oversight

Semiannual Report - October 1, 2001 - March 31, 2002

Published by the Department of Education, Office of Inspector General on 2002-03-31.

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

  U.S. Department of Education
Office of Inspector General




Semiannual Report
   to Congress
            No. 44



 October 1, 2001 - March 31, 2002
                          INSPECTOR GENERAL’S
                  MESSAGE TO CONGRESS

We are pleased to provide this semiannual report on the accomplishments of the Office of Inspector
General (OIG), U.S. Department of Education (Department), from October 1, 2001 through March 31,
2002. During this period, we issued 60 audit and inspection reports and memoranda, closed 209
investigations, and testified once before Congress. Our testimony covered the management challenges
facing the Department.

In the last six months, OIG’s work has supported the Department’s efforts, goals, and objectives as
defined in its new Strategic Plan and the Blueprint for Management Excellence, as well as the
President’s Management Agenda and OIG’s Strategic Plan. Our focus has been on assisting the
Department in maximizing the effectiveness of its elementary and secondary education programs,
strengthening the Department’s financial management, assisting the Department in meeting its
information technology management challenges, and promoting the ability of the Federal Student Aid
office to fulfill its mission.

We participated in a joint project with the General Accounting Office (GAO), the Texas State
Auditor’s Office, Pennsylvania’s Office of the Auditor General, and the Philadelphia City Controller’s
Office to review data accountability and reliability in Title I of the Elementary and Secondary
Education Act. The collective findings will be beneficial to the Department’s implementation of the
No Child Left Behind Act.

In the area of financial management, the Department received a qualified opinion on all five of its
financial statements for Fiscal Year 2001. While the Department has made some improvements in this
area, the implementation of a new general ledger system, Oracle Federal Financials, along with
accelerated financial reporting requirements, will require much attention from both the Department and
OIG in the coming months.

Our investigations continue to disclose fraud relating to federal student aid programs. The Department
has set a goal of removing these programs from the GAO High Risk list. The Department is a key
participant in a joint working group between the Inspector General community and the Chief Financial
Officers’ Council to address improper and erroneous payments. The Deputy Chief Financial Officer
and I are co-chairing this effort. The work group will develop and benchmark methods to reduce and
eliminate, where possible, improper and erroneous payments made by federal government agencies.

Looking to the future, we will focus our efforts on helping the Department improve its contract
monitoring, reduce fraud and error in the federal student aid programs, and achieve its goal of
management excellence.


                                                      Lorraine Lewis
                                                            CONTENTS
LETTER TO THE SECRETARY
INSPECTOR GENERAL'S MESSAGE TO CONGRESS
ACTIVITIES AND ACCOMPLISHMENTS ...................................................................1
EFFECTIVENESS AND INTEGRITY OF ELEMENTARY AND SECONDARY
EDUCATION PROGRAMS ............................................................................................................... 2
              Reliability and Validity of Title I Data........................................................................................................ 2
              Monitoring as an Element of Accountability.............................................................................................. 2
              Corruption in Puerto Rico Department of Education Contracting.............................................................. 3
              Fraud in Title I Programs at Braxton Schools of Puerto Rico .................................................................... 3
FINANCIAL MANAGEMENT REMAINS A CHALLENGE,
SOME IMPROVEMENTS OCCURRED ............................................................................................. 4
              Results of Fiscal Year 2001 Financial Statement Audits ............................................................................ 4
RECOMMENDATIONS FOR IMPROVING INTERNAL CONTROL WEAKNESSES ............................ 4
              Telecommunications Case Pleas and Conviction........................................................................................ 5
              Government Property Requires Monitoring ............................................................................................... 5
              Government Travel Cards Used Inappropriately ........................................................................................ 5
              Audit Follow-up Incomplete....................................................................................................................... 5
              Contracting Officer’s Representatives’ Risk Levels Require Review ........................................................ 6
INFORMATION TECHNOLOGY SECURITY AND PREPAREDNESS.................................................. 6
              Risks in Implementing a New Financial Management System .................................................................. 6
              Disaster Recovery Planning ........................................................................................................................ 6
HIGH RISK FEDERAL STUDENT AID PROGRAMS ....................................................................... 6
              Verification Process Needs to Be Strengthened .......................................................................................... 7
              Identity Theft Fraud Against Student Aid Programs .................................................................................. 7
              Ability-to-Benefit Testing Deficiencies ...................................................................................................... 8
OTHER SIGNIFICANT OIG ACTIVITIES ....................................................................................... 9
        Nonfederal Audit Oversight........................................................................................................................ 9
        OIG Outreach.............................................................................................................................................. 9
TABLE 1: Reporting Requirements (P.L. 95-452)...................................................................................................... 11
TABLE 2: Management Challenges Facing the Department of Education Reported to Congress
         by the OIG (February 2002)...................................................................................................................... 12
TABLE 3: Recommendations Described in Previous Semiannual Reports on Which Corrective Action
         Has Not Been Completed .......................................................................................................................... 13
TABLE 4: Other ED/OIG Reports on Education Department Programs and Activities
          (October 1, 2001 to March 31, 2002) ....................................................................................................... 14
TABLE 5: ED/OIG Audit Services Reports on Education Department Programs and Activities
          (October 1, 2001 to March 31, 2002) ....................................................................................................... 14
TABLE 6: Inspector General Issued Audit Reports with Questioned Costs............................................................... 18
TABLE 7: Inspector General Issued Audit Reports with Recommendations for Better Use of Funds ..................... 19
TABLE 8: Unresolved Reports Issued Prior to October 1, 2001 ................................................................................ 19
TABLE 9: Investigation Services Cumulative Actions (October 1, 2001 to March 31, 2002)................................... 23
TABLE 10: Collections from Audits........................................................................................................................... 24
TABLE 11: Collections from Investigations ............................................................................................................... 24
TABLE 12: Statistical Profile: October 1, 2001 to March 31, 2002 ........................................................................... 25
                        ACTIVITIES AND
                       ACCOMPLISHMENTS


The Office of Inspector General (OIG), U.S. Department of Education (Department), continued to
carry out a program of audit, investigation, inspection, and management improvement activities during
the reporting period October 1, 2001 through March 31, 2002. The purpose of this work, as in prior
reporting periods, was to identify, prevent, and detect fraud and abuse of Department funds; improve
and protect the integrity of Department programs and operations; and ensure excellence and quality in
our organization as we carry out our mission.

Our work this period supported the Department’s efforts to meet the goals set forth in:
    •     the President’s Management Agenda, Fiscal Year 2002,
          http://www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf,
    •     the Department’s Strategic Plan 2002-2007, issued March 12, 2002,
          http://www.ed.gov/pubs/stratplan2002-07/index.html, and
    •     the Department’s Blueprint for Management Excellence, issued October 21, 2001,
          http://www.ed.gov/inits/mit/blueprint.pdf,

as well as the OIG Strategic Plan 2001-2005, issued in March 2001, and found at http://www.ed.gov/
offices/OIG/misc/oigstplan.pdf.

