oversight

Southern Illinois University Edwardsville's Compliance with Selected Provisions of the Law and Regulations for the Upward Bound, Upward Bound Math-Science, and Talent Search Programs

Published by the Department of Education, Office of Inspector General on 2009-04-30.

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

Southern Illinois University Edwardsville’s Compliance with 

  Selected Provisions of the Law and Regulations for the 

 Upward Bound, Upward Bound Math-Science, and Talent 

                      Search Programs




                                 FINAL AUDIT REPORT






                                     ED-OIG/A05I0013


                                        April 2009




Our mission is to promote the                            U.S. Department of Education
efficiency, effectiveness, and                           Office of Inspector General
integrity of the Department's
programs and operations.
                         NOTICE

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, including the recovery of funds, will be
made by the appropriate Department of Education officials in
accordance with the General Education Provisions Act.

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.
                              UNITED STATES DEPARTMENT OF EDUCATION
                                                         OFFICE OF INSPECTOR GENERAL

                                                                                                              AUDIT SERVICES
                                                                                          Chicago/Kansas City/Dallas Audit Region

                                                                     April 30, 2009


Vaughn Vandegrift, Ph.D.
Chancellor
Campus Box 1151
Southern Illinois University Edwardsville
Edwardsville, IL 62026

Dear Dr. Vandegrift:

Enclosed is our final audit report, Control Number ED-OIG/A05I0013, entitled Southern Illinois
University Edwardsville’s Compliance with Selected Provisions of the Law and Regulations for the
Upward Bound, Upward Bound Math-Science, and Talent Search Programs. This report incorporates the
comments you provided in response to the draft report. 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 of Education officials, who will consider them before taking final
Departmental action on this audit:

                                           Thomas Skelly
                                           Acting Chief Financial Officer
                                           Office of the Chief Financial Officer
                                           U.S. Department of Education
                                           400 Maryland Avenue, S.W.
                                           Washington, DC 20202

                                           Daniel Madzelan
                                           Acting Assistant Secretary for Postsecondary Education
                                           Office of Postsecondary Education
                                           U.S. Department of Education
                                           1990 K Street, N.W.
                                           Washington, DC 20006

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

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

                                                                 Sincerely,
                                                                 /s/

                                                                 Gary D. Whitman
                                                                 Regional Inspector General
                                                                 for Audit

 The Department of Education's mission is to promote student achievement and preparation for global competitiveness by fostering educational
                                                   excellence and ensuring equal access.
Final Report 

ED-OIG/A05I0013                                                                                                         Page 1 of 40 



                                              TABLE OF CONTENTS



                                                                                                                                   Page

EXECUTIVE SUMMARY ...........................................................................................................3



BACKGROUND ............................................................................................................................5



AUDIT RESULTS .........................................................................................................................6



          FINDING NO. 1 – SIUE Did Not Serve the Required Minimum 

                          Number of TS Participants ..............................................................6



          FINDING NO. 2 – SIUE Failed to Provide Adequate Documentation to 

                          Support the Allowability of TRIO Personnel Costs.......................9



          FINDING NO. 3 – SIUE Used UB, UBMS, and TS Funds for
                          Unallowable and Inadequately Documented Non-
                          personnel Costs................................................................................12



          FINDING NO. 4 – SIUE Failed to Maintain Adequate TS and UB 

                          Participant Records ........................................................................16



OBJECTIVES, SCOPE, AND METHODOLOGY ..................................................................20 


ENCLOSURE 1............................................................................................................................23     


ENCLOSURE 2............................................................................................................................25



ENCLOSURE 3............................................................................................................................26


Final Report
ED-OIG/A05I0013                                               Page 2 of 40


             Acronyms and Abbreviations Used in this Report

APR               Annual Performance Report

CFO               Chief Financial Officer

C.F.R.            Code of Federal Regulations

Department        U.S. Department of Education

ESLC              East St. Louis Center

HEA               Higher Education Act

OCFO              Office of the Chief Financial Officer

OIG               Office of Inspector General

OMB               Office of Management and Budget

OPE               Office of Postsecondary Education

PAG               Post Audit Group

P-card            Procurement Card

PDL               Program Determination Letter

SIUE              Southern Illinois University Edwardsville

TS                Talent Search

UB                Upward Bound

UBMS              Upward Bound Math and Science
Final Report
ED-OIG/A05I0013                                                                    Page 3 of 40



                               EXECUTIVE SUMMARY




The objectives of the audit were to determine whether Southern Illinois University Edwardsville
(SIUE) complied with selected provisions of the Higher Education Act of 1965, as amended
(HEA), and regulations governing (1) the use of TRIO program funds and (2) participant
eligibility. Our audit covered the periods September 1, 2005, through August 31, 2006 (grant
award year 2005- 2006), and September 1, 2006, through August 31, 2007 (grant award year
2006-2007).

During grant award years 2005-2006 and 2006-2007, SIUE did not comply with the law and
regulations governing (1) the use of TRIO program funds and (2) participant eligibility.
Specifically, SIUE (a) did not serve the required minimum number of Talent Search (TS)
participants; (b) failed to provide adequate documentation for TRIO personnel costs; (c) used
Upward Bound (UB), Upward Bound Math and Science (UBMS), and TS funds for unallowable
and inadequately documented non-personnel costs; and (d) failed to maintain adequate TRIO
participant records. As a result, SIUE

      Was not entitled to receive $720,522 in TS funds during grant award years 2005-2006
       and 2006-2007;
    Cannot show how $174,348 in UB and UBMS and $112,838 in TS personnel costs were
       allowable costs;
   		 Did not have $11,993 in UB and UBMS funds available to spend on allowable activities
       and cannot show how $11,189 in UB and UBMS non-personnel costs were allowable
       costs; and
   		 Used an estimated $22,882 in TS and UB funds to serve participants whose eligibility
       had not been determined and documented.

We recommend that the Acting Chief Financial Officer (CFO), in conjunction with the Acting
Assistant Secretary for the Office of Postsecondary Education (OPE), require SIUE to

      Return to the U.S. Department of Education (Department) the $720,522 in TS funds that
       were awarded for grant award years 2005-2006 and 2006-2007;
      Provide adequate documentation to support the costs or return to the Department the
       $287,186 in inadequately documented personnel costs;
      Return to the Department the $17,453 in TRIO funds expended for inadequately
       documented and unallowable costs;
      Provide adequate documentation to support the costs or return to the Department the
       $25,300 in inadequately documented non-personnel costs; and
      Return to the Department the $22,882 in grant funds expended on project participants
       whose eligibility had not been determined and documented.
Final Report
ED-OIG/A05I0013                                                                         Page 4 of 40

In its comments to the draft of this report, SIUE concurred, in part, with Finding Nos. 1
and 3 but did not concur with Finding No. 2. SIUE stated that it did not concur fully with
Finding No. 4. SIUE indicated it would like the opportunity to supplement its response at
a future time and requests that issuance of the final report be delayed until final resolution
of related criminal matters by the U.S. Attorney’s Office for the Southern District of
Illinois. SIUE would like to conduct conversations with former employees concerning
facts, practices, and documentation needed to respond more fully and accurately to the
draft report. SIUE requested that its response to the draft report be viewed as preliminary
in scope. We included the narrative of SIUE’s comments as Enclosure 3. However,
because of the voluminous number of documents contained in the exhibits SIUE included
with its comments, we have not included them in the enclosure. Copies of the exhibits are
available on request.

Based on our analysis of SIUE’s comments and additional documentation SIUE provided
with its comments, we reduced the amount of inadequately documented personnel costs
associated with Finding No. 2 from $334,266 to $287,186. Regarding SIUE’s request to
delay issuance of the final audit report, the Office of Inspector General (OIG) makes
recommendations to promote economy, efficiency, and effectiveness in the administration
of programs and operations administered or financed by the Department. The Office of
the Chief Financial Officer (OCFO), Post Audit Group (PAG), resolves findings in audit
reports by making a management decision as to whether or not to sustain the auditor's
findings. OCFO, PAG, issues a Program Determination Letter (PDL) to a grantee that sets
forth the Department's decision on audit findings, including all necessary actions and
repayment of funds for which the grantee is responsible. SIUE will have the opportunity
to bring any matters of concern to the attention of, and submit additional documentation
to, the OCFO, PAG, before the PDL is issued. Therefore, delaying the issuance of the
final report is not warranted.
Final Report
ED-OIG/A05I0013                                                                                           Page 5 of 40


                                               BACKGROUND




Southern Illinois University is a multicampus university consisting of two institutions: Southern
Illinois University Carbondale and Southern Illinois University Edwardsville. SIUE was
established in 1957 and is located in Edwardsville, Illinois. SIUE was awarded the following
amounts for its UB, UBMS, and TS projects, which are managed by SIUE’s East St. Louis
Center (ESLC).

Table 1
Grant Award Year                       Project                 Grant Award                    Award Amount
                                                                 Number
2005 - 2006                             UB                  P047A030225-05                                $296,652
2005 - 2006 
                           UB                  P047A030483-05 
                             $549,076


2005 - 2006 
                          UBMS

               P047M030192-05 
                             $255,743


2005 - 2006 
                           TS                  P044A030172-05 
                             $250,261


2006 - 2007 
                           UB

                P047A030225-06 
                             $296,652


2006 - 2007 
                           UB                  P047A030483-06 
                             $549,076


2006 - 2007 
                          UBMS

               P047M030192-06 
                             $255,743


2006 - 2007 
                           TS                  P044A030172-06                                $250,261


2006 - 2007 
                           TS 
                P044A060116                                   $220,000


Total                                                                                                   $2,923,464


Authorized by the HEA, UB, UBMS, and TS are three of eight Federal TRIO programs
administered by OPE. The eight are Educational Opportunity Centers, Ronald E. McNair
Postbaccalaureate Achievement, Student Support Services, TS, TRIO Dissemination Partnership
Program, Training Program for Federal TRIO Programs Staff, UB, and UBMS. TRIO programs
are educational opportunity outreach programs designed to motivate and support students from
disadvantaged backgrounds. The goal of UB and TS is to increase the rate at which participants
complete secondary education and enroll in institutions of postsecondary education. The goal of
UBMS is to help students recognize and develop their potential to excel in math and science and
to encourage them to pursue postsecondary degrees in math and science.

Although the ESLC manages SIUE’s UB, UBMS, and TS grants, SIUE’s Office of Research and
Projects is responsible for the administration of grant funds and assists the principal investigator1
in assuring grant funds are expended in accordance with State, Federal, and other regulations.
ESLC’s TRIO employees submit the grants’ Annual Performance Reports (APRs) to the
Department using Blumen, an on-line server-based system. TRIO employees also use Blumen to
record TRIO participant contacts and other information.



