oversight

Oversight of the Department of Education's Reimbursable Work Authorization Process.

Published by the Department of Education, Office of Inspector General on 2006-09-25.

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

                Oversight of the Department of Education’s 

                Reimbursable Work Authorization Process



                                   FINAL AUDIT REPORT 





                                            ED-OIG/A17G0001 

                                             September 2006



Our mission is to promote the efficiency,                   U.S. Department of Education
effectiveness, and integrity of the                         Office of Inspector General
Department’s programs and operations.                       Financial Statements Internal Audit Team
                                                            Washington, DC
Statements that managerial practices need improvements, as well as other conclusions and
recommendations in this report, represent the opinions of the Office of Inspector General.
Determinations of corrective action to be taken will be made by the appropriate
Department of Education officials.


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 THE INSPECTOR GENERAL




Memorandum
                                                         StP 2 5 2006



TO:           Michell C. Clark
              Assistant Secretary for Management
              Office of Man~7ement

FROM:          Helen Lew        ttd&iJMJ
               Assistant Inspector General for Audit Services
               Office of Inspector General

SUBJECT:       Final Audit Report
               Oversight of the Department of Education's Reimbursable Work Authorization
               Process (Control Number ED-OIG/A17GOOOl)


Attached is the subject final audit report that covers the results of our review of oversight of the
Department of Education's Reimbursable Work Authorization Process at Washington, DC, during the
last quarter of fiscal year 2005. An electronic copy has been provided to your Audit Liaison Officers.
We received your comments concurring with the findings and recommendations in our draft report.

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

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

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

We appreciate the cooperation given us during this review. If you have any questions, please call Greg
Spencer, Director, Financial Statements Internal Audit Team at (202) 245-6015.


Enclosure

                                     400 MARYLAND AVE., S.W., WASHINGTON, DC 20202-1510
                                                         www.ed.gov

             Our mission is to ensure equal aCcess to education and to promote educational excellence throughout the nation.
Electronic Distribution List:

       Nina Aten, OM

        Scott Taylor, OM

       Norma Duncan, OM

        Shelia Russell, OM

       . Veronica Trietsch, OM
                                        TABLE OF CONTENTS 



                                                                                                                       Page

EXECUTIVE SUMMARY .......................................................................................................... 1

BACKGROUND……………………………………………………………………………….. 3

AUDIT RESULTS……………………………………………………………………………… 4

         Finding No. 1 – Lack of Clarity of Roles and Responsibilities for the Various
                         Personnel Governing the Reimbursable Work Authorization
                         Process

                   Recommendation…………………………………………………………………5

         Finding No. 2 – Inadequate Financial Accountability and Ineffective Reporting of
                         Reimbursable Work Authorization Activities

                   Recommendations………………………………………………………………..7

         Finding No. 3 – Payment of Premium Pay Without Proper Documentation of Overtime
                         Requests and Authorization Forms

                   Recommendation……………………………………………………………….. 9

OTHER MATTERS……………………………………………………………………………...9

OBJECTIVES, SCOPE, AND METHODOLOGY….………….…………………………….…9

AUTHORIZATION MEMORANDUM ……………………………………………Appendix A

LIST OF ACRONYMS………………………………………………………………Appendix B

OFFICE OF MANAGEMENT’S RESPONSE TO DRAFT REPORT……………...Appendix C
                               EXECUTIVE SUMMARY 


The Federal Property and Administrative Services Act of 1949 gave the General Services
Administration (GSA) the responsibility to manage the Government’s real property. The Public
Buildings Service (PBS) was established by the Public Buildings Act of 1959, which sets forth
the functions of PBS, including “providing for repairs and alterations of Government owned or
leased space on a reimbursable basis.” This function is the basis for the Reimbursable Work
Authorization (RWA) program which was established to capture and bill the costs of altering,
renovating, repairing, or providing services in space managed by GSA over and above the basic
operations financed through rent.

The Office of Management/Facilities Services (OM/FS) manages the Department of Education’s
(Department) RWA function. OM Project Managers (OM/PMs) communicate the Department’s
request to GSA and agree on a comprehensive scope of work and completion date with GSA.
GSA is responsible for preparing direct cost estimates, its management and indirect cost, and all
other related cost for services with the Department.