OIG’s work focused on our four operational priorities to assist the Department in maximizing the
effectiveness of its elementary and secondary education programs, strengthen the Department’s
financial management, assist the Department in meeting its information technology management
challenges, and promote the ability of Federal Student Aid to fulfill its mission. These issues have
been management challenges for several years. The Inspector General testified on the management
challenges before the House Subcommittee on Labor, Health and Human Services, Education and
Related Agencies, Committee on Appropriations in March 2002. This statement can be found at
http://www.ed.gov/offices/OIG/testimon.htm.

Our significant audits, investigations, and inspections are summarized below. Detailed information is
available on our website at http://www.ed.gov/offices/OIG/.




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                    Effectiveness and Integrity of Elementary and
                           Secondary Education Programs
    Our work in the Department’s elementary and secondary education programs supports the principles of
    the No Child Left Behind Act of 2001 and the Department’s Strategic Plan, Goal 1, Objective 1.1,
    which emphasizes the Department’s commitment to accountability for results on the part of schools,
    States, and the Department.




RELIABILITY AND      We completed work directly related to the need for accurate data and accountability.
VALIDITY OF          OIG participated in a joint project of the U.S. Comptroller General’s Domestic
TITLE I DATA         Working Group to determine whether data used for the purpose of identifying Title I
                     schools in need of improvement are reliable, valid, and timely. The participants in
                     the joint effort are OIG, the U.S. General Accounting Office (GAO), the Texas State
                     Auditor’s Office, Pennsylvania’s Office of the Auditor General, and the Philadelphia
                     City Controller’s Office.

                     As part of this effort, we issued two audit reports on the quality of data reported by
                     the California Department of Education (CDE) (ED-OIG/A09-B0019; February 15,
                     2002 and ED-OIG/A09-C0002; March 25, 2002). We found problems in reporting
                     data used to identify schools for improvement. We also found that CDE had
                     insufficient management controls to ensure that data were reliable and valid. CDE
                     concurred with our findings and recommendations.

                     Also as part of this effort, we performed an audit to assess whether the Department
                     had management controls to ensure that Title I, Part A performance data for schools
                     that fail to meet State criteria for adequate yearly progress were reliable, valid, and
                     timely (ED-OIG/A03-B0025; March 27, 2002). We found that the Department
                     needs to take steps to improve its management controls over timely publication of
                     school improvement data. The Department also needs to strengthen its management
                     controls to ensure that Title I school improvement data are reliable and valid. The
                     Department generally concurred with our findings and recommendations.

MONITORING AS        Monitoring is a critical element of accountability to assess the effectiveness of the
AN ELEMENT OF        federal investment in grant programs and determine whether improvements are
ACCOUNTABILITY       needed. We issued three reports this period on monitoring of formula and
                     discretionary grants.


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                   Our audit of the Department’s monitoring of elementary and secondary education
                   formula grant programs found inconsistency in conducting reviews, insufficient time
                   to monitor some programs for compliance with laws and regulations, and insufficient
                   knowledge about areas examined by auditors under the uniform, entity-wide audit
                   requirements of the Single Audit Act (ED-OIG/A04-A0013; November 26, 2001).
                   The Department generally concurred with our recommendations and described
                   corrective action planned or taken.

                   Our review of States’ monitoring of formula grants found that not all State program
                   offices track and analyze Single Audit findings and site visit results, and those that
                   did perform such analyses were not reporting the results to the Department (ED-OIG/
                   A04-B0008; November 27, 2001). Department officials concurred with our
                   recommendations and advised us they would incorporate them into the monitoring
                   process.

                   Our audit of the Department’s discretionary grant monitoring process for identifying
                   and monitoring high-risk grantees found that principal offices do not have a process
                   and criteria to determine which grantees are high-risk or when site visits are
                   warranted (ED-OIG/A03-B0018; October 24, 2001). We recommended that the
                   Department require principal offices to develop a systematic process and criteria for
                   identifying and monitoring high-risk grantees. The Department agreed with some of
                   our findings but did not agree with others.

CORRUPTION IN      Our extensive audit and investigative work involving the Puerto Rico Department of
PUERTO RICO        Education led to guilty pleas by several officials, including the former Secretary and
DEPARTMENT OF      former Associate Secretary of Education, to felony charges of extortion, program
EDUCATION          fraud, and money laundering.
CONTRACTING
                   A joint OIG/FBI investigation disclosed that between late 1994 and September 2000,
                   the subjects, acting in their official capacity, conspired to extort and obtain
                   approximately $4.3 million from several contractors in return for awarding
                   approximately $138 million in contracts, using the money for the benefit of their
                   political party and for their personal enrichment. The former Secretary’s sister-in-
                   law assisted in the scheme by accepting and channeling extortion payments through a
                   company known as National Consulting Group, a company owned by the former
                   Secretary. The plea agreements provide for a $2.9 million forfeiture to the
                   government. By the end of this reporting period, $1.3 million in cash had been
                   forfeited. The remaining $1.6 million in the form of cash, monetary instruments, and
                   real property is required to be forfeited at sentencing, scheduled for June 25, 2002.
                   Fourteen others charged in the January 22, 2002 indictment have entered not guilty
                   pleas. The investigation is continuing.

FRAUD IN TITLE I   A joint OIG/FBI/Postal Inspection Service investigation disclosed that employees
PROGRAMS AT        and associates of Braxton Schools of Puerto Rico participated in a scheme to obtain
BRAXTON            approximately $225,000 in Title I funds for non-existent employees. Our
SCHOOLS OF         investigation resulted in sentencing of four officials of Braxton Schools and a guilty
PUERTO RICO        plea by a former Braxton employee for this fraudulent payroll scheme. The subjects

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                      have made restitution of $151,194 and have an outstanding court order to pay an
                      additional $73,392 in restitution over the next three years.

                     Financial Management Remains a Challenge,
                            Some Improvements Occurred
    We have identified financial management on our list of management challenges of the Department for
    the past three years. The benefits of sound financial management are two-fold. First, sound financial
    management allows managers to make decisions based on reliable financial information. Second,
    sound financial management ensures the basic trust between a government agency and the public
    remains intact.

    The President’s Management Agenda and the Department have also highlighted the importance of
    sound financial management. For example, the Department’s Strategic Plan, Goal 6, and its Blueprint
    contain a commitment to create a culture of accountability and to develop and maintain financial
    integrity and management and internal controls.