1
  According to SIUE’s Post Award Manual, the principal investigator/project director of a grant usually serves as
fiscal officer of the project. The principal investigator/project director must be familiar with institutional procedures
and the granting agency requirements applicable to the specific grant.
Final Report
ED-OIG/A05I0013                                                                                   Page 6 of 40


                                          AUDIT RESULTS




During grant award years 2005-2006 and 2006-2007, SIUE did not comply with the HEA and
regulations governing (1) the use of TRIO program funds and (2) participant eligibility.
Specifically, SIUE did not serve the required minimum number of TS participants; failed to
provide adequate documentation to support the allowability of TRIO personnel costs; used UB,
UBMS, and TS funds for unallowable and inadequately documented non-personnel costs; and
failed to maintain adequate TRIO participant records. As a result, SIUE

       Was not entitled to receive $720,522 in TS funds during grant award years 2005-2006
        and 2006-2007;
     Cannot show how $174,348 in UB and UBMS and $112,838 in TS personnel costs were
        allowable costs;
    		 Did not have $11,9932 in UB and UBMS funds available to spend on allowable activities
        and cannot show how $11,1893 in UB and UBMS non-personnel costs were allowable
        costs; and
    		 Used an estimated $22,882 in TS and UB funds to serve participants whose eligibility
        had not been determined and documented.

FINDING NO. 1 – SIUE Did Not Serve the Required Minimum Number of TS
                Participants

During grant award years 2005-2006 and 2006-2007, SIUE failed to serve the minimum number
of TS participants required by Federal regulations.

1. 	 SIUE reported in its 2005-2006 APR that it served 603 participants. However, the
     participant list provided to us for budget period 2005-2006 included only 386 participants. A
     physical inventory of participant files conducted by the current TS Program Director
     indicated that only 219 participant files existed to support the number reported in the APR
     for the budget period.
2. 	 SIUE reported in its 2006-2007 APR that it served 549 participants, and the participant list
     provided to us for the budget period included 549 participants. However, a physical
     inventory of participant files conducted by the current TS Program Director indicated that
     only 323 participant files existed to support the number reported in the APR for the budget
     period.
3. 	 SIUE reported in its 2006-2007 APR that it served 545 TSCM4 participants, and the
     participant list provided to us for the budget period included 545 participants.




2
  Amount from Enclosure 1, excluding TS and TSCM costs.


3
  Amount from Enclosure 2, excluding TS costs. 

4
  “CM” is a designation SIUE uses to distinguish between its TS grants. TSCM was a new grant in 2006 and serves 

participants from Cahokia and Madison, IL. The TS grant serves participants from East St. Louis, Brooklyn, 

Cahokia, and Venice, IL.


Final Report
ED-OIG/A05I0013                                                                      Page 7 of 40

According to 34 C.F.R. § 643.32(b),5 “A grantee shall serve a minimum of 600 [Talent Search]
participants in each budget period.”

According to the ESLC Executive Director, the former TS Assistant Program Director did not
use Blumen to record participant information and contacts. The ESLC Executive Director did
not know which database the former TS Assistant Program Director used or where the
participant information and additional files were located.

The TS grant is a competitive grant and the Department considers the information that the
institution includes in its grant proposal, such as number of participants who will be served, in
making its decision to award grants. Inaccurate information on grant proposals could result in
the Department denying other institutions funding and awarding grants to institutions that are not
able to meet the objectives stated in their grant proposals. Inaccurate information in APRs also
could result in the Department continuing funding to institutions that are not meeting objectives
as stated in their grant proposals. SIUE was awarded $250,261 each year for its TS projects in
2005-2006 and 2006-2007. SIUE was awarded $220,000 for its TSCM project in 2006-2007.

Recommendation

We recommend that the Acting CFO, in conjunction with the Acting Assistant Secretary for
OPE, require SIUE to

1.1 	      Return to the Department the $500,522 in TS funds that were awarded for grant award
           years 2005-2006 and 2006-2007 and the $220,000 in TSCM funds that were awarded for
           grant award year 2006-2007.

SIUE’s Comments

SIUE concurred, in part, with the finding but stated that the actual number of TS participants was
higher than reflected in the audit. In its response to the draft of this report, SIUE included
printouts from its Blumen system showing 354 TS participants in budget year 2005-2006, 539
TS participants in budget year 2006-2007, and 543 TSCM participants in budget year 2006-
2007. SIUE stated that the documentation from the Blumen system should be deemed sufficient
for purposes of documenting participation pursuant to 34 C.F.R. § 643.32(b). SIUE stated that
Blumen was used to record TS and TSCM participant information included in its response to the
draft report. The Blumen printouts contained participant information for TS grant years 2005-
2006 and 2006-2007 and TSCM grant year 2006-2007.

Regarding recommendation 1.1, SIUE believes that it should be required to return only
$148,950.19, an amount proportional to the difference between the minimum 600 participants
and the participation numbers indicated by the Blumen printouts.6



5
    All C.F.R. references are to the July 1, 2005, edition unless otherwise d.
6
    (600 - 354)/600 X $250,261          =        $102,607.01        TS 2005-2006
    (600 - 539)/600 X $250,261          =         $25,443.18        TS 2006-2007
    (600 - 543)/600 X $220,000          =         $20,900.00        TSCM 2006-2007
                                 Total =         $148.950.19
Final Report
ED-OIG/A05I0013                                                                           Page 8 of 40

OIG Response

SIUE did not provide any additional information in its response to refute the results reported in
the draft report. Physical file inventories that the TS Program Director conducted revealed that
not all names listed on the Blumen printouts or included in the participant count on the APRs
were supported by adequate documentation as required by 34 C.F.R. § 643.32(c). The Blumen
printouts SIUE provided in response to the draft report for the TS and TSCM 2006-2007 projects
were identical to printouts provided during the course of the audit. The Blumen printout
provided for the TS 2005-2006 project was presented in a different format but contained
essentially the same participant names and information as the printout provided during the course
of the audit.

SIUE did not provide documentation to support participant eligibility. As required by
34 C.F.R. § 643.32(c), grantees must have evidence showing (1) the basis for the grantee's
determination that the participant is eligible to participate in the project under section 643.3;
(2) the grantee's needs assessment for the participant; (3) the services that are provided to the
participant; and (4) the specific educational progress made by the participant as a result of the
services. Section 643.3 states, in part, an individual is eligible to participate in the TS project if
the individual is a United States citizen or meets residency requirements and has completed 5
years of elementary education or is at least 11 years old but not more than 27 years old.

The results of the physical file inventories illustrate that files were not maintained in accordance
with ESLC’s own TRIO Programs Records Checklist, which was provided to us on
June 17, 2008, by the ESLC Executive Director. The checklist is dated July 2003, and states, in
part, that each participant file will contain a completed application packet, containing income
documentation, first generation, student and parent signature, school attended, and grade level;
entry sheet; exit report sheets; contact hours; and individualized educational plans.

SIUE contends that it should be required to return only an amount of the TS and TSCM grant
funds that is proportional to the difference between 600 and the participation numbers indicated
by the Blumen printouts. However, SIUE should return all of its TS and TSCM funds awarded
for grant award years 2005-2006 and 2006-2007 because it did not serve the minimum of 600
participants (1) as stated in its grant proposal and (2) as required by Federal regulations
(34 C.F.R. § 643.32(b)). The TS grants are competitive. In its grant proposal, SIUE stated that
“the high number of students eligible for Talent Search services, currently do not receive
adequate comprehensive educational, academic counseling, advisement or postsecondary
program preparation in the target area schools.” Objective 1 of SIUE’s grant proposal was
“specifically designed to identify these students and select from among them, 600 participants to
receive comprehensive services of the Talent Search Program.” SIUE’s grant proposal might
have been selected over other grant proposals because SIUE asserted that it would serve at least
600 participants in each budget period.
Final Report
ED-OIG/A05I0013                                                                                         Page 9 of 40


FINDING NO. 2 – SIUE Failed to Provide Adequate Documentation to Support the
                Allowability of TRIO Personnel Costs

Our review of personnel records from 10 pay periods disclosed that activity reports for 58
employees were signed before the fact in 66 of 100 instances, and, therefore, did not reflect an
after-the-fact reporting of the percentage distribution of employee activity or represent actual
personnel costs.

Table 2
     Grant                    Pay Period            Number of        Number of                      Inadequately
                                                  Activity Reports Activity Reports                 Documented
                                                    Pay Period      Signed Before                  Personnel Cost
                                                      Sample           the Fact                      per Grant
UBEC7                            3/1/06                   16 
            13                              $62,920
UBEC                             7/1/07                   19 
             6                              $11,022
UBMS                             2/1/06                    8
              7                              $14,222
UBMS                             7/1/07                   19 
             5                               $7,659
UBBEV8                          10/1/05                   11 
            11                              $68,566
UBBEV                            8/1/07                    7
              5                               $9,959
TS                              12/1/05                    5
              5                              $37,379
TS                               6/1/07                    7
              6                              $26,802
TSCM                            11/1/06                    3
              3                              $25,710
TSCM                             4/1/07                   5
               5                              $22,947
Totals                                                   100 
            66                             $287,186

According to Office of Management and Budget (OMB) Circular A-21, revised 5/10/04,
Subsections J.10.b., paragraphs (1)(a) and (2)(b) and c.(2)(a-c), the payroll distribution method
an institution uses must recognize the principle of after the fact confirmation or determination so
that costs distributed represent actual costs. The distribution of salaries and wages, whether
treated as direct or facilities and administration costs, will be based on payrolls documented in
accordance with the generally accepted practices of colleges and universities. After-the-fact
activity records will reflect an after-the-fact reporting of the percentage distribution of employee
activity.

           Charges may be made initially on the basis of estimates made before the services
           are performed, provided that such charges are promptly adjusted if significant
           differences are indicated by activity records. Reports will reasonably reflect the
           activities for which employees are compensated by the institution. To confirm
           that the distribution of activity represents a reasonable estimate of the work
           performed by the employee during the period, the reports will be signed by the
           employee, principal investigator, or responsible official(s) using suitable means of
           verification that the work was performed.

7
    EC refers to the target schools the project serves (East St. Louis High and Cahokia High).


8
    BEV refers to the target schools the project serves (Brooklyn High, East St. Louis Charter High, and Venice High).


Final Report
ED-OIG/A05I0013                                                                               Page 10 of 40

According to SIUE, all public universities in Illinois are required to submit specific cost data to
the Illinois Board of Higher Education. The means for collecting salary data at SIUE is the
Faculty, Professional Staff, and Administrator Activity Report. An activity report is generated
for each account from which an individual is paid. The individual reviews it for accuracy,
completes the average hours for the time period, and signs the report. The report is reviewed by
the fiscal officer, who assigns a percentage of effort to each activity. The percentages must total
100. The fiscal officer's signature indicates that the percentages are correct and meet the
required effort for the individual for the account.

To adhere to the State requirement, SIUE prints activity reports before the work has been
completed. According to the Director, Office of Research and Projects, the majority of fiscal
officers sign the activity reports before the work has been completed. Although SIUE has
written policies for the completion of activity reports, the policies do not state specifically that
the activity reports should be signed only after the work has been completed.

As a result of SIUE not providing adequate documentation for TRIO personnel activities, the
Department has no assurances that $287,186 was used on allowable TRIO costs. Without
adequate documentation, SIUE cannot show that it used funds to carry out the grant
objectives stated in the grant proposals. Sixty-six percent of activity reports tested were signed
before the fact. Because of the high error rate in our sample population, additional TRIO funds,
including funds from prior grant award years, expended for personnel costs that were not tested
might be at risk.