The objectives of our audit were to determine (1) the adequacy of the Department’s oversight of
the RWA process, (2) if RWA funds are tracked and accounted for properly, (3) if a systemic
issue exists with the tracking and accounting of the RWA funds, and (4) the reasonableness of
employee overtime pertaining to the RWA process.

Our audit disclosed that there is (1) a lack of clarity of roles and responsibilities for the various
personnel governing the RWA process, (2) inadequate financial accountability and ineffective
reporting of RWA activities, and (3) a lack of compliance with the Department’s guidance on
premium pay. In addition, our audit work revealed that no one individual appeared to have
earned excessive overtime when compared to all other individuals in OM/FS.

To correct the identified weaknesses, we recommend that the Assistant Secretary for
Management:

   ‰   Develop, disseminate, and keep current written policies and procedures for the RWA
       process. The policies and procedures should be specific and detailed enough to provide
       sufficient guidance for a standardized approach to be followed by all Department
       personnel responsible for RWAs. At a minimum, the policies and procedures should be
       developed by OM with support from the Principal Offices (PO) and GSA and should
       include a description of the RWA process, when RWAs are to be used, the roles and
       responsibilities of GSA, OM and the POs, and the interdependency of OM and POs for
       financial accountability.

   ‰   Establish a clear understanding with GSA that the Department will refuse payment for
       work performed outside of the agreed upon scope of the RWA agreements.



______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report
   ‰   Track and reconcile RWA funds appropriated, expended and the balance available with
       GSA and the POs on a regular basis, using available tools from GSA and the Department.
       The reconciliation should include documentation of the research performed and the
       resolution of any differences identified. All differences identified should be researched
       and resolved in a timely manner. In addition, a supervisory review and approval of the
       reconciliations should be performed and documented.

   ‰   Ensure reconciliations are performed properly by providing OM/FS and PO personnel
       with access to and training on the available GSA and Departmental tools (e.g., GSA PBS
       RWA website and the Award Financial History Report in Oracle).

   ‰   Ensure that OM/FS works with GSA in closing out RWAs.

   ‰   Not pay overtime unless requests are approved in advance by completion of the
       authorizing memorandum, Appendix A, by authorized officials in accordance with the
       Department’s guidance on premium pay.

In response to the draft audit report, OM concurred with the findings and recommendations and
provided a proposed corrective action plan to address each recommendation. The full text of
OM’s response is included as Appendix C to this audit report.




______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report                     Page 2
                                    BACKGROUND 


The Federal Property and Administrative Services Act of 1949 gave GSA the responsibility to
manage the Government’s real property. PBS was established by the Public Buildings Act of
1959, which sets forth the functions of PBS, including “providing for repairs and alterations of
Government owned or leased space on a reimbursable basis.” This function is the basis for the
RWA program which was established to capture and bill the costs of altering, renovating,
repairing, or providing services in space managed by GSA over and above the basic operations
financed through rent.

OM/FS manages the Department’s RWA function. OM/PMs communicate the Department’s
request for services to GSA and agree on a comprehensive scope of work and completion date
with GSA. GSA is responsible for preparing direct cost estimates, its management and indirect
cost, and all other related cost for services with the Department.

The RWA (GSA Form 2957) is a document submitted by federal agencies requesting that GSA
perform work for them on a reimbursable basis. It serves as a written agreement between the
GSA and the requesting agency, describing the work or services ordered and giving an estimate
of the cost of work or services. The RWA provides the requesting agency with a citation that its
appropriation or fund will be charged and a statement that funds equal to cost estimates are
available for immediate obligation.

As GSA pays it contractors, it then bills the Department through Intra-governmental Payment
and Collection (IPAC) statements. IPACs are immediate transfers of funds between federal
agencies. The Department may reject payment if the goods or services have not been received
within 90 days of receiving the IPAC statement. Once the Department disputes a charge, the
Department is reimbursed and GSA must prove that the charge is valid.

Departmental RWAs, projects and services that benefit all POs within the Department, or in
some cases, selective POs in the Department, are funded through common support. These funds
are allocated to the OM’s Executive Office through the Office of Planning, Evaluation and
Policy Development/Budget Service (OPEPD/BS). OM’s accounting string is assigned to these
Departmental RWAs. OM/FS and OM’s Executive Office staff account for these funds. RWAs
that are specific to a PO are funded through the applicable PO’s accounting string. OM/FS and
the PO’s Executive Office staff both account for these funds.