RESULTS OF            The independent auditors, Ernst & Young, LLP, issued reports on their audits of the
FISCAL YEAR           Department’s and Student Financial Assistance’s (now Federal Student Aid, or FSA)
2001 FINANCIAL        FY 2001 financial statements. The Report of Independent Auditors in both cases
STATEMENT             contained a qualified opinion on the statements, while the Report on Internal Control
AUDITS                detailed weaknesses in management controls. The Report on Compliance with Laws
                      and Regulations for both the Department and FSA disclosed no instances of
                      noncompliance with laws or regulations required to be reported. The auditors did
                      find, however, that neither the Department’s nor FSA’s financial management
                      systems substantially complied with certain systems requirements referred to in the
                      Federal Financial Management Improvement Act of 1996. The Department and FSA
                      generally concurred with the auditors’ findings and recommendations. The
                      Department’s financial statement audit, and OIG’s list of the Department’s
                      management challenges (see Table 2), can be found in the Department’s Fiscal Year
                      2001 Accountability Report at http://www.ed.gov/offices/OCFO/
                      FY2001AccountabilityReport.pdf. The FSA Fiscal Year 2001 Accountability
                      Report can be found at http://www.ed.gov/offices/OIG/AuditReports/a17b0007.pdf.

        Recommendations for Improving Internal Control Weaknesses
    Our audits, inspections, and reviews have examined a number of internal control issues and have
    resulted in recommendations for improvement. Our investigations also focus on areas where there is
    risk of fraud and abuse due to weak internal controls. The Secretary has made an effective system of
    internal controls a priority, and the Blueprint contains plans to strengthen the control environment in
    the Department.




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TELECOMMUNI-   Weaknesses in internal controls can leave Department funds and property vulnerable
CATIONS CASE   to fraud and abuse. This period, a former Bell Atlantic telephone technician assigned
PLEAS AND      to the Department was found guilty of three felony counts involving a wide-ranging
CONVICTION     scheme to defraud the Department. The technician had participated in a scheme
               involving himself, other telephone technicians, and Department employees and their
               relatives that resulted in the theft of over $300,000 in Department-purchased
               electronic items and the billing to the Department of over $800,000 in false overtime
               charges. To date, sixteen individuals, including seven Department employees, have
               either pled guilty or been convicted in federal court of crimes associated with this
               activity. The three remaining individuals, including one Department employee, are
               scheduled to go on trial later this year. Our special agents have been the lead
               investigators in this case, with assistance from the FBI.


GOVERNMENT     In prior reporting periods, we disclosed control weaknesses at three contractors who
PROPERTY       managed Department property. As a result of these audits, we issued a report noting
REQUIRES       improvements needed in FSA’s monitoring of these contracts and contractors (ED-
MONITORING     OIG/A19-B0001; March 15, 2002). We recommended that FSA develop and
               implement a monitoring plan that clearly defines responsibilities, and reinforce
               Contracting Officer’s Representative responsibilities to determine the need for
               government property and ensure its proper utilization and disposition. The
               Department concurred with our findings and recommendations.

GOVERNMENT     Our audit of the Department's controls over government travel cards found that the
TRAVEL CARDS   Department needs to improve its controls over the travel card program by increasing
USED           monitoring and providing training to cardholders on appropriate use of the card (ED-
INAPPROPRI-    OIG/A19-B0010; March 27, 2002). We found that individual travel cards were not
ATELY          always used appropriately, some travel card accounts were not canceled timely, and
               charges to centrally billed accounts were not always appropriately supported or
               reconciled. We recommended that the Department develop and implement
               guidelines for monitoring travel card activity, ensure that Department staff receive
               the appropriate training, take immediate action to cancel the travel card accounts for
               separated staff, and establish and implement other specified policies and
               administrative procedures. The Department concurred with our findings and
               recommendations and is taking corrective action.

AUDIT          Our report on the Department’s controls over the audit follow-up process found that
FOLLOW-UP      corrective actions were not always implemented as reported (ED-OIG/A19-B0002;
INCOMPLETE     October 18, 2001). We also found that program offices did not have complete
               records of corrective actions that were taken. We recommended that the Department
               ensure that corrective actions have been taken, and reopen the closed
               recommendations for which corrective action had not been taken. The Department
               generally concurred with our findings.




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CONTRACTING          We completed a review of the Department’s risk-level designations and training
OFFICER’S REP-       program for Contracting Officer’s Representatives (CORs) (ED-OIG/A&I 2001-03;
RESENTATIVES’        December 21, 2001). We recommended that principal offices conduct periodic
RISK LEVELS          reviews of the position risk-level designations of their CORs to determine if their risk
REQUIRE REVIEW       levels are correct in relation to the value and complexity of the contracts they handle.
                     We also recommended that the Department update its COR records and include the
                     COR appointment date in its training database to fulfill its responsibility to schedule
                     and conduct the COR training curriculum and properly certify and recertify CORs in
                     a timely manner. The Department is taking action to address our recommendations.

                Information Technology Security and Preparedness
    We identified information technology (IT) security as a management challenge, and our work has
    identified improvements that are necessary for the Department to ensure its systems’ security and
    preparedness. The Department’s Blueprint includes a commitment to complete remedial actions on
    problems we have identified, and the Department’s Strategic Plan, Goal 6, Objective 6.3, also contains
    a commitment to improve IT security.

RISKS IN             As part of its plan to substantially improve its financial management, the Department
IMPLEMENTING A       has committed to implement a new general ledger system, Oracle Federal Financials.
NEW FINANCIAL        Our audit of the Department’s implementation of the Oracle software identified risks
MANAGEMENT           in several areas, including incomplete or inadequate test-planning documentation,
SYSTEM               interface testing, internal verification and validation, end-user training, user access
                     controls, and post-implementation operations and maintenance plans (ED-OIG/A11-
                     C0007; January 14, 2002). The Department did not agree with all of our findings and
                     recommendations.

DISASTER             We completed an audit of the Department’s disaster recovery and backup plans
RECOVERY             (DRPs) for selected IT systems (ED-OIG/A11-A0009; November 28, 2001). We
PLANNING             found that the Department’s policies provide adequate guidance, but a number of
                     mission-critical and mission-important systems lacked fully developed, executable
                     and tested DRPs. The Department concurred with our finding and agreed to take
                     corrective action.

                       High Risk Federal Student Aid Programs
    The federal student aid programs have long been an area of concern for the Department, and the GAO
    has identified these programs as being at high risk for fraud, waste, abuse, and mismanagement since
    1990. OIG audits and investigations have repeatedly confirmed this assessment. The President’s
    Management Agenda includes as a priority minimizing fraud and error in federal student aid programs,
    echoed by both the Department’s Strategic Plan, Goal 6, Objective 6.4, and the Secretary’s Blueprint,
    which discuss the Department’s commitment to reducing these problems.




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VERIFICATION     Verification is a process the Department uses to ensure that students and parents
PROCESS NEEDS    report accurate financial and demographic data. This information determines the
TO BE            student’s eligibility for federal student aid.
STRENGTHENED
                 Department lacks adequate controls

                 Our audit of the effectiveness of the Department’s federal student aid application
                 verification process found that the Department has not established adequate controls
                 for monitoring the effectiveness of the process, or for ensuring that schools complete
                 the process (ED-OIG/A06-A0020; March 28, 2002). We recommended that the
                 Department strengthen, then evaluate the usefulness of these controls, and that it
                 perform reviews at or provide technical assistance to schools based on the results of
                 its analysis of the verification data. The Department agreed with some of our
                 recommendations. Regarding our recommendation that it identify and evaluate its
                 monitoring controls, the Department stated that the controls were adequate, and
                 described additional planned actions to address our concerns.