Recommendations

We recommend that the Acting CFO, in conjunction with the Acting Assistant Secretary for
OPE, require SIUE to

2.1		   Provide adequate documentation to support the costs or return to the Department the
        $287,186 in inadequately documented personnel costs for grant award years 2005-2006
        and 2006-2007;9
2.2 	   Provide to the Department after-the-fact activity reports in accordance with OMB
        Circular A-21, signed by the responsible official, documenting the personnel costs
        charged to the TRIO projects for all employees paid with project funds for grant award
        years 2004-2005, 2005-2006, and 2006-2007 that were not tested, or return those funds to
        the Department;
2.3 	   Provide evidence to the Department that TRIO employees are in compliance with revised
        personnel policies and procedures and OMB Circular A-21 requirements for after the fact
        activity reporting; and
2.4 	   Provide evidence to the Department that it provided TRIO employees with training on
        revised payroll policies and procedures, with emphasis on OMB Circular A-21
        requirements for after the fact activity reporting.




9
 Because we are recommending that all TS and TSCM funds be returned to the Department, $112,838 of the
inadequately documented personnel costs is included in our Finding No. 1 recommendation.
Final Report
ED-OIG/A05I0013                                                                                            Page 11 of 40

SIUE’s Comments

SIUE did not concur with the finding, stating that the documentation supporting the allowability
of the TRIO personnel costs, included in SIUE’s response to the draft report, rebuts the finding.

Regarding recommendation 2.1, SIUE did not agree that a return of funds is warranted, as
after-the-fact certifications for the tested payroll periods have been verified and signed by
individuals who have first-hand knowledge of the work performed.

Regarding recommendation 2.2, SIUE did not feel that there is a need to expand the scope of
review beyond the sample of pay periods tested during the course of the audit. SIUE requests
OIG to review the adequacy of the documentation provided, and, if the documentation is
adequate, OIG should rescind its recommendation to provide after-the-fact activity reports for all
employees for grant years 2004-2007.

SIUE concurred with recommendations 2.3 and 2.4 and stated it has implemented procedures to
ensure completion of after-the-fact activity reports consistent with OIG recommendations. SIUE
also stated that it will provide training on payroll policies and procedures at least annually.

OIG Response

To refute the finding, SIUE provided Compensated Activity Reports for the pay periods in
question. SIUE stated that the Office of Research and Projects generated the after-the-fact
activity reports by creating a database from actual payroll certifications from the Office of
Human Resources coupled with actual work assignments and activity reports maintained by the
Office of Institutional Research. SIUE believes that the certifications are consistent with
requirements under OMB Circular A-21.

However, the Compensated Activity Reports SIUE provided did not adhere to the provisions of
OMB Circular A-21. In two instances, the reports provided contained no signatures. In 10
instances, the ESLC Executive Director’s signature was the only signature provided for
employees that the Executive Director did not directly supervise. It is not reasonable to assume
that the Executive Director would have first-hand knowledge of the work performed by these
employees. In addition, the reports do not represent a “prompt” adjustment of employee activity.
The reports are signed between 18 months and more than 3 years after the pay periods in
question. In addition, the reports are not based on a “suitable means of verification that the work
was performed,” because they were generated by creating a database from payroll certifications,
work assignments, and activity reports. Our finding is that after-the-fact activity reports were not
always in adherence with OMB Circular A-21 requirements; therefore, creating Compensated
Activity Reports based, in part, on these documents would not provide an adequate verification
that work was performed as reported.

SIUE also provided 41 salary time records for the pay periods in question. The salary time
records had lines for employee, supervisor, and fiscal officer signatures but were not always
signed by all three individuals. The salary time records were signed by the employees, in 31
instances; supervisors, in 41 instances; and, the fiscal officer, in 24 instances.10 The salary time

10
     For employees that the fiscal officer directly supervised, the fiscal officer also signed as supervisor.
Final Report
ED-OIG/A05I0013                                                                                    Page 12 of 40

records did not contain the dates of the signatures, and we did not receive salary time records for
all employees. During the course of the audit, SIUE’s Payroll Manager told us that most of the
TRIO employees selected for testing as part of our sample were professional employees who did
not submit timesheets or timecards. The Payroll Manager instead provided employment
contracts for these employees.

Other documents provided with SIUE’s comments included employment contracts; monthly
payroll certifications; and Faculty, Professional Staff, and Administrator Activity Reports.

		 For the UBEC pay period beginning March 1, 2006, SIUE provided Faculty, Professional
    Staff, and Administrator Activity Reports that were signed before the fact but were signed
    closer to the end of the period worked than those previously provided for three employees.
    We adjusted the amount of unsupported UBEC funds from $89,841 to $62,920 based on the
    additional documents.
		 For the TS pay period beginning June 1, 2007, SIUE provided a Faculty, Professional Staff,
    and Administrator Activity Report that was signed approximately one month after the fact for
    one employee. We adjusted the amount of unsupported TS funds from $34,072 to $26,802
    based on the additional document.
		 For the TSCM pay period beginning April 1, 2007, SIUE provided Faculty, Professional
    Staff, and Administrator Activity Reports that were signed before the fact but were signed
    closer to the end of the period worked than those previously provided for two employees.
    We adjusted the amount of unsupported TSCM funds from $35,836 to $22,947 based on the
    additional documents.

SIUE provided Time & Effort Reporting policies from its website to address recommendation
2.3. The policies state that employees paid via sponsored grant/contract funds will receive
Compensated Activity Reports on a monthly basis. The supervisor and/or individual who has
first-hand knowledge of the effort performed on the sponsored project is required to sign and
date the document. The fiscal officer and the employee receiving compensation from the
grant/contract are also to sign the document. The policies also present examples that require
correction/adjustment to the effort reported. We revised recommendations 2.3 and 2.4 to request
evidence of the corrective actions, including training SIUE provided to TRIO employees.


FINDING NO. 3 – SIUE Used UB, UBMS, and TS Funds for Unallowable and
                Inadequately Documented Non-personnel Costs

SIUE used TRIO program funds for costs that were unallowable and inadequately documented.
Of 90 non-personnel costs tested for grant award years 2005-2006 and 2006-2007, 17 were
unallowable and 15 were inadequately documented.11 Of the 17 unallowable costs totaling
$17,453, 9 were for field trips to Six Flags, Speed Parks, St. Louis Gateway Sport, Raging
Rivers, a St. Louis Blues’ hockey game, and a haunted theme park that had as their primary
purpose the entertainment of participants. Another 5 were for gift cards or other gifts. The
remaining 3 were for charges that occurred in prior or subsequent grant years. (See Enclosure 1
for detailed explanations of the unallowable costs.) Of the 15 inadequately documented costs

11
  Because we selected our samples judgmentally, the results might not be representative of the entire universe and
should not be projected.
Final Report
ED-OIG/A05I0013                                                                          Page 13 of 40

totaling $25,300, 13 were for costs that lacked evidence of the participants who attended the trip
or how the cost was related to the project, or the list of participants attending the field trip did not
agree with the list of participants SIUE provided us. (See Enclosure 2 for detailed explanations
of the inadequately documented costs.)

According to 34 C.F.R. § 74.28, where a funding period is specified, a recipient may charge to a
grant only allowable costs resulting from obligations incurred during the funding period and any
pre-award costs authorized by the Secretary.

		 The accounting practices of individual colleges and universities must provide for adequate
    documentation to support costs charged to sponsored agreements. (OMB Circular A-21,
    Subsection A.2.e.)
		 Allowable costs for UB programs include the following if they are reasonably related to the
    objectives of the project: admissions fees, transportation and other costs necessary to
    participate in field trips, attend educational activities, visit museums, and attend other events
    that have as their purpose the intellectual, social, and cultural development of participants.
    (34 C.F.R. § 645.40 (g))
		 Allowable costs for TS programs include the following if they are reasonably related to the
    objectives of the project: transportation, meals, and, if necessary, lodging for participants
    and staff for visits to postsecondary educational institutions to obtain information relating to
    the admission of participants to those institutions; participation in “College Day” activities;
    and field trips to observe and meet with persons who are employed in various career fields in
    the target area and who can act as role models for participants.
    (34 C.F.R. § 643.30(a)(1),(2), and (3))
		 The SIUE East St. Louis Center Fiscal Management Procedures state that, for
    procurement card (p-card) purchases, an initialed, itemized receipt must be
    submitted by the project official to the ESLC’s Budget Office. SIUE’s Post Award
    Manual urges fiscal officers to ensure that purchases made with p-cards are
    allowable and meet the criteria established under the grant award.

SIUE and ESLC had written policies and procedures in place for the management of
TRIO funds, but employees did not always follow the policies and procedures.
Although against SIUE policy, TRIO employees were permitted to use their purchase
cards to obtain gift cards. In addition, employees did not always maintain records of
who received gift cards or require recipients to sign for gift cards. TRIO employees
stated that they believed the grant proposals permitted purely recreational trips. In
addition, SIUE does not code grant funds by grant award year. Grant year two funding
is simply added to grant year one funds. SIUE uses the first in first out approach with
regard to expending grant funding.

As a result of using grant funds for unallowable costs, SIUE did not have $17,453 to accomplish
the objectives of the grant. In addition, the Department has no assurances that $25,300 was used
on allowable TRIO costs. Without adequate documentation, SIUE cannot show that it used
funds to carry out the grant objectives stated in the grant proposals.
Final Report
ED-OIG/A05I0013                                                                                Page 14 of 40

Recommendations

We recommend that the Acting CFO, in conjunction with the Acting Assistant Secretary for
OPE, require SIUE to

3.1 	   Return to the Department the $17,453 in TRIO funds expended for unallowable costs in
        grant award years 2005-2006 and 2006-2007;12

3.2 	   Provide adequate documentation to support the costs or return to the Department $25,300
        in inadequately documented non-personnel costs for grant award years 2005-2006 and
        2006-2007;13

3.3 	   Review TRIO expenditures for grant award years 2004-2005, 2005-2006, and 2006-2007
        that were not tested to ensure that charges are allowable, including adequately
        documented, and return those funds found to be unallowable to the Department;

3.4 	   Ensure that employees charged with administering the TRIO grants understand and
        adhere to established policies and procedures for the management of TRIO funds,
        including the restriction on the purchase of gift cards;

3.5 	   Ensure that employees charged with administering the TRIO grants retain adequate
        documentation for TRIO non-personnel costs, including documentation clearly indicating
        who received the good or service; and

3.6 	   Develop program activities that have as their purpose the intellectual, social, and cultural
        development of participants, including field trips to museums, postsecondary educational
        institutions, and other educational activities.

SIUE’s Comments

SIUE concurred, in part, with the finding. SIUE concurred to the extent that documentation is
unavailable to verify participation in, and costs associated with, certain events or activities.
SIUE did not concur with certain costs being disallowed due to certain activities being unrelated
to the objectives of the projects.