OM/PMs track RWA expenditures using one of two different GSA tracking systems: PBS and
Federal Supply Service (FSS). In addition, GSA representatives periodically provide OM/PMs
Funds Status Reports, which give an accounting of RWA expenditures and GSA costs to date.
PO staff interviewed stated that they do not contact GSA directly but rely on OM/FS for RWA
status information. Currently, POs are attempting to manage RWA expenditures through IPAC
statements and Award Financial History Reports in Oracle.

______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report                     Page 3
                                    AUDIT RESULTS 


Overall, we found that improvements are needed in the oversight of the RWA process. Our audit
revealed that there is a lack of clarity of roles and responsibilities for the various personnel
governing the RWA process and inadequate financial accountability and ineffective reporting of
RWA activities. In addition, although our audit work revealed that no one individual appeared to
have earned excessive overtime when compared to all other individuals in OM/FS, there is a lack
of compliance with the Department’s guidance on premium pay.

In response to the draft audit report, OM concurred with the findings and recommendations and
provided a proposed corrective action plan to address each recommendation. The full text of
OM’s response is included as Appendix C to this audit report.



Finding No. 1 –       Lack of Clarity of Roles and Responsibilities for the
                      Various Personnel Governing the RWA Process


POs, as well as OM/PMs, lack meaningful and effective guidance on the oversight of the RWA
process. To date, OM has not developed written policies and procedures for the RWA process.
Results of interviews conducted with personnel involved in the RWA process reflect that
responsibilities have not been clearly defined and that various POs and PMs have created ad hoc
systems and procedures for oversight of RWAs. By not having written policies and procedures,
a lack of understanding exists about OM and PO functional responsibilities and how to
effectively carry out those responsibilities. Accountability is also diminished.

In some cases, POs rely on one person to establish their RWA process, making them vulnerable
to changes in personnel. In other cases, when POs were in close proximity to GSA, its staff
contacted GSA directly, bypassing OM, which resulted in OM not being aware of the RWA.
Departmental policies and procedures would provide standard guidance to ensure consistent
performance at a required level of quality resulting in more efficient and effective operations and
accountability.

U.S. Government Accountability Office’s (GAO’s) Standards for Internal Control in the
Federal Government, GAO/AIMD-00-21.3.1, dated November 1999 (GAO’s Standards for
Internal Control), state in the standard on Control Environment that “the agency’s organizational
structure clearly define key areas of authority and responsibility and establish appropriate lines
of reporting. The environment is also affected by the manner in which the agency delegates
authority and responsibility throughout the organization. This delegation covers authority and
responsibility for operating activities, reporting relationships, and authorization protocols….”


______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report                     Page 4
In the standard on Information and Communications, GAO’s Standards for Internal Control also
state “pertinent information should be identified, captured, and distributed in a form and time
frame that permits people to perform their duties efficiently. Effective communications should
occur in a broad sense with information flowing down, across, and up the organization. In
addition to internal communications, management should ensure there are adequate means of
communicating with, and obtaining information from, external stakeholders that may have a
significant impact on the agency achieving its goals.”

Recommendation

To improve the Department’s oversight of the RWA process, we recommend that the Assistant
Secretary for Management:

       1.1 	   Develop, disseminate, and keep current written policies and procedures for the
               RWA process. The policies and procedures should be specific and detailed
               enough to provide sufficient guidance for a standardized approach to be followed
               by all Department personnel responsible for RWAs. At a minimum, the policies
               and procedures should be developed by OM with support from the POs and GSA
               and should include a description of the RWA process, when RWAs are to be used,
               the roles and responsibilities of GSA, OM and the POs, and the interdependency
               of OM and POs for financial accountability.




Finding No. 2 –       Inadequate Financial Accountability and Ineffective
                      Reporting of RWA Activities


Proper reconciliations of Department RWA funds are not being performed consistently.
Available GSA data and internal system reports are not being used; accountability for the various
aspects of the RWA process is not defined; and prior OM/FS management did not require regular
reconciliations between OM/FS, GSA, and the POs.