                 Preparer fraud cases highlight impact

                 Successful prosecutions against preparers – individuals who, for a fee, help parents
                 fill out false financial aid forms to fraudulently obtain student aid for their children –
                 resulted in a number of prosecutive actions this period. (See Table 9, Investigation
                 Services Cumulative Actions.) In one, a former employee of Richard J. Daley
                 College in Chicago was sentenced to 12 months imprisonment and ordered to pay
                 $143,301 in restitution for mail fraud. The subject collected fees of between $50 and
                 $200 per application from students she assisted in preparing false financial aid
                 applications and fictitious supporting documents understating family income. She
                 allegedly prepared and submitted at least 52 applications containing false
                 information. In another case, a self-employed financial aid consultant was sentenced
                 to confinement, and was ordered to perform community service and pay an $1,800
                 fine. His scheme caused a loss of between $70,000 and $120,000 to the federal
                 government.

                 These investigations and our verification process audit underscore the need for
                 legislation authorizing the Internal Revenue Service to release individual income
                 information to the Department of Education for the purpose of verifying applicant
                 income. We urge the Congress to enact such legislation. This legislative authority is
                 requested in the President’s Fiscal Year 2003 Budget.

IDENTITY THEFT   Our investigations have identified schemes by individuals who use false names and
FRAUD AGAINST    social security numbers to obtain fraudulently federal student aid. The FSA
STUDENT AID      programs may be particularly vulnerable to fraud and abuse because they offer
PROGRAMS         financial assistance on the basis of information received from several sources –
                 student applicants, parents, schools, Department systems – whose internal controls
                 and control mechanisms vary.



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               Illegal alien sentenced for student aid fraud

               An OIG investigation in Phoenix, Arizona, led to the conviction and sentencing of an
               individual for federal student aid fraud. The subject, a Mexican citizen illegally
               living in the United States, fraudulently used the identity of a U.S. citizen to obtain
               approximately $39,000 in Title IV funds to attend three separate colleges in
               California and Arizona from 1993 to 1998. He was sentenced to five years probation
               and ordered to pay restitution of $26,439.

               Student pleads guilty to fraud charges

               A joint investigation with the Social Security Administration OIG in Texas
               developed evidence that an individual received approximately $35,600 in student aid
               funds to attend a university, three years after having defaulted on $23,000 in student
               loans at the same school. The subject admitted obtaining a second social security
               number for the sole purpose of fraudulently obtaining federal student aid.

               Siblings sentenced for social security number fraud

               A joint OIG/U.S. Secret Service investigation in San Jose, California led to the
               conviction and sentencing of a former receptionist for Bryman College and her sister.
               The two devised and carried out a scheme using false social security cards as
               identification to cash $30,000 worth of student loan checks that the sister who
               worked at the school had stolen while employed there.

               Identity thief sentenced

               An OIG investigation in California led to the sentencing of an individual for filing
               false financial statements, perjury, grand theft, and false impersonation to obtain
               federally guaranteed student loans, Pell grants, and credit card and bank accounts.
               The subject, who obtained over $9,900 in federal loans and grants before his true
               identity was disclosed, was sentenced to two years in State prison, with credit for
               time served, fined $800, and ordered to pay $12,000 in restitution. The remaining
               loans were canceled.

ABILITY-TO-    Under Section 484(d) of the Higher Education Act of 1965, as amended (HEA), a
BENEFIT        student who does not have a high-school diploma or recognized equivalent must pass
TESTING        an independently administered “ability-to-benefit” (ATB) test to be eligible to
DEFICIENCIES   receive federal student aid. Our audits this period at two schools and a test publisher
               disclosed problems in administering the testing program.

               Our audit at Glendale Career College (GCC) found that GCC lacked adequate
               procedures for ensuring compliance with the HEA’s ability-to-benefit provision
               (ED-OIG/A09-B0017; March 18, 2002). GCC has revised its procedures to address
               the identified weaknesses, but did not agree with our recommendataions on the
               return of Title IV funds. Our audit at All-State Career School found that All-State


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               did not always comply with the test publisher Wonderlic’s procedures for
               administering retests of the Wonderlic Basic Skills Test (ED-OIG/A03-B0014;
               December 7, 2001). All-State did not agree with our finding.

               When we audited the test publisher, we found that Wonderlic did not have adequate
               processes in place to timely identify and inform institutions, when indicated, that
               they had administered retests in violation of its testing procedures (ED-OIG/A03-
               B0022; February 5, 2002). Wonderlic agreed to implement our recommendation that
               it improve its process for identifying and reporting retest errors, provided the
               Department re-approves its tests.

                       Other Significant OIG Activities

NONFEDERAL     Participants in Department programs are required to submit annual audits performed
AUDIT          by independent public accountants (IPAs). In accordance with the Inspector General
OVERSIGHT      Act requirement to assure that work performed by nonfederal auditors complies with
               federal government auditing standards, we publish audit guidance specific to
               Department programs to assist IPAs in performing these audits.

               This period, we performed 58 quality control reviews of audits by 53 different IPAs.
               Of these, 23 were acceptable, 28 were technically deficient, and 7 were substandard.
               We also referred four IPAs to the American Institute of Certified Public Accountants
               and/or the appropriate State Board of Accountancy for possible disciplinary action
               for substandard work reported in a prior semiannual report.

OIG OUTREACH   OIG’s efforts to promote awareness of both institutional and individual responsibility
               to prevent fraud, waste, and abuse relating to federal education funds extend to those
               both within and outside the Department.

               Advice and assistance to Department managers and staff

               In addition to the work we do to assess the reliability of Department systems, we
               have been sharing our expertise with managers and staff by participating on several
               Department steering committees and working groups in an advisory capacity. In
               connection with a Blueprint action item, an OIG staff member selected for the
               Council for Excellence in Government Fellows program has been performing a
               series of tests in support of the Department’s effort to determine the propriety of
               computer purchases and systems inventory.

               Auditors participate in Title I conference

               OIG staff this period attended and played a key role in developing the audit section
               of the National Title I Conference in Tampa, Florida. This annual conference brings
               together federal program managers and staff, State and local administrators and
               fiscal officers, teachers, and parents. OIG presented an overview of the audit
               process, and discussions of how auditors and program managers work together to

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     improve program performance information, and of how participants can be optimally
     prepared for an audit. More than 2,000 people attended the conference.

     Investigators address student aid administrators conferences

     To promote awareness of federal student aid abuse issues and offer guidance to help
     aid administrators identify and prevent abuse of federal student aid programs, OIG
     investigative staff were invited to address administrators at several meetings and
     conferences this period. The meetings included the California Association of
     Student Financial Aid Administrators, the Southern Christian College Coalition of
     Student Financial Aid Administrators, and the Western Association of Student
     Financial Aid Administrators.