Regarding recommendation 3.1, SIUE’s position is that the costs for the activities identified as
“recreational” are allowable under the relevant regulation, and TRIO participants who engaged
in “recreational” activities were regularly required to participate in educational activities. It is
SIUE’s TRIO policy and practice that no participants are allowed to participate in “recreational”
activities without full participation in related educational activities. SIUE included an example
of a typical program schedule for UB and TS to demonstrate the coupling of educational and
“recreational” activities. SIUE agreed to return only $4,989.44 in disallowed gift purchases.



12
   Because we are recommending that all TS and TSCM funds be returned to the Department, $5,461 in 

unallowable expenses is included in our Finding No. 1 recommendation.


13
   Because we are recommending that all TS and TSCM funds be returned to the Department, $14,110 in 

inadequately documented expenses is included in our Finding No. 1 recommendation.


Final Report
ED-OIG/A05I0013                                                                       Page 15 of 40

Regarding recommendation 3.2, SIUE stated that its lack of access to former employees
currently under criminal investigation has severely hindered its ability to respond to this aspect
of the finding. SIUE maintains that services to participants were provided in the UB and TS
activities referenced in the draft report, despite incomplete documentation regarding participant
lists. SIUE believes that if OIG had been able to compare the participant lists it received for
these activities against the Blumen data it would have found support for the activity participation
lists. SIUE stated that it should be required to return only funds related to costs for which there
is no support for student participation and only after SIUE has been able to speak with former
employees responsible for managing these activities.

SIUE concurred with recommendations 3.4 and 3.5 and stated it has implemented corrective
measures. TRIO employees continue to receive ongoing training on TRIO policies and
procedures, including maintenance of appropriate support documentation. The TRIO Director
now conducts a monthly review and random spot checks of documentation. The purchase of gift
cards is strictly prohibited.

SIUE concurred with recommendation 3.6 and intends to fully adhere to the TRIO proposal
submitted and approved by the Department and to comply with all regulations applicable to the
TRIO grant. SIUE will work with the Department to seek official clarification regarding
interpretation and application of the regulations.

OIG Response

SIUE did not provide additional documentation to refute our finding of $25,300 in inadequately
documented non-personnel costs. SIUE stated that “if OIG had been able to compare the
participant lists it received for these activities against the Blumen data it would have found
support for the activity participation lists.” We compared the activity participation lists with the
Blumen printouts provided during the course of the audit. The activity participation lists did not
always agree with the Blumen printouts provided.

To refute our finding for unallowable costs related to field trips, SIUE provided summer activity
schedules for UBEC 2006, UBBEV 2006, and TS 2007 to show that educational activities were
scheduled along with recreational activities. The schedules, as stand-alone documents, are not
adequate to refute our finding that the trips to Six Flags, Speed Parks, St. Louis Gateway Sport,
Raging Rivers, a St. Louis Blues’ hockey game, and a haunted theme park had as their primary
purpose the entertainment of participants and did not meet the requirements for allowable costs
under 34 C.F.R. § 645.40 and 34 C.F.R. § 643.30. The schedules do not include itineraries,
indicating that field trips to Six Flags also included visits to education venues, such as colleges
or universities. In addition, the schedules provided represent “typical” summer activities and, in
all but one case, do not correspond to the specific disallowed trips, included in Enclosure 1 of
this report.

SIUE provided its Program Action Plans to address recommendations 3.4 and 3.5, but the plans
are not specific. The sections for administrative and program training state only that the training
will be “on-going” and “will ensure accurate file documentation and record keeping.” The
Program Action Plans should establish specific dates when training will occur and should
indicate specific areas training will cover to ensure that adequate support for costs charged to
sponsored agreements is maintained in accordance with OMB Circular A-21.
Final Report
ED-OIG/A05I0013                                                                        Page 16 of 40

FINDING NO. 4 – SIUE Failed to Maintain Adequate TS and UB Participant
                Records

During grant award years 2005-2006 and 2006-2007, SIUE failed to maintain adequate
documentation to support TS and UB participant eligibility. We selected 67 TS, TSCM,
UBBEV, and UBEC participants and reviewed their files for evidence of eligibility to participate
in the programs. SIUE failed to maintain adequate documentation demonstrating eligibility in 26
of 67 instances.

   Of 15 TS participants from grant award year 2005-2006, 8 files were missing, 6 did not
    contain participant applications, and 1 contained an unsigned application.
 Of 18 TSCM participants from grant award year 2006-2007, 4 files were missing, and 4
    contained unsigned applications.
		 Of 22 UBBEV participants from grant award year 2005-2006, 2 files were missing
    applications, and 1 file included evidence that the participant had exited the project the prior
    period (but the participant was still included on the participant list).
		 Of 12 UBEC participants from grant award year 2006-2007, 6 files contained no needs
    assessments. We did not consider participants, who did not have needs assessments to be
    ineligible participants, and we did not include these 6 files in our total of 26 files, mentioned
    above, that lacked adequate eligibility documentation. However, because SIUE did not
    complete needs assessments for these participants, it cannot be sure that these participants
    received essential services.

According to 34 C.F.R. § 643.32(c), for each TS participant, a grantee must keep a record of

       (1) The basis for the grantee’s determination that the participant is eligible to
       participate in the project under § 643.3;
       (2) The grantee's needs assessment for the participant;
       (3) The services that are provided to the participant; and
       (4) The specific educational progress made by the participant as a result of the
       services.

According to 34 C.F.R. § 645.43(c), for each UB participant, a grantee must keep a record of

       (1) The basis for the grantee’s determination that the participant is eligible to
       participate in the project under § 645.3;
       (2) The basis for the grantee’s determination that the participant has a need for
       academic support in order to pursue successfully a program of education beyond
       secondary school;
       (3) The services that are provided to the participant; and
       (4) The educational progress of the participant during high school and, to the
       degree possible, during the participant's pursuit of a postsecondary education
       program.

According to the ESLC Executive Director, reviews of TRIO participant files were conducted
periodically. However, no written policies or procedures existed for participant file reviews;
therefore, the frequency and extent of the file reviews were left to the discretion of the TRIO
Final Report
ED-OIG/A05I0013                                                                                Page 17 of 40

employees. According to the TSCM Program Director, former TS employees did not adequately
maintain participant files, and the former TS Assistant Program Director instructed TS
employees to sign participant applications if the parent or guardian’s signature could not be
obtained.

Providing services to participants whose eligibility has not been determined and documented is a
misuse of grant funds and results in less grant funds being available to provide essential services
to eligible participants. SIUE expended approximately $22,882 on participants who lacked
adequate documentation to support their eligibility for the TRIO projects. We calculated that
$6,256.50 was spent on 15 TS participants (15 * $417.10/cost per participant), $2,933.36 was
spent on 8 TSCM participants (8 * $366.67/cost per participant), and $13,691.64 was spent on 3
UBBEV participants (3 * $4,563.88/cost per participant) whose eligibility had not been
determined and documented.

Recommendations

We recommend that the Acting CFO, in conjunction with the Acting Assistant Secretary for
OPE, require SIUE to

4.1		   Return to the Department $22,882 in grant funds expended on project participants whose
        eligibility had not been determined and documented;14

4.2		   Conduct a physical inventory of UBEC, UBBEV, and TSCM 2004-2005, 2005-2006, and
        2006-2007 participant files to ensure that files exist for each participant and contain the
        required eligibility documentation. If the physical inventory reveals missing files or
        eligibility documentation, return to the Department funding associated with participants
        whose eligibility had not been determined and documented;

4.3 	   Inspect all 2004-2005, 2005-2006, and 2006-2007 TS participant files to ensure that the
        files contain required eligibility documentation. If inspection reveals missing eligibility
        documentation, return to the Department funding associated with participants whose
        eligibility had not been determined and documented; and

4.4 	   Ensure that TRIO employees receive training on grant requirements for document
        retention and participant eligibility verification.

SIUE’s Comments

SIUE stated it does not concur fully with the finding because the draft report did not contain
sufficient information for SIUE to fully respond to the finding.

Regarding recommendation 4.1, SIUE stated that the recommendation is based on a sample of
unidentified files that prevents SIUE from cross-referencing to entries in the corresponding
Blumen database. SIUE has implemented efforts to improve record management, including

14
  Because we are recommending that all TS and TSCM funds be returned to the Department, $9,190 of the $22,882
in funds expended on participants whose eligibility has not been determined and documented are included in our
Finding No. 1 recommendation.
Final Report
ED-OIG/A05I0013                                                                      Page 18 of 40

maintenance of complete physical documentation. SIUE does not agree that a record of
eligibility based only on a “physical inventory” of files should be the sole measure of compliance
with the regulations. SIUE’s Blumen data on each participant clearly states “the basis for
[SIUE’s] determination that the participant is eligible to participate,” and should be deemed
sufficient to meet the cited regulatory standard. Therefore, since SIUE has already agreed, in
response to Finding No. 1, to return $148,950.19 for TS 2005-2006, TS 2006-2007, and TSCM
2006-2007 projects due to unavailability of records that include eligibility records, no additional
return of funding associated with Finding No. 4 should be required.

SIUE concurred, in part, with recommendations 4.2 and 4.3 and stated it is currently conducting
an inventory and inspection of the files and data printouts for TS 2005-2006 and 2006-2007 and
TSCM 2006-2007. SIUE did not concur with the recommendations to the extent that they
exceed the stated scope of the draft report. Furthermore, a low error rate for the tested UBBEV
participant files would seem not to warrant an extensive file review, and a physical review of
these additional files and cross-referencing to the database would be cumbersome and resource
intensive. SIUE is currently conducting a voluntary analysis of all TRIO program records for
grant award year 2007-2008.

SIUE concurred with recommendation 4.4 and has implemented a revised professional training
program for TRIO employees.

OIG Response

We provided the results of the participant file reviews during the course of the audit. Even after
receiving our results, SIUE did not provide records adequately documenting eligibility for the
projects for 26 of the participants sampled. The Blumen printouts provided with SIUE’s
comments on the draft report contain columns for name, ethnic type, eligibility type, grade
standing, entry date, gender, age, and school. The Blumen printouts, as stand-alone documents,
do not contain sufficient information to demonstrate compliance with 34 C.F.R. § 643.32(c) or
34 C.F.R. § 645.43(c) and do not contain the information required to be maintained for each
participant, as detailed in ESLC’s TRIO Programs Records Checklist.