OM/FS has stated that it is in the process of implementing monthly meetings with POs that have
separate appropriations on the status of their RWA funds. At these meetings, POs will be
provided with OM tracking documentation and GSA Funds Status Reports. In addition, OM/FS
is also implementing quarterly meetings with GSA to discuss GSA Funds Status Report
balances.

By not performing reconciliations on a consistent basis the Department lacks assurance that
RWA data is accurate and complete; material errors or irregularities are detected; differences are
resolved quickly; and year-end reporting of RWA expenditures and unexpended obligations are
accurate. In addition, OM cannot be certain that it is maintaining an accurate accounting of the
population of Departmental RWAs for which GSA is procuring services.


______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report 	                   Page 5
For example, the table below reflects some of the differences we noted in available balances
between GSA, OM and Oracle financial data.

                                Available Balance Comparison
Sample
                RWA Number/ED Number                 GSA              OM              Oracle
Number

   2          RWA 3043941/ED-02-NP-0969           $32,898.00       $32,898.00       ($39,165.58)

   3          RWA 3321472/ED-04-NP-0172           $97,099.00       $97,099.00       $113,874.08

   4          RWA 3535006/ED-05-NP-0256              $124.52          $124.52        $8,338.50

   5          RWA 3475263/ED-05-NP-0121            $4,982.00        $4,982.00       $16,616.93

   7          RWA 2857536/ED-03-AR-0053            $2,376.78        $2,376.78            $0.00

   9          RWA 3571125/ED-05-AR-0108              $776.52          $227.43        $1,875.52

   10         RWA 3539646/ED-05-NP-0419            $9,733.51        $9,443.65       $90,600.00

   11         RWA 2758169/ED-01-NP-0769              ($0.72)          ($0.72)       $59,830.27

In addition to the available balance differences, we noted other problems with accountability
over RWA activity:

   ‰    Item number seven is an Office for Civil Rights (OCR) RWA created in June 2003 for
        architectural services. However, due to a data entry error on the original RWA
        paperwork, GSA work under this RWA was charged multiple times to an interagency
        agreement between the Office of the Chief Financial Officer (OCFO) and Health and
        Human Services. The lack of effective reconciliation procedures prevented OM/FS from
        identifying and resolving this problem in a timely manner.

   ‰    During the course of the audit, we were also provided an email from OM/FS that stated
        GSA applied some OM/FS funds to another PO’s project by mistake over the past couple
        of years. While OM/FS attempted to reconcile this discrepancy, GSA was unable to
        provide any specific information. The difference remains unresolved.

   ‰    OM/FS management stated that there have been instances where personnel outside of
        OM/FS made requests, and GSA performed and billed for work outside of the agreed
        upon scope of the RWA. This creates problems for OM/FS when it attempts to determine
        the legitimacy of expenditures, as well as the available balance amounts. In some
        instances, this resulted in OM/FS having to allocate additional funding to complete the
        work anticipated under the original RWA agreement.

   ‰    OM/FS management also stated that there have been instances where GSA has closed
        Department RWAs without prior authorization. This creates problems in completing
        planned work in the RWA.

______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report                     Page 6
GAO’s Standards for Internal Control state in the standard on Control Activities that “control
activities are the policies, procedures, techniques, and mechanisms that enforce management’s
directives, such as the process of adhering to requirements for budget development and
execution. They help ensure that actions are taken to address risks. Control activities are an
integral part of an entity’s planning, implementing, reviewing, and accountability for stewardship
of government resources and achieving effective results. Control activities occur at all levels and
functions of the entity. They include a wide range of diverse activities such as approvals,
authorizations, verifications, reconciliations, performance reviews, maintenance of security, and
the creation and maintenance of related records which provide evidence of execution of these
activities as well as appropriate documentation.”

Office of Management and Budget’s revised Circular No. A-123, Management’s Responsibility
for Internal Control, dated December 21, 2004, states “management is responsible for
establishing and maintaining internal control to achieve the objectives of effective and efficient
operations, reliable financial reporting, and compliance with applicable laws and regulations...
Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved: effectiveness and
efficiency of operations, reliability of financial reporting, and compliance with applicable laws
and regulations.”

Recommendations

We recommend that the Assistant Secretary for Management:

       2.1 	   Establish a clear understanding with GSA that the Department will refuse
               payment for work performed outside of the agreed upon scope of the RWA
               agreements.