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                              TABLE 1: Reporting Requirements (P.L. 95-452)
                                                                                                     Table    Page
  Section                                        Requirement                                        Number   Number

5(a)(1) and   Significant Problems, Abuses, and Deficiencies
5(a)(2)
              Significant Activities and Accomplishments                                              *        *

5(a)(3)       Recommendations Described in Previous Semiannual Reports on
              Which Corrective Action Has Not Been Completed                                          3        13

5(a)(4)       Matters Referred to Prosecutive Authorities
              Investigation Services Cumulative Actions                                               9        23

              Statistical Profile                                                                     12       25

5(a)(5) and   Summary of Instances Where Information Was Refused or Not
6(b)(2)       Provided**
5(a)(6)       Listing of Audit Reports
              ED/OIG Audit Services Reports on Education Department Programs and Activities           5        14

5(a)(7)       Summary of Significant Audits
              Significant Activities and Accomplishments                                              *        *

5(a)(8)       Audit Reports Containing Questioned Costs
              Inspector General Issued Audit Reports with Questioned Costs                            6        18

5(a)(9)       Audit Reports Containing Recommendations That Funds Be Put to
              Better Use
              Inspector General Issued Audit Reports with Recommendations for Better Use of Funds     7        19

5(a)(10)      Summary of Unresolved Audit Reports Issued Prior to the Beginning
              of the Reporting Period
              Unresolved Reports Issued Prior to October 1, 2001                                      8        19

5(a)(11)      Significant Revised Management Decisions**
5(a)(12)      Significant Management Decisions with Which OIG Disagreed**

* Information found on pages 1-10 of the Semiannual Report.
** No instances to report.




                                                                                                                    11
     TABLE 2: Management Challenges Facing the Department of Education
              Reported to Congress by the OIG (February 2002)




      •   Correct long standing financial management problems


      •   Strengthen information technology (IT) security


      •   Improve internal controls


      •   Improve contract monitoring


      •   Balance compliance monitoring and technical assistance


      •   Meeting its goal of removing the federal student aid (formerly known as student
          financial assistance) programs from the General Accounting Office “high risk” list


      •   Pursue appropriate electronic government initiatives


      •   Improve strategic management of human capital


      •   Improve and test continuity of operations plans


      •   Improve management of IT assets


      •   Obtain reliable performance data and improve performance measures




12
  TABLE 3: Recommendations Described in Previous Semiannual Reports on Which
                 Corrective Action Has Not Been Completed
                             Report Title                                         Total     Number of    Latest
 Report            (Prior Semiannual Report (SAR)                Date   Date    Monetary Recommendations Target
 Number                    Number and Page)                     Issued Resolved Findings Open   Closed    Date
Section 5(a)(3) of the Inspector General Act requires a listing of each report resolved before the commencement of the reporting
period for which management has not completed corrective action. The reports listed below are OIG internal and nationwide
audit reports and management improvement reports.

NEW AUDITS SINCE LAST REPORTING PERIOD
             No New Audits to Report

AUDITS REPORTED IN PREVIOUS SEMIANNUAL REPORTS
Office of Postsecondary Education
A04-90014 Review of Title III Program, HEA, Compliance 06/30/00 03/31/01                 *           6         1      12/31/02
          with GPRA Requirements for Implementation of
          Performance Indicators (SAR 41, pg. 23)
A09-18053 ED Needs To Strengthen Student Loan Cure            03/13/92 09/30/93 $154,000,000         1         0      09/30/02
          Procedures (MIR 92-05) (SAR 24, pg. 12)
Federal Student Aid (formerly Student Financial Assistance)
A01-90005 The Recertification Process for Foreign Schools 09/29/00 03/31/01              *           1         3      09/30/02
          Needs to Be Improved (SAR 41, pg. 23)
A17-90018 Fiscal Year 1999 Annual Financial Statements - 02/28/00 09/30/00               *           1        22      06/30/02
          Student Financial Assistance (SAR 40, pg. 19)
Office of the Chief Financial Officer
A17-90019 Fiscal Year 1999 Annual Financial Statements - 02/28/00 07/31/00               *           1        23      06/30/02
          U.S. Department of Education (SAR 40, pg. 19)
Office of the Chief Information Officer
A11-90013 Review of Security Posture, Policies, and Plans 02/25/00 06/30/00              *           3        10      06/30/02
          (SAR 40, pg. 3)
A11-90018 Review of EDNET Security (SAR 41, pg. 22)           07/10/00 03/31/01          *           3        57       08/31/02
A11-A0005 Review of Planning and Assessment Activities 09/14/00 03/31/01                 *           2         8      06/30/02
          for Presidential Decision Directive 63 on
          Critical Infrastructure Protection
          (SAR 41, pg. 22)
Office of the Under Secretary
17-70007     Moving Towards a Results-Oriented                09/24/98 01/31/00          *           1         7      07/31/02
             Organization: A Report on the Status of ED’s
             Implementation of the Results Act
             (SAR 37, pg. 14)

* Non-monetary findings only.




                                                                                                                              13
         TABLE 4: Other ED/OIG Reports on Education Department Programs and
                     Activities (October 1, 2001 to March 31, 2002)
     Report
     Number                                                Report Title                                           Date Issued
I13C0005       Review of the Department’s Implementation of the Federal Policy on Research Misconduct                 11/09/01
A13B0007       Review of the Department-wide Purchase Card Statement Late Notices for June 2001                       11/20/01
A13B0004       Review of Contracting Officer’s Representative Training and Risk Level Designations                    12/21/01
I13C0006       Management Challenges of the Department of Education                                                   02/22/02
I13C0004       Report on the Department’s Policies and Procedures for the Location of New Offices and Other
                                                                                                                      03/20/02
               Facilities in Rural Areas - Sent to the Chair of the Senate Committee on Appropriations
I13C0004       Report on the Department’s Policies and Procedures for the Location of New Offices and Other
                                                                                                                      03/20/02
               Facilities in Rural Areas - Sent to the Chair of the House Committee on Appropriations



       TABLE 5: ED/OIG Audit Services Reports on Education Department Programs
                   and Activities (October 1, 2001 to March 31, 2002)
                                                                                                   Better
     Report                                                        Date     Questioned Unsupported Use of         Number of
     Number                    Report Title                       Issued     Costs**      Costs    Funds         Recommend.
Section 5(a)(6) of the Inspector General Act requires a listing of each report completed by OIG during the reporting period. A
total of 37 audit reports were issued by ED/OIG auditors. In addition, we issued 18 alternative products, which include 8 action
memoranda1, 1 alert memorandum2, 5 close-out letters, and 4 special projects.