Pursuant to 34 C.F.R. § 645.4(b) and (c), an institution shall document that the student is a low-
income individual by obtaining and maintaining a signed statement from the student's parent or
legal guardian regarding family income or verification of income from another governmental
source, such as a signed financial aid application or a signed income tax return. Documentation
of potential first generation college student status consists of a signed statement from a
participant's parent. Pursuant to C.F.R. § 643.32(a), a grantee shall determine the status of a
low-income individual on the basis of the documentation described in section 402A(e) of the
HEA, which states that documentation of an individual’s low-income status shall be made by a
signed statement from the individual’s parent or legal guardian or verification from another
governmental source, such as a signed financial aid application or a signed income tax return.
The Blumen printouts SIUE provided do not contain the information required to document low-
income and first generation status, as described above.
Final Report
ED-OIG/A05I0013                                                                     Page 19 of 40

Because our testing revealed that participant files were not always maintained in accordance with
ESLC’s own policies and Federal regulations, SIUE should implement corrective and
preventative measures to ensure that adequate documentation of eligibility is maintained for each
TRIO participant. The corrective measures should include completing participant file reviews
and physical inventories of participant files. However, SIUE’s Program Action Plans, created to
address recommendation 4.4, are not specific. The section for participant file checks states only
the frequency of when files are checked and the number of files selected for review will be
“increased.” The Program Action Plans should establish specific timelines for file reviews;
include standards against which participant files will be checked; include steps for follow up on
any participant files found incomplete as a result of the review; and indicate how many files will
be selected for review to ensure compliance with 34 C.F.R. § 643.32(c) and
34 C.F.R. § 645.43(c).
Final Report
ED-OIG/A05I0013                                                                                 Page 20 of 40



                    OBJECTIVES, SCOPE, AND METHODOLOGY




The objectives of the audit were to determine whether SIUE complied with selected provisions
of the HEA and regulations governing (1) the use of TRIO program funds and (2) participant
eligibility during grant award years 2005-2006 and 2006-2007.

To achieve our objectives, we performed the following procedures:

1.		 Reviewed SIUE’s approved grant proposals, grant award notifications, and annual
     performance reports for grant award years 2005-2006 and 2006-2007.
2.		 Reviewed selected provisions of the HEA, regulations, and OMB Circulars applicable to the
     audit objectives.
3.		 Reviewed SIUE’s web site, organizational charts, and conducted interviews with SIUE
     employees to gain an understanding of SIUE’s history and organization.
4.		 Reviewed the State of Illinois Southern Illinois University Compliance Examination, A-133
     Single Audit Report prepared by Crowe Chizek and Company LLC, and the audit
     documentation prepared for grant award years 2005-2006 and 2006-2007.
5.		 Gained a limited understanding of SIUE’s internal control structure, policies, procedures, and
     practices applicable to the administration of the UB, UBMS, and TS grants by interviewing
     various SIUE officials including the Director of Purchasing; Manager of P-cards; Payroll
     Manager; Senior Grants and Contracts Accountant; Grants and Contracts Accountant
     responsible for TRIO; Controller; Inventory Control Supervisor; Internal Auditor; Director
     Office of Information Technology; Director of ESLC; Assistant Director of ESLC; and
     current Program Directors for UB, UBMS, and TS.
6.		 Obtained and reviewed SIUE’s accounting records and identified all UB, UBMS, and TS
     grant funds expended during grant award years 2005-2006 and 2006-2007.

To determine whether non-personnel costs were allowable, we selected a judgmental sample of
75 non-personnel transactions totaling $157,580 from a universe of 896 non-personnel
transactions totaling $597,83515 for grant award years 2005-2006 and 2006-2007. Thirty-four of
the non-personnel expenditures, totaling $75,444, were from grant award year 2005-2006, and 41
of the non-personnel expenditures, totaling $82,136, were from grant award year 2006-2007.
We traced the selected sample of expenditures to source documents to determine compliance
with the law and regulations, including whether the expenditures were allowable (reasonable,
necessary, allocable, and adequately documented). We also inventoried equipment items
selected as part of the sample. Items selected for inventory included 3 mobile printers, 1 desktop
printer, 1 monitor, 1 computer hard drive, and 3 laptops. Finally, we obtained a listing of TRIO
credit cardholders and their transactions. We reviewed cardholders’ credit card statements to
assess the reasonableness of the credit limit and ensure credit limits had not been exceeded. To
ensure that selected credit card purchases were for allowable grant activities, we reviewed a
judgmental sample of 15 credit card transactions, totaling $3,343, from a universe of 1,135


15
  The universe consisted of 354 non-personnel transactions totaling $249,204 from the 2005-2006 grant award year
and 542 transactions totaling $348,631 from the 2006-2007 grant award year.
Final Report
ED-OIG/A05I0013                                                                                    Page 21 of 40

transactions totaling $304,336.16 Eight of the 15 credit card transactions, totaling $1,380, were
from grant award year 2005-2006, and 7, totaling $1,963, were from grant award year 2006-
2007. We also reviewed UB and TS activity schedules SIUE provided in its response to the draft
report.

To ensure that SIUE maintained adequate eligibility documentation and to ensure that
participants were actually enrolled in the program, we obtained and reviewed a sample of UBEC,
UBBEV, UBMS, TS, and TSCM participant files.

      Table 3
                    Grant                         Number in Sample                        Number in
                                                                                          Population
          UBEC 05-06                                         11                              150 

          UBEC 06-07                                         12                              150 

          UBMS 05-06 
                                        5
                              52 

          UBMS 06-07                                          5                               46 

          UBBEV 05-06 
                                      22 
                            109 

          UBBEV 06-07                                         6                               67
          TS 05-06 
                                         15 
                           38617
          TS 06-07                                            3                             54918
          TSCM 06-07 
                                       18 
                            545 

          Totals                                             97                             2,054



We then selected a judgmental sample of 53 TRIO participants from the 97 participants whose
files we reviewed and contacted target schools to confirm that the 53 participants were enrolled.

To determine whether personnel costs charged to the TRIO projects were supported by personnel
records and time cards indicating the amount of time charged by employees to TRIO activities,
we judgmentally selected 10 pay periods from a universe of 108 pay periods. ESLC TRIO
employees were paid $171,731 during the 10 pay periods and a total of $1,519,726 for all 108
pay periods. Four of the 10 pay periods we tested were from grant award year 2005-2006, and 6
were from grant award year 2006-2007. We also reviewed payroll documents, including
Compensated Activity Reports; employment contracts; monthly payroll certifications; and
Faculty, Professional Staff, and Administrator Activity Reports, that SIUE provided in its
response to the draft report.

We also relied, in part, on expenditure data provided to us by SIUE from its Human Resource
and Oracle systems. We performed an initial assessment of the reliability of the records. We
reviewed the data for completeness to determine whether SIUE could account for all funds
drawn down. We also reviewed the records for relevance to ensure they included only personnel

16
   The universe consisted of 392 credit card transactions totaling $88,176 from the 2005-2006 grant award year and 

743 credit card transactions totaling $216,160 from the 2006-2007 grant award year.


17
   The current TS Program Director conducted a physical file inventory. Only 219 TS files could be located. 

Sample selection was made prior to learning that participant list of 386 was inaccurate. 

18
   The current TS Program Director conducted a physical file inventory. Only 323 TS files could be located. 

Sample selection was made prior to learning that participant list of 549 was inaccurate. 

Final Report
ED-OIG/A05I0013                                                                        Page 22 of 40

and non-personnel costs for our audit period. We further reviewed non-personnel costs for
accuracy and reliability by tracing them to supporting records such as receipts, purchase orders,
vendor invoices, and other information on documents maintained by SIUE. Based on these
comparisons, we concluded that the data SIUE provided for personnel and non-personnel costs
were sufficiently reliable for the purposes of our audit.

We conducted our audit from April through September 2008 at SIUE’s administrative
offices in Edwardsville, Illinois, and ESLC in East St. Louis, Illinois, and at our offices.
We discussed the results of our audit with SIUE officials on October 7, 2008.

We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit
objectives.
Final Report
ED-OIG/A05I0013                                                                       Page 23 of 40

    Enclosure 1: Schedule of Unallowable Costs for Grant Award Years 2005-2006
                                   and 2006-2007

   Item           Grant        Grant Award 
        Total Costs Reviewed 
 Unallowable Costs
  Number                          Year 
                Sample Item 


1                UBEC            2006-2007                          $40.00                   $40.00


2                UBEC            2005-2006                       $2,500.00                $2,500.00


3                UBEC            2006-2007 
                       $175.00

                $175.00


4                UBEC            2005-2006                         $620.16                  $177.19


5                UBEC            2005-2006 
                       $174.00

                 $72.50


6                UBBEV           2006-2007                       $2,456.56                $2,456.56


7                UBBEV           2005-2006 
                       $400.00

                $400.00


8                UBBEV           2006-2007                       $1,047.00                $1,047.00


9                UBBEV           2006-2007 
                       $825.00

                $825.00


10               UBBEV           2005-2006                       $1,204.50                $1,204.50


11               UBBEV           2006-2007 
                       $350.00

                $350.00


12               UBMS            2006-2007                         $811.08                  $811.08


13               UBMS            2006-2007 
                     $1,934.00

              $1,934.00


14               TS              2005-2006                       $1,717.50                $1,717.50


15               TS              2006-2007 
                     $1,759.00

              $1,759.00


16               TS              2005-2006                         $225.00                  $225.00


17               TSCM            2006-2007 
                     $1,759.00

              $1,759.00


Totals                                                          $17,997.80               $17,453.33



		 According to 34 C.F.R. § 645.40(g), costs must be reasonably related to the objectives of the
    project. Items 1, 7, and 11 were for purchases of gift cards. Items 12 and 13 were for the
    purchase of key tags and clocks to be used as gifts for graduating seniors.
		 According to 34 C.F.R. §§ 643.30(a) and 645.40(g), costs must be reasonably related to the
    objectives of the project. Costs necessary for participants and staff to visit postsecondary
    educational institutions, to participate in “College Day” activities; and field trips to observe
    and meet with persons who are employed in various career fields in the target area and who
    can act as role models for participants are allowable. In addition, costs necessary to
    participate in field trips, attend educational activities, visit museums, and attend other events
    that have as their purpose the intellectual, social, and cultural development of participants are
    allowable. The regulations do not allow costs for field trips that have as their primary
    purpose the entertainment of participants. However, items 2, 6, 15, and 17 were for trips to
    Six Flags. Item 3 was for a trip to Speed Parks. Item 8 was for a trip to St. Louis Gateway
    Sport. Item 9 was for a trip to a haunted theme park. Item 14 was for a trip to Raging
    Rivers. Item 16 was for a trip to a St. Louis Blues’ hockey game. All these trips were purely
    recreational.
		 According to 34 C.F.R. § 74.28, where a funding period is specified, a recipient may charge
    to a grant only allowable costs resulting from obligations incurred during the funding period.
    For item 4, a portion of the services occurred in grant award year 2004-2005 but were
    charged to 2005-2006 grant funds. For item 5, a portion of the service agreement was for
Final Report
ED-OIG/A05I0013                                                               Page 24 of 40

  grant award year 2007-2008 but was charged to 2006-2007 grant funds. For item 10, the
  charges occurred in grant award year 2004-2005 but were charged to 2005-2006 grant funds.
Final Report
ED-OIG/A05I0013                                                                       Page 25 of 40

      Enclosure 2: Schedule of Inadequately Documented Costs for Grant Award Years
                                 2005-2006 and 2006-2007

Item Number        Grant       Grant Award Year           Total Costs 
     Inadequately 

                                                        Reviewed Sample 
 Documented Costs


                                                              Item 


1                 UBEC 
            2006-2007 
                    $3,995.00              $2,496.90
2                 UBEC 
            2005-2006                      $3,500.00              $3,500.00