       2.2 	   Track and reconcile RWA funds appropriated, expended, and the balance
               available with GSA and the POs on a regular basis, using available tools from
               GSA and the Department. The reconciliation should include documentation of
               the research performed and the resolution of any differences identified. All
               differences identified should be researched and resolved in a timely manner. In
               addition, a supervisory review and approval of the reconciliations should be
               performed and documented.

       2.3 	   Ensure reconciliations are performed properly by providing OM/FS and PO
               personnel with access to and training on the available GSA and Departmental
               tools (e.g., GSA PBS RWA website and the Award Financial History Report in
               Oracle).

       2.4 	   Ensure that OM/FS works with GSA in closing out RWAs.




______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report 	                   Page 7
Finding No. 3 –       Payment of Premium Pay Without Proper Documentation
                      of Overtime Requests and Authorization Forms

Our review revealed that OM/FS personnel did not complete the required standard authorization
forms for all premium pay earned during the review period, and OM officials did not follow
Departmental instructions regarding employees that received overtime pay in lieu of
compensatory time off. For pay period 25, 2004 through pay period 24, 2005, OM paid premium
pay on a total of 617.5 hours. Based on a comparison of SF-5003 Overtime Request and
Authorizations provided and payroll records reviewed for OM/FS employees for this period, four
employees were compensated for a total of 201.5 overtime hours without proper authorization
forms being completed, and two employees were compensated for a total of 9.5 hours over the
hours authorized on the SF-5003 Overtime Request and Authorizations provided for review, for
a total of 211.0 hours compensated without proper authorization. For the same pay periods,
proper overtime request and authorization forms supported a total of 406.5 hours of overtime. In
addition, the required Senior Officer approval was not obtained for the SF-5003 Overtime
Request and Authorizations for employees that received overtime pay in lieu of compensatory
time off.

By not having proper Overtime Request and Authorization forms for premium pay and following
Departmental instructions, employees working without proper overtime request authorizations
risk that funds to compensate them for overtime work may not be available within their PO.

U.S. Department of Education Personnel Manual Instruction (PMI) 550-3, Premium Pay, dated
October 25, 1984 states, “overtime be approved in advance by completion of SF-5003 (Overtime
Request and Authorization) by officials who have been delegated authority to approve overtime.
The only exception is in instances of bona fide emergencies where the Recommending or
Approving Officials find it impracticable to obtain advance authorization, and where there is no
doubt that the overtime would be approved. In such instances, the supervisor will submit SF-
5003 (Overtime Request and Authorization) for authorization at the earliest possible time.”

In addition, PMI 550-3, Premium Pay, states “when irregular occasional overtime is properly
authorized for employees who are exempt from the provisions of the Fair Labor Standards Act
(FLSA) and whose basic compensation is above the maximum for GS-10 (GS-10, step 10),
compensatory time off in lieu of overtime pay will be authorized…However, in instances of
emergencies, exceptions may be permitted for employees up through grade GS-14 to receive
overtime pay for overtime work with prior approval of their Senior Officer (any official who is
the head of an office or major organizational component of the Department and reports directly
to the Secretary and Under Secretary).”

Recently the Department issued a revised PMI 550-3, Premium Pay, effective June 25, 2006.
Under the new guidance, Department officials requesting employee overtime are required to
complete an authorizing memorandum, Appendix A, which has replaced SF-5003 (Overtime
Request and Authorization).

______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report                     Page 8
Recommendation

To improve the Department’s oversight of premium pay we recommend that the Assistant
Secretary for Management:

       3.1 	   Not pay overtime unless requests are approved in advance by completion of the
               authorizing memorandum, Appendix A, by authorized officials in accordance
               with the Department’s guidance on premium pay.




                                  OTHER MATTERS


During the course of our fieldwork we noted one OM/FS employee that was classified in the
Department’s payroll system as non-exempt from the FLSA when the individual’s duties,
responsibilities and grade level were commensurate with employees that are exempt from the
FLSA. OM confirmed that this employee was classified incorrectly. According to payroll
records, this individual earned 11.0 hours of overtime during the review period, and under the
non-exempt status received a total of $563.54 in overtime pay. According to our calculations, as
a FLSA exempt employee, this individual should have received a total of $377.52 for the 11.0
hours of overtime earned. The incorrect classification resulted in the individual being overpaid by
$186.02.