AUDIT REPORTS
The 37 audit reports are listed below by program office.
Federal Student Aid (formerly Student Financial Assistance)
A02-B0006 Audit of Drake College of Business’s           03/05/02               *          $6,347          *            7
          Compliance with the Title IV, Higher Education
          Act Program Requirements
A02-B0015 Audit of Notre Dame College’s Compliance with 03/28/02                *             *            *            1
          the Title IV, Higher Education Act Program
          Requirements
A03-A0022 Audit of Commissioned Sales and Course Length 01/15/02 $1,431,560                   *                         5
          at Wesley College
A03-B0014 Audit of the Ability-to-Benefit Testing Process        12/07/01    $57,994          *            *            2
          of All-State Career School
A03-B0022 Audit of Wonderlic’s Ability-to-Benefit Program 02/05/02              *             *            *            4
A05-B0003 Audit of Commissioned Sales and Course Length 12/13/01             $221,988         *            *            5
          at Benedictine University
A06-A0020 Audit of the Effectiveness of the Department’s         03/28/02       *             *            *            4
          Student Financial Aid Application Verification
          Process




14
    TABLE 5: ED/OIG Audit Services Reports on Education Department Programs
                and Activities (October 1, 2001 to March 31, 2002)
                                                                                            Better
 Report                                                    Date      Questioned Unsupported Use of Number of
 Number                      Report Title                 Issued      Costs**      Costs    Funds Recommend.
A06-B0011 Livingstone College’s Compliance with the Title 03/29/02    $854,145     *        *         5
          IV, Student Financial Assistance, Verification
          Requirements
A06-B0012 Audit of Los Angeles City College’s Compliance 11/14/01     $14,072      *        *         3
          with the Title IV, Student Financial Assistance,
          Verification Requirements
A06-B0026 South Texas Vocational Technical Institute -    03/20/02    $96,545      *        *         6
          Brownsville’s Administration of the Title IV
          Student Financial Assistance Programs
A09-B0017 Audit of Glendale Career College’s              03/18/02    $109,249     *        *         3
          Administration of the Higher Education Act,
          Title IV Programs
A17-B0007 Audited Financial Statements: U.S. Department 03/01/02         *         *        *        12
          of Education Student Financial Assistance Years
          Ended September 30, 2001 and 2000
A17-B0009 Final Management Letter: Fiscal Years 2001 and 03/29/02        *         *        *        20
          2000 Financial Statement Audits - Student
          Financial Assistance
A19-B0001 Audit of Controls over Government Property      03/15/02       *         *        *         3
          Provided under Federal Student Aid Contracts
Office of the Chief Financial Officer
A03-B0018 Audit of the U.S. Department of Education’s     10/24/01       *         *        *         2
          Discretionary Grant Monitoring Process
A11-B0003 Audit of ED’s Implementation of FMSS Oracle     12/17/01       *         *        *        13
                                     3
            Federal Financials Phase I
A11-C0007 ED’s Implementation of FMSS Oracle Federal      01/14/02       *         *        *         7
          Financials Phase II and III
A17-B0006 Financial Statement Audits: Fiscal Years 2001   02/27/02       *         *        *        14
          and 2000 - U.S. Department of Education
A17-B0008 Final Management Letter: Fiscal Years 2001 and 03/29/02        *         *        *        28
          2000 Financial Statement Audits - U.S.
          Department of Education
A17-C0003 Agreed Upon Procedures: Federal Agencies’    03/04/02          *         *        *         0
          Centralized Trial- Balance I Data - U.S.
          Department of Education Year Ended September
          30, 2001
A17-C0004 Agreed Upon Procedures: Intragovernmental       03/04/02       *         *        *         0
          Transactions - U. S. Department of Education
          Year Ended September 30, 2001
A19-B0002 Audit of Controls over the Audit Follow-up      10/18/01       *         *        *         6
          Process
A19-B0010 Audit of Controls over Government Travel Cards 03/27/02        *       $52,963    *         7



                                                                                                          15
       TABLE 5: ED/OIG Audit Services Reports on Education Department Programs
                   and Activities (October 1, 2001 to March 31, 2002)
                                                                                              Better
     Report                                                  Date      Questioned Unsupported Use of    Number of
     Number                  Report Title                   Issued      Costs**      Costs    Funds    Recommend.
Office of the Chief Information Officer
A11-A0009 Disaster Recovery and Backup Plans for Selected 11/28/01         *          *         *          5
          Information Technology Systems3
Office of Elementary and Secondary Education
A03-B0025 Improving Title I Data Integrity for Schools      03/27/02       *          *         *          4
          Identified for Improvement
A04-A0013 Review of the Office of Elementary & Secondary 11/26/01          *          *         *          3
          Education’s Monitoring of Formula Grants
A04-B0008 State Monitoring of Formula Grants                11/27/01       *          *         *          2
A05-B0005 The Chicago Public Schools’ Administration of 03/29/02           *          *         *          8
          Title I, Part A, Funds for Providing Services to
          Private School Children
A05-B0024 Audit of the Chicago Public Schools’ Use of       03/29/02     $1,075       *         *          5
          Elementary and Secondary Education Act of
          1965, as amended, Title I, Part A, Funds to
          Purchase Property, Equipment, and Services
          from National School Services, Inc. during the
          period July 1, 1999 through June 30, 2000
A05-B0039 Audit of Rockford Public Schools’                 02/11/02       *          *         *          0
          Administration of Selected Aspects of the 21st
          Century Community Learning Centers Program
A09-B0019 California Department of Education Needs to       02/15/02       *          *         *          3
          Report Reliable and Valid Data on Title I
          Schools Identified for Improvement
A09-C0002 California Department of Education’s              03/25/02       *          *         *          3
          Management Controls over Performance Data
          for Identifying Title I Schools for Improvement
Office of Postsecondary Education
 A07-90034 Department Controls Over TRIO Grantee            01/04/02       *          *         *          9
           Monitoring
A07-A0006 Audit of Independence Community College’s         10/15/01       *          *         *          10
          Administration of its Federal TRIO Projects
Office of Special Education and Rehabilitative Services
A05-B0020 Audit of IDEA Part B at the Connecticut State  11/29/01          *          *         *          1
          Department of Education, Hartford, Connecticut
A05-B0023 Audit of Individuals with Disabilities Education 12/18/01        *          *         *          1
          Act Part B funds at the Illinois State Board of
          Education, Center for Special Education and four
          selected Local Educational Agencies




16
    TABLE 5: ED/OIG Audit Services Reports on Education Department Programs
                and Activities (October 1, 2001 to March 31, 2002)
                                                                                               Better
 Report                                                        Date     Questioned Unsupported Use of Number of
 Number                       Report Title                    Issued     Costs**      Costs    Funds Recommend.
A05-C0009 Excess Cash not Reported in A-133 Single Audit 12/18/01           *             *           *           2
          Reports Issued by the Indiana State Board of
          Accounts, Indianapolis, Indiana