3
                UBEC 
            2005-2006 
                    $1,567.63 
              $760.40


4                 UBBEV 
           2006-2007                      $1,523.52              $1,523.52


5
                UBBEV 
           2005-2006 
                    $1,000.00 
              $333.33


6                 UBBEV 
           2006-2007                      $2,502.58              $1,126.16


7
                UBBEV 
           2006-2007 
                      $400.00 
              $400.00


8                 UBBEV 
           2005-2006                        $276.48                $115.20


9
                UBMS 
            2006-2007 
                      $933.50 
              $933.50


10                TS 
              2005-2006                      $1,547.57              $1,547.57


11 
              TS 
              2005-2006 
                    $4,500.00 
            $4,500.00


12                TS 
              2005-2006                      $4,280.00              $4,280.00


13 
              TS 
              2005-2006 
                    $1,696.00 
            $1,696.00


14                TS 
              2006-2007                      $1,126.96              $1,126.96


15 
              TS 
              2006-2007 
                      $960.00 
              $960.00


Totals                                                            $29,809.24             $25,299.54



		 OMB Circular A-21, Subsection A.2.e. provides that accounting practices of individual
    colleges and universities must provide for adequate documentation to support costs charged
    to sponsored agreements. However, for items 1 and 3, the documentation provided only
    supported a portion of the charge. For item 2, no documentation was provided to show the
    purpose of the trip or the participants attending. For items 4, 6, 9, 14, and 15, the attendance
    sheets for the field trips did not agree with the participant lists provided. For item 5, the
    names of 12 participants who received tickets could not be found on the UBBEV participant
    list provided. For item 7, an itemized receipt was not provided. For item 8, the attendance
    sheet for the field trip contained 10 names that could not be found on the participant list
    provided. For items 10 and 13, no documentation was provided to show that the rental
    vehicles were used only for project purposes. For item 11, no documentation was provided
    to show the participants who received tutoring or the dates of tutoring. For item 12, no
    documentation was provided to show the participants attending the leadership conference.
Final Report
ED-OIG/A05I0013                                                               Page 26 of 40




                      Enclosure 3: Auditee’s Comments
SIUE provided comments to the draft report, including Exhibits A through E. Because of the
voluminous number of documents contained in Exhibits A through E, we have not included them
in this enclosure. Copies of Exhibits A through E are available on request.
Final Report
ED-OIG/A05I0013                                                                       Page 27 of 40




March 12, 2009

Gary D. Whitman
Regional Inspector General for Audit
U.S. Department of Education
Office of Inspector General
500 West Madison St., Suite 1414
Chicago, IL 60661

Re:    Draft Audit Report
       Control Number ED-OIG/A05I0013
       Southern Illinois University Edwardsville

Dear Mr. Whitman:

        This correspondence and its enclosures are submitted on behalf of Chancellor Vaughn
Vandegrift and Southern Illinois University Edwardsville (SIUE) to serve as SIUE’s written
response to the above-referenced Draft Audit Report, as requested in your letter dated
December 18, 2008, that accompanied the Report. The audit was conducted for the 2005-2006
and 2006-2007 grant award years as a result of SIUE’s discovery and self-reporting to law
enforcement and the Department of Education of financial irregularities in its TRIO programs -
Talent Search (TS), Upward Bound (UB), and Upward Bound Math and Science (UBMS). As
an initial matter, and in light of the ongoing criminal investigation of certain former key SIUE
TRIO employees, SIUE respectfully requests 1) that SIUE have the opportunity to supplement
this response at a future time and 2) that issuance of the OIG Final Audit Report to the
Department of Education be delayed until final resolution of the criminal matters by the U.S.
Attorney’s Office for the Southern District of Illinois. SIUE believes it will be better positioned
upon final resolution of the criminal matters to conduct the necessary candid conversations with
those former employees concerning certain facts, practices, and documentation needed to
respond more fully and accurately to the Draft Audit Report. In the interim, SIUE requests that
this response to the Draft Audit Report be viewed as preliminary in scope.

        This preliminary response to the Draft Audit Report provides a brief overview of SIUE’s
TRIO program in East St. Louis, Illinois, including SIUE’s discovery and self-reporting of the
alleged criminal conduct leading to the audit, followed by a specific, but preliminary,
response/position pertaining to each of the four draft findings by the Office of Inspector General
(OIG) and the recommendations based on those draft findings. For the reasons provided by your
office on the cover page of the Draft Audit Report, I respectfully request that disclosure of this
responsive correspondence be limited and the contents treated as confidential, except where
otherwise required by law.
Final Report
ED-OIG/A05I0013                                                                      Page 28 of 40

Background Overview

         Southern Illinois University Edwardsville’s East St. Louis Center has successfully
operated Department of Education (DOE) grant-funded TRIO programs, including the current
2008-2009 grant award year, for approximately 30 years. Guided by a mission of service, SIUE
has demonstrated a long-term commitment to the Metro-East St. Louis region by providing
TRIO programs for the benefit of the region’s low income children. This service commitment
has been, and continues to be, essential to the region’s future. According to documentation from
the Illinois Bureau of Labor, more than 55% of families within SIUE’s TRIO target service areas
in St. Clair and Madison Counties are living at or below 150% of the poverty level compared to
only 9% of families for the State of Illinois. Additionally, only 5.5% of adults residing in the
target area have earned a baccalaureate degree compared to 28.1% in the State of Illinois.
Seventy-five percent of families with students in target schools are on some type of Federal or
state aid and have limited knowledge of the financial aid resources available to them.

        The audit of the SIUE TRIO program by the OIG derives primarily from SIUE’s
response to the discovery of financial irregularities in the TS program by SIUE’s external
auditors during a routine A-133 audit in September 2007. Upon discovery, SIUE immediately
notified law enforcement of the financial irregularities and a subsequent criminal investigation of
alleged fraud was opened. SIUE also promptly reported the alleged fraud to the DOE and
immediately implemented corrective measures19 to prevent future irregularities. In the months
since SIUE’s discovery of the financial irregularities in the TS program, SIUE has cooperated
fully with the OIG in the criminal investigation and in the audit of the 2005-2006 and 2006-2007
grant award years.

        It is important to that the completeness of this response to the Draft Audit Report has
been significantly limited by SIUE’s lack of communication with the five SIUE TRIO
employees terminated in late 2007 for reasons related to the investigation into the financial
irregularities in the TS program. The U.S. Attorney’s Office for the Southern District of Illinois
has informed SIUE, as the victim of an alleged criminal fraud, that indictments will be sought
against some of these former SIUE employees. Although a majority of the findings of the Draft
Audit Report appear to involve misconduct by these former employees, SIUE has necessarily
had no substantive communications with these former employees subsequent to their
employment terminations as a result of the criminal investigation and potential indictments. As a
consequence, the whereabouts of certain documentation or explanations for flaws in the data
base, information known primarily by these former employees, cannot be fully ascertained by
SIUE for purposes of responding to some findings in the Draft Audit Report.




19
     Specific corrective actions are detailed in the response to each Finding.
Final Report
ED-OIG/A05I0013                                                                       Page 29 of 40


        Notwithstanding SIUE’s identified difficulties in the 2005-2006 and 2006-2007 grant
award years due to employee misconduct, SIUE is confident that its existing procedures,
policies, and practices and its improved training and oversight of these procedures, policies, and
practices have brought the SIUE TRIO program into full compliance for the 2007-2008 grant
award years and future grant award years.

OIG Finding No. 1: SIUE Did Not Serve the Required Minimum Number of TS Participants.

        In the Draft Audit Report, the OIG alleges that SIUE did not serve the required minimum
number of TS participants because, at the time of the review, the OIG and the Program Director
were not able to locate sufficient physical files to support the participant numbers previously
reported to the DOE, and, alternatively, SIUE did not use the Blumen system (Blumen) or a
comparable database to record participant information and contacts. SIUE concurs with Finding
No. 1 only to the extent that documentation is apparently unavailable to verify 600 participants in
each TS program and that the APR prepared by a now-terminated employee under criminal
investigation may have misstated the actual number of participants receiving services in the
2005-2006 budget year and the 2006-2007 budget year for each TS program. However, as
explained below in response to Recommendations 1.1 and 1.2, SIUE does not concur with the
actual participant numbers shown in Finding No. 1.

       OIG Recommendations
       1.1		   Return to the Department the $500,522 in TS funds that were awarded for the 2005-2006
               and 2006-2007 grant award years.
       1.2		   Return to the Department the $220,000 in TSCM funds that were awarded for the 2006-
               2007 grant award year.

        SIUE does not concur with the Recommendations. SIUE’s actual TS participant
numbers, as evidenced by valid documentation, were higher than reflected in the audit and,
therefore, Recommendations 1.1 and 1.2 should be modified to reflect those findings. As
explained below, a return of $148,950.19 in TS and TSCM funds awarded for 2005-2006 and
2006-2007 would be reasonable in light of the facts of this case.

        SIUE concurs that it did not maintain complete physical files for all TS and TSCM
participants. However, the Draft Audit Report (p. 5) also states that “the former TS Assistant
Program Director did not use Blumen to record participant information and contacts.” There
appears to be a misunderstanding or confusion on this point because the data printouts from the
Blumen data management software system, attached as EXHIBIT A, confirm that Blumen was
utilized and contained participant information for TS 2005-06, TS 2006-07, and TSCM 2006-
Final Report
ED-OIG/A05I0013                                                                                  Page 30 of 40

07.20 The data printouts show the following actual participant numbers, not counting duplicate
entries, and approximate participant percentage for each TS and TSCM budget year audited:

        354 TS participants in the 2005-2006 budget year (59% of the required number),
        539 TS participants in the 2006-2007 budget year (90% of the required number), and
        543 TSCM participants in the 2006-2007 budget year (91% of the required number).

SIUE believes that the Blumen database documentation should be deemed sufficient for purposes
of documenting participation pursuant to 34 CFR §643.32(b) since the regulation does not
expressly stipulate the type of documentation, such as hardcopies of paper documents or
electronic data, to be maintained to verify actual participation. Therefore, the Draft Audit Report
findings of only 219 physical files for TS participants for 2005-2006 and only 323 physical files
for TS participants for 2006-2007 is not controlling and appears not to be reflective of the actual
participant numbers.21

        Although Finding No. 1 in many ways resulted from fraud-based misconduct that is now
the subject of the ongoing criminal investigation, SIUE has moved to aggressively improve
oversight of and training on its existing procedures, policies and practices to assure compliance
with the participation requirements of 34 CFR §643.32(b). Additional policies, procedures, and
practices, as indicated below and further described in EXHIBIT B, were implemented shortly
after discovery of the financial irregularities in late 2007 to complement existing policies and
procedures and to ensure compliance.