While we reviewed payroll data to determine the reasonableness of RWA related overtime, it was
not within the scope of this audit to determine the adequacy of the Department’s internal controls
over the payroll system, or determine the policies and procedures that OM/Human Resources
uses to classify an employee as exempt or non-exempt from the FLSA. However, we have
relayed the information to OM/Human Resources, and it is in the process of changing the
employee’s status in the Department’s payroll system from non-exempt to exempt from the
FLSA.




               OBJECTIVES, SCOPE, AND METHODOLOGY


The objectives of our audit were to determine (1) the adequacy of the Department’s oversight of
the RWA process, (2) if RWA funds are tracked and accounted for properly, (3) if a systemic
issue exists with the tracking and accounting of the RWA funds, and (4) the reasonableness of
employee overtime pertaining to the RWA process.




______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report 	                   Page 9
To accomplish our objectives, we focused on identifying the Department’s internal control
policies and procedures pertaining to RWAs, obtaining a walkthrough of the RWA process, and
obtaining and analyzing RWA tracking and reconciliation records. We conducted interviews
with staff from OM and the OCFO regarding the RWA process. Additional interviews were held
with staff from Federal Student Aid (FSA) and the OCR regarding the RWA funding and
payment process. In addition, we contacted GSA to discuss its role in the RWA process.

We received spreadsheets from OM/FS that listed all of the Department RWAs that OM/FS
tracked during the last quarter of fiscal year 2005. We then pulled GSA figures from the PBS
RWA website for these RWAs. We also ran Award Financial History Reports in Oracle. Each
of the sources included RWA balances including total obligated amounts, expenditures, and
remaining available balance. We noted the RWAs that had discrepancies in the remaining
available balances. From the RWAs that had balance discrepancies, we selected 12 for further
review.

Department RWAs are funded through either OM appropriations or directly from appropriations
of FSA, OCR, and Office of Inspector General (OIG). Due to the increased complexity inherit in
having the POs directly funding its RWAs, we selected FSA and OCR RWAs for our audit
sample. Because our test results reflected a consistent level of problems with the accounting of
funds, we decided not to do any further sampling and report out on the current findings.

To satisfy the fourth objective, we secured payroll records for all employees in OM/FS from pay
period 25, 2004 through pay period 24, 2005. We reviewed the payroll records provided by the
National Business Center, Denver Payroll Office, to determine the reasonableness of RWA
related overtime. Reasonableness was defined as any one individual having excessive overtime
when compared to all other individuals. We also requested and reviewed employee biweekly
timesheets and SF-5003s (Overtime Request and Authorization) to determine if the approval of
employee overtime pertaining to the RWA process was adequately documented. In addition, we
researched overtime guidance to determine employee payment rates based on FLSA exemption
status and grade level. We then calculated overtime pay rates based on the employee’s FLSA
exemption status and grade level to ensure employees were paid the correct premium pay.

We relied, in part, on computer data generated from PBS’ website, OM tracking records, and
Oracle. We assessed the reliability of this data by tracing details to IPAC statements establishing
expenditure data. We also compared the obligation data amongst the three sources. We were
able to derive some missing data from other records and determined that our findings and
recommendations would not be affected if the data provided differed slightly. Therefore, we
concluded that the data was sufficiently reliable for use in meeting the audit objectives.

Our audit focused on RWAs tracked by OM during the last quarter of fiscal year 2005. In
addition, we reviewed personnel payroll records from pay period 25, 2004 through pay period
24, 2005. We performed our fieldwork at OM, OCFO, and at applicable Department POs
located in Washington, DC, from November 14, 2005, through February 27, 2006. We held an
exit conference with Department officials on February 27, 2006. We performed our audit in
accordance with generally accepted government auditing standards appropriate to the scope of
the review described above.

______________________________________________________________________________
ED-OIG/A17G0001                 Final Audit Report                     Page 10
                                                                                       Appendix A

                                                                              PURPOSE: ACTION

MEMORANDUM


TO:                                     [Approving Official]        


FROM:                                   [Recommending Official] 


SUBJECT:                                Request for Overtime for [employee name] 


ISSUE


In accordance with Personnel Manual Instruction (PMI) 550-3 (Premium Pay) 

Section VII (Procedures), I hereby request overtime for [employee(s)] in the amount of [number
of hours].