ALTERNATE AUDIT SERVICES PRODUCTS
Alternative products are listed below by program office, except for the 8 action memoranda and 1 alert memorandum, which
have a restricted distribution.
Federal Student Aid (formerly Student Financial Assistance)
A05-B0034 Audit Survey of Andrews University’s Federal       11/21/01       *             *           *           0
          Student Financial Assistance Programs for the
             period July 1, 1999 through June 30, 2000 4
Office of the Chief Financial Officer
A06-C0012 Survey at Southwest Educational Development        02/28/02       *             *           *           0
          Laboratory4
S17-B0012 Further Review of GAPS Transactions described 01/30/02            *             *           *           0
          in Management Information Report: Analysis of
          GAPS Duplicate Payments (A11-B0001)
Office of the Deputy Secretary
S17-B0001 Transmission of Final Reports Issued as a Result 10/04/01         *             *           *           0
          of a Review of the Department’s Controls over
          Various Payment Systems and Processes
Office of English Language Acquisition, Language Enhancement, and Academic Achievement for
Limited English Proficient Students (formerly Office of Bilingual Education and Minority
Languages Affairs)
A06-C0011 Survey at Hatch Valley Public School District4     01/28/02       *             *           *           0

Office of Special Education and Rehabilitative Services
A02-B0027 Closure of the Planned Audit of the Workforce      02/28/02       *             *           *           0
          Investment Act 4
S05-C0013 Summary of Carryover and Supplanting           03/21/02           *             *           *           0
          Information from OIG Audits of the Individuals
          with Disabilities Education Act, Part B (State
          and Local Information Memo No. 02-01)
Office of the Under Secretary
S03-C0002 Office of Inspector General’s Independent          01/30/02       *             *           *           0
          Report on the U.S. Department of Education’s
          Detailed Accounting of Fiscal Year 2001 Drug
          Control Funds, dated January 28, 2002




                                                                                                                           17
          TABLE 5: ED/OIG Audit Services Reports on Education Department Programs
                      and Activities (October 1, 2001 to March 31, 2002)
                                                                                                             Better
     Report                                                                  Date     Questioned Unsupported Use of                Number of
     Number                              Report Title                       Issued     Costs**      Costs    Funds                Recommend.
Office of Vocational and Adult Education
A02-B0027 Closure of the Planned Audit of the Workforce                    02/28/02         *               *              *             0
          Investment Act 4

* Non-monetary findings only.       ** Includes other recommended recoveries.      A - Audit Report S - Special Report
1
    Action Memoranda notify the Department’s management of issues and problems detected so that appropriate action is taken. Action
    Memoranda are pre-decisional and will not appear on our web site.
2
    Alert Memoranda notify the Department’s management of issues and problems detected so that appropriate action is taken. An Alert
    Memorandum was used because issues and problems were identified that were outside our scope of review. Alert Memoranda are final and
    will appear on our web site unless information is restricted.
3 Restricted
               distribution.
4 Audit    closure notice - notice to close assignment without issuing an audit report. Audit closure notices will not appear on our web site.




            TABLE 6: Inspector General Issued Audit Reports with Questioned Costs 1
                                                                                                Number          Questioned       Unsupported2
     A.    For which no management decision has been made before the                                42
                                                                                                                $161,541,742        $23,817,556
           commencement of the reporting period (as adjusted)3
     B.    Which were issued during the reporting period                                            11            $3,150,560           $348,717
                Subtotals (A + B)                                                                   53          $164,692,302        $24,166,273
     C.    For which a management decision was made during the reporting period                      9           $41,774,887           $124,818
           (i) Dollar value of disallowed costs                                                                  $10,463,804                 $361
           (ii) Dollar value of costs not disallowed                                                             $31,311,083           $124,457
     D.    For which no management decision has been made by the end of the                         44
                                                                                                                $122,917,415        $24,041,455
           reporting period
     E.    For which no management decision was made within six months of                           33
                                                                                                                $119,766,855        $23,692,738
           issuance4

1 None
           of the audits reported in this table were performed by the Defense Contract Audit Agency.
2 Included    in the questioned costs.
3 Beginning
               balance for questioned costs was increased by $2,677 (A05-A0028) to coincide with database.
4 These
           figures include 10 audits on administrative stay with questioned costs of $43,995,081 and unsupported costs of $7,371,000.




18
       TABLE 7:             Inspector General Issued Audit Reports with Recommendations for
                                            Better Use of Funds1
                                                                                                         Number       Dollar Value
     A.    For which no management decision has been made before the commencement of the                     1
                                                                                                                       $10,300,000
           reporting period (as adjusted)
     B.    Which were issued during the reporting period                                                     0                  $0
                Subtotals (A + B)                                                                            1         $10,300,000
     C.    For which a management decision was made during the reporting period                              1         $10,300,000
           (i) Dollar value of recommendations that were agreed to by management                                                $0
           (ii) Dollar value of recommendations that were not agreed to by management                                  $10,300,000
     D.    For which no management decision has been made by the end of the reporting period                 0                  $0
     E.    For which no management decision was made within six months of issuance                           0                  $0

1   None of the audits reported in this table were performed by the Defense Contract Audit Agency.



                     TABLE 8: Unresolved Reports Issued Prior to October 1, 2001
                                                                                                       Total
    Report                               Report Title                                       Date     Monetary         Number of
    Number            (Prior Semiannual Report (SAR) Number and Page)                      Issued    Findings      Recommendations
Section 5(a)(10) of the Inspector General Act requires a listing of each report issued before the commencement of the reporting
period for which no management decisions had been made by the end of the reporting period.

NEW AUDITS SINCE LAST REPORTING PERIOD
Federal Student Aid (formerly Student Financial Assistance)
A05-A0030 Audit of Commissioned Sales at Olivet Nazarene University                       05/21/01   $3,299,891           4
            (SAR 43, pg. 11)
    Status: Audit was placed on administrative stay on July 26, 2001.

A05-B0004 Indiana Wesleyan University, Adult and Professional Studies                     09/28/01   $31,682,782          5
            Administration of Title IV Programs, Marion, Indiana
            (SAR 43, pg. 11)
    Status: Audit was placed on administrative stay on October 24, 2001.

A05-B0007 Audit of the Michigan Guaranty Agency’s Administration of the 09/25/01 $1,100,400                               4
            Federal Family Education Loan Program Federal and Operating
            Funds (SAR 43, pg. 12)
    Status: The Program Office is currently drafting a response to the final version of the audit.

A05-B0014 Audit of Course Length at Olivet Nazarene University                            09/28/01       *                4
            (SAR 43, pg. 12)
    Status: Audit was placed on administrative stay on October 24, 2001.

A06-A0001 Interactive Learning Systems’ Administration of the Title IV         07/20/01               $990,828            7
            Student Financial Assistance Programs (SAR 43, pg. 12)
    Status: This audit is currently being reviewed by FSA staff - Dallas Case Team.



