program matching requirements.

CORRECTIVE ACTION:

As you have mentioned in your draft report, OCFO annually collects information on the
discretionary grant monitoring plans of program offices via its Monitoring Information System
database. We will add a question to the current CFDA program monitoring questions in the
database in FY 2006 that requests a measure(s) for monitoring matching requirements.

Recommendation 1.4 -- Review all monitoring plans to ensure specific measures for
monitoring match are included.
Final Report
ED-OIG/A05F0015                                                                       Page 21 of 22

CORRECTIVE ACTION:

OCFO annually collects reports on each program office’s monitoring activity with respect to
discretionary grants, which you also pointed out in the draft report. Based on the review of the
FY 2004-2005 office-wide monitoring reports, which will be completed this spring, we will
advise appropriate principal offices about the inclusion of measures for monitoring the matching
requirement for their specific CFDA programs in FY 2006.

Recommendation 1.5 -- Conduct program reviews to ensure program staff are monitoring
match as prescribed in their respective monitoring plans.

CORRECTIVE ACTION:

OCFO will develop a representative sample of programs with matching requirements in selected
principal offices and review those programs for compliance during FY 2007.

Recommendation 1.6 -- Advise program staff to review grantees’ Single Audit Reports for
applicable findings as part of the match monitoring process.

CURRENT ACTION

Please note that the Handbook (at section 5.4.8) already advises program staff to use applicable
audit history to guide their work and inform their decisions.

As part of the CFDA program profile in the Monitoring Information System (MIS) database,
program offices are required to indicate whether they used Single Audit reports as a monitoring
tool, including the frequency and purpose of use. As part of the FY 2005 review of this
information that will be completed this spring, OCFO requested the completion of this item for
all discretionary grant programs, including those with matching requirements, if this information
was missing in the original program profile.

Recommendation 1.7 -- Establish a mechanism for publishing best practices regarding
monitoring match for Principal Offices to reference. The best practices may include
examples of monitoring tools and forms.

CORRECTIVE ACTION:

As noted in our response to Recommendation 1.3, in FY 2006 Principal Offices will be required
to include measures for monitoring matching requirements in the MIS database. Principal
Offices will be required to report on these measures in the FY 2006 annual office-wide
monitoring reports and will be asked to provide any monitoring tools that they used to monitor
for adherence to matching requirements. OCFO will develop an instrument and canvass
agencies in the grantmaking community to gather additional monitoring best practices. In FY
2007, GPOS will post information on the identified best practices and monitoring tools related to
monitoring match on the GPOS web page on connectED.

Additionally, we have attached technical clarifications for your consideration in the final audit
report.
Final Report
ED-OIG/A05F0015                                                                Page 22 of 22


OCFO appreciates this opportunity to comment on the Draft Audit Report. Please contact
Blanca Rodriguez, GPOS Director, if you have any questions about our comments or the
Corrective Action Plan.

Thank you.

Attachment

cc: 	 Linda Stracke
      Charles Miller
      Gail Cornish
      Dick Dowd