DISCUSSION

[PROVIDE DETAILED JUSTIFICATION DESCRIBING SPECIFICALLY THE REASON
FOR THE OVERTIME].

RECOMMENDATION

Approve request for overtime.

DECISION

I.         Approving Official (Required)

________          ___________      ___________________________                __________________
 Approve            Disapprove                 Signature                             Date


II.        Budgeting Official/Statement of Availability of Funds (Required)

________          ___________      ___________________________                __________________
 Approve            Disapprove                 Signature                             Date


III.       Senior Officer Approval for Overtime Pay In Lieu of Compensatory Time

________          ___________      ___________________________                __________________
 Approve            Disapprove                 Signature                             Date


NUMBER OF HOURS WORKED BY EACH EMPLOYEE:                                ________

CONTACT: PO: NAME: TELEPHONE NUMBER
                                                              Appendix B



             List of Acronyms

Department        Department of Education

FLSA              Fair Labor Standards Act

FS                Facilities Services

FSA               Federal Student Aid

FSS               Federal Supply Service

GAO               Government Accountability Office

GSA               General Services Administration

IPAC              Intra-governmental Payment and Collection

OCFO              Office of the Chief Financial Officer

OCR               Office for Civil Rights

OIG               Office of Inspector General

OM                Office of Management

OM/FS             Office of Management/Facilities Services

OM/PM             Office of Management/Project Managers

OPEPD/BS          Office of Planning, Evaluation and Policy
                  Development/Budget Service

PBS               Public Buildings Service

PM                Project Managers

PO                Principal Office

RWA               Reimbursable Work Authorization

SF                Standard Form
                                                                                                                      Appendix C

                             UNITED STATES DEPARTMENT OF EDUCATION

                                                         OFFICE OF MANAGEMENT

                                                                                                                 ASSISTANT SECRETARY




                                                            August 29, 2006

TO: 	            Helen Lew
                 Assistant Inspector General for Audit Services
                 Office ofInspector General

FROM: 	          Michell C. Clark              J) .  ~                       ~ r;,~
                 Assistant Secretary for Management

SUBJECT:     DRAFT AUDIT REPORT: Oversight ofthe Department of Education's
Reimbursable Work Authorization Process, Control Number ED-OIG/AI7GOOOI

Thank you for your draft audit report, Oversight ofthe Department ofEducation's Reimbursable
Work Authorization Process, ED-OIG/A17GOOOI dated July 2006. The Office of Management
(OM) concurs with your three findings and related recommendations. The following are the
proposed corrective actions.

Finding 1: Lack of Clarity ofRoles and Responsibilities for the Various Personnel Governing
the RW A Process

Recommendation 1.1: Develop, disseminate, and keep current written policies and procedures
for the RWA process. The policies and procedures should be specific and detailed enough to
provide sufficient guidance for a standardized approach to be followed by all Department
personnel responsible for RWAs. At a minimum, the policies and procedures should be
developed by OM with support from the POs and GSA and should included a description of the
RWA process, when RWAs are to be used, the roles and responsibilities of GSA, OM and the
POs, and the interdependency of OM and POs for financial accountability.
    Proposed Corrective Action: OM Facilities Services will develop policies and procedures
     for the R WA process in an ACS document. The document will include the following:
         • Description of R WA process;
         • When the Department of Education uses RW As;
         • Roles and responsibilities of OM;
         • Roles and responsibilities of Principal Offices;
         • Roles and responsibilities of GSA.
    A copy of the final, signed RWA ACS document will be placed in the audit file as evidence
    that this action has been completed.
     Proposed Completion Date: 9/2812007




                                         400 MARYUIND AVE .. S.W., WASH[NGTON, D.C. 20202-4500
                                                                     \v\,;w.ed.gov

           Our   mi~sion   i.s to   en~ure   equar acceSS w education and to promote educatwnal excellence tllroughuut rite Nation.
Response to Draft RWA Audit ED-OIG/A17GOOO 1 	                                   Page 2

Finding 2: Inadequate Financial Accountability and Ineffective Reporting OfRWA Activities