     		 Each TS program is now managed by a separate director and secretary assigned only to
         that specific program. In the past, one director and secretary managed all five of the
         SIUE TRIO programs. This increase in program management personnel has improved
         overall management and recordkeeping of each TS program.
     		 Each of the newly appointed TS program directors is receiving on-going professional
         development training specific to improving management skills and compliance with
         TRIO regulations and SIUE policies.
     		 The former practice of annual audits of TRIO participant records by the one TRIO
         program director has been replaced by quarterly audits conducted by the Executive




20
   EXHIBIT A also contains Blumen database participant information for UBEC and UBBEV for 2005-2006 and
2006-2007 that is responsive to OIG Finding No. 4.
21
   The number of TS participants may actually be higher than shown in the Blumen data printouts, but verifying
those higher numbers would require SIUE to have communications with those former employees now under
criminal investigation. Since these former employees may be facing criminal indictments, SIUE does not believe
that such communications are appropriate at this time.
Final Report
ED-OIG/A05I0013                                                                     Page 31 of 40

         Director of the East St. Louis Center. Increased auditing of all TRIO participant records
         is intended to assure regulatory compliance.
        The SIUE Office of Research and Projects is now conducting monthly standing audits on
         procurement card charges and continues to conduct proprietary reviews of all
         expenditures to the TRIO programs.
        TS staff now receive additional professional development training with increased
         emphasis on program responsibilities, conducting participant contacts, record keeping,
         documentation, and regulatory compliance.

         The above corrective actions were designed to prevent future fraudulent activity by
improving overall management, oversight, and operation of SIUE’s TS programs. As stated
earlier, SIUE is confident that these changes have brought the SIUE TRIO program into full
compliance.

        As detailed above and in EXHIBIT A, the Blumen data demonstrates significantly higher
TS participant numbers than found by the audit. Notwithstanding that circumstances prevent
SIUE from demonstrating the minimum participation requirement (600) for each TS grant year
audited, a proportional return of grant funds for Finding No. 1 seems particularly just,
reasonable, and fair in light of the particular facts and circumstance of this case, including 1)
SIUE’s Blumen data confirming the accuracy of relatively higher participant numbers, 2) SIUE’s
own discovery and self-reporting of the alleged fraud, 3) SIUE’s limited ability to solicit and
gather information from former employees involved in the criminal investigation of that alleged
fraud, and 4) SIUE’s successful implementation of effective corrective measures. Based on the
above, SIUE agrees to return $148,950.1922 – the proportional amount of the TS grant funds
received for 2005-2006 and 2006-2007 and of the TSCM grant funds received for 2006-2007,
corresponding to the higher participation numbers, 59%, 90%, and 91%, respectively (80%
overall).

OIG Finding No. 2: 	 SIUE Failed to Provide Adequate Documentation to Support the
                       Allowability of TRIO Personnel Costs.
        In the Draft Audit Report, the OIG alleges that SIUE did not properly obtain after-the-
fact reporting of employee activity in order to support personnel costs. The OIG recommends
that SIUE be required to provide adequate documentation to support the personnel costs tested




22
         (600 - 354)/600 X $250,261   =       $102,607.01    TS 2005-2006
         (600 - 539)/600 X $250,261   =        $25,443.18    TS 2006-2007
         (600 - 543)/600 X $220,000   =        $20,900.00    TSCM 2006-2007
                              Total   =       $148.950.19
Final Report
ED-OIG/A05I0013                                                                       Page 32 of 40

by the OIG during their visit or return $334,266 to the DOE, and to provide documentation to
support personnel costs for all employees paid with project funds for the 2004-2005, 2005-2006,
and 2006-2007 grant award years. The OIG further recommends that SIUE be required to revise
and enforce personnel policies and procedures to ensure that activity reports are signed after the
fact by the responsible official and to provide training on these policies and procedures. SIUE
does not concur with Finding No. 2. Documentation supporting the allowability of the TRIO
personnel costs is attached as EXHIBIT D and should conclusively rebut the Finding.

       OIG Recommendation
       2.1 	 Provide adequate documentation to support the costs or return to the Department
             $334,266 in inadequately documented personnel costs for the 2005-2006 and
             2006-2007 grant award years.

        The requested adequate documentation is attached as EXHIBIT D. The attached
compensated activity reports are after-the-fact certifications reflecting the salary and associated
effort reported for each tested pay period. The SIUE Office of Research and Projects generated
these after-the-fact activity reports by creating a database from actual payroll certifications from
the SIUE Office of Human Resources coupled with actual work assignments and activity reports
maintained by the SIUE Office of Institutional Research. The compensated activity reports for
the tested transactions confirm that the work performed by those employees represents a
reasonable estimate of the work performed for the period indicated. The after-the-fact
certifications for the tested payroll periods during 2005-2006 and 2006-2007 have been verified
and signed by individuals who have first-hand knowledge of all work performed. Such
certifications are consistent with requirements under A-21 for sponsored programs. SIUE
believes that the information provided as Exhibit B constitutes the “adequate” documentation
that the OIG requires under Recommendation 2.1 and supports the questioned $334,266 in
personnel costs. Therefore, SIUE does not agree that a return of $334,266 is warranted.

       OIG Recommendation
       2.2 	 Provide to the Department after-the-fact activity reports, signed by the
             responsible official, documenting the personnel costs charged to the TRIO
             projects for all employees paid with project funds for the 2004-2005, 2005-2006,
             and 2006-2007 grant award years that were not tested, or return those funds to
             the Department.

        SIUE does not concur with Recommendation 2.2. SIUE has provided after-the-fact
certifications for all payroll periods tested in the Draft Audit Report. Because SIUE has
provided documentation to support the costs reflected in the entire sample reviewed by the OIG,
there is no need to expand the scope of the review beyond the sample. SIUE requests the OIG to
Final Report
ED-OIG/A05I0013                                                                    Page 33 of 40

review the adequacy of the documentation provided, and if that documentation is adequate, then
SIUE requests the OIG to rescind its recommendation for SIUE to provide after-the-fact activity
reports for all employees for the 2004-2007 grant award years.

       OIG Recommendations
       2.3 	 Revise and enforce personnel policies and procedures to ensure that activity
             reports are signed after the fact and by the responsible official.
       2.4 	 Provide TRIO staff with training on revised payroll policies and procedures.

        SIUE concurs with Recommendations 2.3 and 2.4. SIUE has implemented compliance
with after-the-fact activity reports consistent with OIG recommendations. The requirement of
the compensated activity reports is documented in ORP procedures and addressed in the ORP
Post Award web-site (See EXHIBIT E). Training of TRIO staff on revised payroll policies and
procedures is provided at least annually with the assistance of the SIUE Office of Human
Resources liaison to the East St. Louis Center, who works specifically on personnel and payroll
issues.

OIG Finding No. 3: 	 SIUE Used UB, UBMS, and TS Funds for Unallowable and
                     Inadequately Documented Non-personnel Costs.

         The OIG reports that SIUE used TRIO program funds for unallowable costs, including
field trips that did not include an educational component and the purchase of gift cards, as well
as inadequately documented activity costs, for which SIUE was unable to document participants.
SIUE concurs with Finding No. 3 only to the extent that documentation is apparently unavailable
to verify participation in and costs associated with certain events or activities. However, SIUE
does not concur with Finding No. 3 that certain costs would be disallowed due to certain
activities being unrelated to the objectives of the projects. SIUE’s non-concurrence is grounded
in the applicable regulatory framework, SIUE’s proposal, and DOE’s prior acceptance of certain
activities as allowable.

       OIG Recommendation
       3.1		 Return to the Department $17,453 in TRIO funds expended for
             unallowable costs in the 2005-2006 and 2006-2007 grant award years.

       SIUE does not concur with Recommendation 3.1. Allowable services that may be
provided by a TS project, pursuant to 34 CFR §643.4(g), include, “[e]xposure to college
campuses as well as cultural events, academic programs, and other sites or activities not usually
available to disadvantaged youth” (emphasis added). Similarly, allowable costs for UB funds,
pursuant to 34 CFR §645.40(g), include, “[a]dmission fees, transportation, Upward Bound T-
Final Report
ED-OIG/A05I0013                                                                        Page 34 of 40

shirts, and other costs necessary to participate in field trips, attend educational activities, visit
museums, and attend other events that have as their purpose the intellectual, social, and cultural
development of participants” (emphasis added). SIUE’s position is that the costs for the
activities identified as “recreational” in Finding No. 3 are allowable by definition under the
relevant regulation. The disagreement appears to be a matter of philosophical interpretation of
what activities are “not usually available to disadvantaged youth” or promote “social and
cultural development.” The vagueness of the regulations authorizes a broader interpretation than
that found in the Draft Audit Report.

         SIUE TRIO participants who engaged in “recreational” activities considered disallowable
by OIG were also regularly required to participate in educational activities (e.g. Monday thru
Thursday educational courses coupled to Friday “recreational” activities). The educational and
motivational “recreational” components constituted a total package of educational development
for all participants, including their social and personal wellbeing, which requires exposure to
diverse environments that would include “other sites or activities not usually available to
disadvantaged youth.” Although the Draft Audit Report (p. 8) states that “TRIO staff stated that
they believed the grant proposals permitted recreational trips that did not contain educational
components,” it is SIUE TRIO policy and practice that no students/participants were allowed to
participate in motivational “recreational” activities without full participation in the related
educational activities. EXHIBIT C provides an example of typical program schedules for both
UB and TS programs that clearly demonstrate the coupling of educational and motivational
“recreational” activities in accord with TRIO objectives.

        The SIUE TRIO program also justifiably relied upon the common practice established in
previously awarded grant years that mentoring includes shaping appropriate behavior in all
environments, premised on the theory that exposure to diverse environments with a mentor
allows reinforcement of positive behaviors as well as the correction of negative behaviors. In
fact, the rationale for this theoretical approach was articulated in the approved TRIO grant
proposals:

          The academic and intellectual components of the college experience are impacted by
           the social/cultural component and integral to the success of the student.
          Social wellbeing promotes academic success.
          Building a program that will keep students motivated and excited about learning, thus
           stimulated to learn.

       SIUE also maintains that motivational “recreational” activities such as those described
have historically been allowed under 34 CFR §643.4(g) for visits to institutions out of their
Final Report
ED-OIG/A05I0013                                                                         Page 35 of 40

geographical area, such as when an amusement park is in the same area as the college visited.
Although TRIO participants from East St. Louis, Illinois, may not live a great geographical
distance from the institutions and recreational facilities visited, these participants have severely
limited opportunities to experience such activities due to socioeconomic restraints regardless of
distance. This is the very real nature of the “Target Community” to be served by this program.

        Due to the documented coupling of activities with TRIO program objectives and the
reasonable statutory interpretation explained above, SIUE agrees to return $4,989.44
(representing disallowed gift purchases) of the $17,453.33 requested in Recommendation 3.1 and
shown on Enclosure 1 of the Draft Audit Report.

       OIG Recommendation
       3.2		 Provide adequate documentation to support the costs or return to the Department
             $25,300 in inadequately documented non-personnel costs for the 2005-2006 and
             2006-2007 grant award years.

       3.3		   Review TRIO expenditures for the 2004-2005, 2005-2006, and 2006-2007 grant
               award years that were not tested to ensure that charges are allowable, including
               adequately documented, and return those funds found to be unallowable to the
               Department.