Recommendation 2.1: Establish a clear understanding between GSA that the Department will
refuse payment for work performed outside of the agreed upon scope of the RWA agreements.
    Proposed Corrective Action: The Assistant Seeretary for OM will send a memorandum to
    the GSA Commissioner for Public Building Services informing that the Department of
    Education will not pay for work performed outside the scope of the RW A. A signed copy of
    the memorandum will be placed in the audit file as evidence that this action has been
    completed.
    Proposed Completion Date: 11130/2006

Recommendation 2.2: Track and reconcile RWA funds appropriated, expended, and the balance
available with GSA and the POs on a regular basis, using available tools from GSA and the
Department. The reconciliation should include documentation of the research performed and the
resolution of any differences identified. All differences identified should be researched and
resolved in a timely manner. In addition, a supervisory review and approval of the
reconciliations should be performed and documented.
    Proposed Corrective Action: As of February 2006, OM initiated a more comprehensive
    reconciliation system that is performed on a monthly basis. The Department uses the
    following tools (Attachment I):
        • 	 RWAForm;
        • 	 lAS (OM System) that tracks charge back funds (see screen shot of obligated funds
            and assigned ED document number);
        • 	 GSA Finance Website: Reimbursable Work Authorization Form Detail Form;
        • 	 GSA Non-Recurring RWA's administrative and overhead spreadsheet;
        • 	 GSA RWA Tracking Sheet: with detailed transaction descriptions;
        • 	 FMSS (Oracle System): Award Financial History Report;
        • FS Tracking/Reconciliation Sheet.
    Facilities Services meets monthly with OCR, OIG and FSA, and provides RWA reports,
    which include RWA funds appropriated, expended and the balance available. Attachment 2
    includes sample monthly minutes and related reports. A monthly reconciliation is performed
    on all differences identified with GSA through meetings, e-mails, and conference calls. In
    addition, a monthly supervisory review and approval by Director and/or Deputy will be
    established. Attachm~nts 1 and 2, along with a signed copy of a monthly supervisory review
    will be placed in the audit file as evidence that this action has been completed.
    Proposed Completion Date: 03/01/2007

Recommendation 2.3: Ensure reconciliations are performed properly by providing OMIFS and
PO personnel with access to and training on the available GSA and Departmental tools (e.g.,
GSA PBS RWA website and the Award Financial History Report in Oracle).
   Proposed Corrective Action: Facilities Services will develop and provide training to
   Facilities Services, OCR, OIG, FSA, and OM on the RWA process that covers the tools in
   Attachment 1. A eopy of the training materials and the sign-in roster for the class will be
   included in the audit file as evidence that this action has been completed.
   Proposed Completion Date: 05/3112007
Response to Draft RWA Audit ED-OIGIA17GOOO1                                      Page 3

Recommendation 2.4: Ensure that OMIFS works with GSA in closing out RWAs.
   Proposed Corrective Action: OM Facilities Services will establish monthly communication
   with GSA regarding RWA status via meetings, emails, and/or conference calls. OM
   Facilities Services will identify RWAs for closure during the monthly RWA reconciliation
   process. Any open RWAs identified by ED as candidates for closing will be discuss in the
   monthly RWA communication with GSA. Evidence of monthly communications with GSA
   requesting closure of specific RWAs will be placed in the audit file as evidence that this
   action has been completed.
   Proposed Completion Date: 03/01/2007

Finding 3: Payment of Premium Pay Without Proper Documentation of Overtime Requests and
Authorization Forms

Recommendation 3.1: Not pay overtime unless requests are approved in advance by completion
of the authorizing memorandum, Appendix A, by authorized officials in accordance with the
Department's guidance on premium pay.
    Proposed Corrective Action: The Director of Facilities Services will send an email to all
    Facilities Services staff communicating the mandatory requirement for documented approval
    of overtime in accordance with Department policy as outlined in the Premium Pay Personnel
    Manual Instruction (PMI) 530-3 dated May 31,2006. The email will include a link to the
    PMI (hup://wdcrobiis09/doc img/pmi 550-3p I.doc), as well as a copy of the memo in
    Appendix A of the Premium Pay PMI that Facilities Services will use to document approval
    of all future overtime pay. A copy of this email and attachment will be placed in the audit
    file as evidence that this action has been completed.
    Proposed Completion Date: 9/30/2006


Attachments