        SIUE’s lack of access to the former employees currently under criminal investigation has
severely hindered SIUE’s ability to respond to this finding in particular. SIUE maintains that
services to participants were provided in the UB and TS activities referenced in the Draft Audit
Report despite incomplete documentation regarding participant lists. SIUE also believes that if
the OIG had been able to compare the participant lists it received for these activities against the
Blumen data, it likely would have found support for the activity participant lists. Since the costs
in question correspond to actual activities, and since participant lists do exist, SIUE believes it is
inappropriate to assume that the activities, in fact, did not occur and that the costs for these
activities should be repaid. At the very least, SIUE should be required to return only that
funding related to costs for which there is no support for student participation, and only after
SIUE has been able to speak with the former employees who managed these activities.

        As detailed earlier in this response, corrective measures were implemented immediately
after SIUE discovered and self-reported the alleged fraud involving use of TRIO funds and
records. These corrective measures include: 1) all TRIO employees receive ongoing training on
TRIO policies and procedures, including training on maintaining appropriate documentation for
TRIO non-personnel costs; 2) the TRIO Director conducts a monthly review and random spot
checks of this documentation; and 3) the purchase of gift cards is strictly prohibited.
Final Report
ED-OIG/A05I0013                                                                      Page 36 of 40



       OIG Recommendation
       3.4		 Ensure that staff members charged with administering the TRIO grants
             understand and adhere to established policies and procedures for the
             management of TRIO funds, including the restriction on the purchase of gift
             cards.
       3.5		 Ensure that staff members charged with administering the TRIO grants retain
             adequate documentation for TRIO non-personnel costs, including documentation
             clearly indicating who received the good or service.

        SIUE concurs with Recommendations 3.4 and 3.5. As detailed elsewhere in this
response, corrective measures were implemented immediately after SIUE discovered and self-
reported the alleged criminal fraud involving use of TRIO funds and records. All TRIO
employees continue to receive ongoing training on TRIO policies and procedures, including
maintenance of appropriate documentation for TRIO non-personnel costs. The TRIO Director
now conducts a monthly review and random spot checks of this documentation. The purchase of
gift cards is strictly prohibited.

       OIG Recommendation
       3.6		 Develop program activities that have as their purpose the intellectual, social, and
             cultural development of participants, including field trips to museums,
             postsecondary educational institutions, and other educational activities.

        SIUE concurs with Recommendation 3.6 and intends to fully adhere to the TRIO
Proposal submitted and approved by DOE, and to comply with all regulations applicable to the
TRIO grant. Approved TRIO Proposal language includes: “Services to Be Provided (v.)
Additionally, to further increase the chances of success at completing secondary education
programs, and motivate the entry/reentry into postsecondary education programs, this Talent
Search Project will provide the following supportive activities: (1) exposure to college campuses,
(2) cultural, educational and career oriented field trips and activities, (3) workshops for parents,
and (4) mentoring programs.” SIUE will work with DOE to seek official clarification regarding
interpretation and application of the regulatory definition of these general services to specific
activities .

OIG Finding No. 4:		 SIUE Failed to Maintain Adequate TS and UB Participant
                     Records.

       SIUE does not concur fully with Finding No. 4 for the reasons detailed in response to
each Recommendation below.
Final Report
ED-OIG/A05I0013                                                                    Page 37 of 40



       OIG Recommendation
       4.1		 Return to the Department $22,882 in grant funds expended on project
             participants whose eligibility had not been determined and documented.

        SIUE is unable to concur or not concur with Recommendation 4.1 in that the Draft Audit
Report provides insufficient information for SIUE to respond fully to Finding No. 4. In
particular, Finding No. 4 and Recommendation 4.1 are based on a sample of unidentified files
that prevent SIUE from cross-referencing to entries in the corresponding Blumen database. As
shown in the response to Finding No. 1 and in EXHIBIT A, SIUE maintains TRIO participant
records in the Blumen software management system for the audited 2005-2006 and 2006-2007
award years. Since a “record” for purposes of 34 CFR §643.32(c)(1) for TS programs and 34
CFR §645.43(c)(1) for UB programs would presumably include an electronic record maintained
in the Blumen database, identifying information for the sampled files is needed in order for SIUE
to review the Blumen data for the records in question and, then, to appropriately respond.

       OIG Recommendation
       4.2		 Conduct a physical inventory of UBEC, UBBEV, and TSCM 2004-2005, 2005-
             2006, and 2006-2007 participant files to ensure that files exist for each
             participant and contain the required eligibility documentation. If the physical
             inventory reveals missing files or eligibility documentation, return to the
             Department funding associated with participants whose eligibility had not been
             determined and documented.
       4.3		 Inspect all 2004-2005, 2005-2006, and 2006-2007 TS participant files to ensure
             that the files contain required eligibility documentation. If inspection reveals
             missing eligibility documentation, return to the Department funding associated
             with participants whose eligibility had not been determined and documented.

        SIUE concurs, in part, with Recommendation 4.2 and Recommendation 4.3 and is
currently conducting an inventory and inspection of the files and data printouts for TS 2005-2006
and 2006-2007, and for TSCM 2006-2007. SIUE does not concur, however, with the
recommendations to the extent that they exceed the stated scope of the Draft Audit Report by
incorporating, without explanation or justification, the 2004-2005 grant award year for the
referenced TRIO programs. Furthermore, a low error rate such as is evident for the tested
UBBEV participant files would seem not to warrant an extensive file review. While SIUE has
Blumen data for the 2004-2005 grant year and, presumably, many of the participants from that
grant year were also participants in the 2005-2006 grant year, a physical review of these
additional files and cross-referencing to the database would be cumbersome and resource-
intensive. As a means of moving forward and assuring ongoing compliance, SIUE is currently
Final Report
ED-OIG/A05I0013                                                                       Page 38 of 40

conducting a voluntary inventory analysis of all TRIO program records for the 2007-2008 grant
award year.

         SIUE has acknowledged in response to Finding No. 1 record management difficulties due
to employee misconduct in its TRIO programs in 2005-2006 and 2006-2007. Since that time, in
addition to SIUE’s self-reporting and full cooperation with the OIG and DOE, SIUE has looked
forward and improved its records management, as evidenced by the recent voluntary inventory
analysis of the 2007-2008 TRIO data referenced above. This ongoing inventory demonstrates
that the number of student files present and reviewed equals or exceeds the number of students
funded to serve for UBEC (110 students), UBBEMV (65 students), and UBMS (50 students).
The percentage of those files evaluated as complete and documenting eligibility, assessment
support, services, and educational progress averages greater than 97% as of the date of this letter.
The number of student files present and reviewed to date equals the number of students funded to
serve for Talent Search EB (600 students) and Talent Search CM (600 students). The percentage
of those TSEB and TSCM files evaluated as complete for documenting eligibility, assessment,
services, and educational progress currently averages 95%. While this inventory is not yet
complete and higher numbers are anticipated, it is apparent that successful corrective actions are
now in place to address prior record management deficiencies. For example, complete physical
files are now maintained for all TRIO participants to comport with and back-up the electronic
records and a regular review of physical files has been instituted.

         Notwithstanding these efforts to improve record management, including maintenance of
complete physical documentation, SIUE does not agree that a record of eligibility based only on
a “physical inventory” of files should be the sole measure of compliance with the regulations
cited in the Draft Audit Report (p. 10). This seems particularly true if a return of funds is
required for a participant who clearly received services and whose basis of eligibility is found in
SIUE’s electronic record. SIUE’s position in this regard is premised on the plain meaning of the
cited regulatory language of 34 CFR §643.32(c)(1) and 34 CFR §645.43(c)(1): “.a grantee shall
maintain a record of – (1) The basis for the grantee’s determination that the participant is eligible
to participate in the project …” SIUE’s Blumen data on each participant clearly states “the basis
for [SIUE’s] determination that the participant is eligible to participate.” Although the Blumen
data summary information is basic, this electronic record should be deemed sufficient to meet the
cited regulatory standard. Therefore, since SIUE has already agreed, in response to Finding No.
1, to return $148,950.19 for TS 2005-2006, TS 2006-2007, and TSCM 2006-2007 due to
unavailability of records that include eligibility records, no additional return of funding as a
result of Finding No. 4 should be required.
Final Report
ED-OIG/A05I0013                                                                    Page 39 of 40



       OIG Recommendation
       4.4		 Ensure that TRIO staff members receive training on grant requirements for
             document retention and participant eligibility verification.

       SIUE concurs with OIG Recommendation 4.4 and has implemented a revised
professional training program for TRIO personnel. As referenced in response to Findings No. 1
and No. 3 above and as shown in EXHIBIT B, training programs are now in place for TRIO
personnel in order to improve record keeping, documentation, and regulatory compliance.



Conclusion

        SIUE has responded in good faith to the Draft Audit Report and demonstrated that 1) the
TRIO programs have maintained a Blumen database verifying that TRIO services were provided
to a substantially greater number of eligible participants during the audited grant award years
(2005-2006 and 2006-2007) than found by the OIG audit due to the unavailability of the data; 2)
adequate documentation, including after-the-fact activity reports, may be compiled from existing
documentation to support the personnel costs expended in the audited grant years; 3) certain non-
personnel costs for so-called “recreational” activities may be allowable under a broader
interpretation of the relevant regulations; 4) SIUE has strengthened personnel training processes
emphasizing policy, procedures, and regulatory compliance; and 5) an in-depth inventory review
and analysis of TRIO participant documentation has occurred for the 2007-2008 grant year.
SIUE has also agreed to return $153,939.6323 in funds for the audited grant years due to its
inability to provide adequate documentation or when its non-compliance was clear and
substantial.

        Lastly, SIUE has acknowledged the financial irregularities in its East St. Louis TRIO
programs stemming from employee misconduct, including alleged criminal fraud, which greatly
impinged SIUE’s ability to collect and verify data to respond to the Draft Audit Report. SIUE
took immediate corrective actions to prevent further damage to the programs, self-reported the
irregularities upon discovery to law enforcement and DOE, and has and will continue to
cooperate fully with law enforcement, the OIG, and DOE in all aspects of this matter. However,
for the reasons detailed earlier concerning SIUE’s limited access to facts, practices, and
documentation known only to those former key TRIO employees now under criminal
investigation, SIUE requests that the OIG Final Audit Report not be forwarded to the
Department of Education until final resolution of the criminal matters by the U.S. Attorney’s




23
       Recommendation 1.1 & 1.2        $148,950.19
       Recommendation 3.1                $4,989.44
                               Total   $153,939.63
Final Report
ED-OIG/A05I0013                                                                    Page 40 of 40

Office for the Southern District of Illinois and after SIUE has been able to supplement this
response to the Draft Audit Report with information received from candid conversations with
those former key employees. In the interim, SIUE requests that this response to the Draft Audit
Report be viewed as preliminary in scope.

       I trust the above information and enclosures are responsive to the Draft Audit Report and
adequate for your purposes. Please contact me at (618) 650-2514 or jmclell@siue.edu if you
have questions or need clarifications.

Sincerely,

/s/

Jeffrey C. McLellan
Senior Associate General Counsel
Special Assistant to the Chancellor

JCM/mdo
Enclosures
cc:    Vaughn Vandegrift