                                                                                                                                     19
                 TABLE 8: Unresolved Reports Issued Prior to October 1, 2001
                                                                                               Total
     Report                         Report Title                                  Date       Monetary        Number of
     Number      (Prior Semiannual Report (SAR) Number and Page)                 Issued      Findings     Recommendations
A06-A0015 ESS College of Business’ Administration of the Title IV Student       08/29/01    $4,439,651             4
            Financial Assistance Programs (SAR 43, pg. 12)
    Status: Audit was placed on administrative stay on February 22, 2002.

A06-B0009 Audit of Southwest Texas University’s Compliance with the Title 09/28/01            $11,200              3
            IV, Student Financial Assistance, Verification Requirements
            (SAR 43, pg. 12)
    Status: Audit was placed on administrative stay on February 22, 2002.

A06-B0013 Audit of the University of Arkansas at Little Rock’s Compliance 09/28/01            $1,172             1
            with the Title IV, Student Financial Assistance, Verification
            Requirements (SAR 43, pg. 12)
    Status: Program office informed us that the audit is closed. We are awaiting a copy of the program determination letter
            and a copy of the audit clearance document. It will be removed in the next Semiannual Report.

A06-B0014 Audit of United Education Institute’s Compliance with the Title       09/28/01      $7,285               1
            IV, Student Financial Assistance, Verification Requirements
    Status: This audit is being reviewed by the case team.

 A07-90035 Audit of Commissioned Sales at William Penn University               05/15/01    $5,023,447             4
             (SAR 43, pg. 12)
     Status: Audit was placed on administrative stay on August 1, 2001.

A07-B0001 Audit of Course Length at William Penn University                     09/28/01         *                 4
            (SAR 43, pg. 12)
    Status: Audit was placed on administrative stay on October 24, 2001.

Office of Elementary and Secondary Education
A02-B0012 Puerto Rico Department of Education Did Not Administer                09/28/01    $8,412,280            10
            Properly Title I Contracts with National School Services of
            Puerto Rico for the 1999/2000 and 2000/2001 School Years
            (SAR 43, pg. 11)
    Status: Audit was placed on administrative stay on February 7, 2002.

A03-A0021 Review of the Office of Elementary and Secondary Education            09/24/01          *                4
            Discretionary Grants Monitoring Process (SAR 43, pg. 11)
    Status: The Acting Deputy Assistant Secretary issued a memorandum, March 29, 2002, on the progress made in resolving
            this audit. Formal resolution should take place once corrective actions are entered into the Department’s Internal
            Audit Electronic Corrective Action Plans system.

Office of Special Education and Rehabilitative Education
A04-A0015 The Virgin Islands Government Lacks Adequate Management               07/25/01    $4,702,542            15
            Controls Over the Administration of Its IDEA, Part B Grant
            Program Salary Costs (SAR 43, pg. 11)
    Status: Audit was placed on administrative stay on January 15, 2002.

A04-B0013 Audit of the Virgin Islands Department of Education, Special          07/17/01         *                 4
            Education Payroll (SAR 43, pg. 11)
    Status: Audit was placed on administrative stay on January 15, 2002.




20
                 TABLE 8: Unresolved Reports Issued Prior to October 1, 2001
                                                                                             Total
 Report                             Report Title                                 Date      Monetary        Number of
 Number          (Prior Semiannual Report (SAR) Number and Page)                Issued     Findings     Recommendations
A05-A0031 Michigan Department of Education Management Controls Over 09/21/01                   *                12
            IDEA, Part B - Special Education Performance Data
            (SAR 43, pg. 11)
    Status: Program office informed us that a program determination letter was issued on May 9, 2002. We are awaiting a
            copy of the program determination letter and a copy of the audit clearance document. It will be removed in the
            next Semiannual Report.

A05-B0001 Audit of IDEA Part B Carryovers at the Indiana Department of          09/18/01       *                 1
            Education, Indianapolis, Indiana (SAR 43, pg. 11)
    Status: Program office informed us that a program determination letter was issued on April 17, 2002. We are awaiting a
            copy of the program determination letter and a copy of the audit clearance document. It will be removed in the
            next Semiannual Report.

A07-A0020 Kansas State Department of Education Management Controls             09/25/01         *                10
            over IDEA, Part B - Special Education Performance Data
            (SAR 43, pg. 11)
    Status: Program office informed us that a program determination letter was issued. We are awaiting a copy of the
            program determination letter and a copy of the audit clearance document. It will be removed in the next
            Semiannual Report.

AUDITS REPORTED IN PREVIOUS SEMIANNUAL REPORTS
Federal Student Aid (formerly Student Financial Assistance)
A02-70010 Drake Business Schools Corporation - Refunds of Unearned             06/06/00     $72,493              11
            Tuition, Fees and Other Institutional Charges (SAR 41, pg. 23)
    Status: Audit was placed on administrative stay on March 29, 2001.

A03-90005 Computer Dynamics Institute Incorporated’s Eligibility to            09/15/00 $6,410,913               6
            Participate in the Title IV Programs (SAR 41, pg. 23)
    Status: Program office informed us that the audit is closed. We are awaiting a copy of the program determination letter
            and a copy of the audit clearance document. It will be removed in the next Semiannual Report.

A05-90054 Audit of the Title IV, Higher Education Act Programs                 09/28/00      $86,189             9
            Administered by Cleveland State University, Cleveland, Ohio
            (SAR 41, pg. 23)
    Status: Program office informed us that the audit is closed. We are awaiting a copy of the program determination letter
            and a copy of the audit clearance document. It will be removed in the next Semiannual Report.

A06-70005 Professional Judgment at Yale University (SAR 36, pg.18)             03/13/98      $5,469              3
    Status: Audit was placed on administrative stay on June 29, 2000.

A06-70009 Professional Judgment at University of Colorado                      07/17/98     $15,082              4
            (SAR 37, pg. 17)
    Status: Audit was placed on administrative stay on June 29, 2000.

A06-90004 Review of Student Financial Aid Compliance at Success Institute 08/07/00         $2,245,416            3
            of Business (SAR 41, pg. 23)
    Status: Audit was placed on administrative stay on September 26, 2001.




                                                                                                                             21
                  TABLE 8: Unresolved Reports Issued Prior to October 1, 2001
                                                                                                Total
     Report                          Report Title                                   Date      Monetary         Number of
     Number       (Prior Semiannual Report (SAR) Number and Page)                  Issued     Findings      Recommendations
 A06-90010 International Aviation and Travel Academy’s Administration of 03/29/01             $6,637,634             7
             Title IV Student Financial Assistance Programs (SAR 42, pg. 22)
     Status: Audit was placed on administrative stay on September 24, 2001.

 A06-90011 Review of Collection Activities at Unger and Associates                02/08/00     $833,897              4
             (SAR 40, pg. 18)
     Status: Audit was placed on administrative stay on September 29, 2001.

A06-A0003 International Business College’s Administration of Title IV             03/28/01     $461,035              4
            Student Financial Assistance Programs (SAR 42, pg. 22)
    Status: Audit was placed on administrative stay on September 24, 2001.

 A07-23545 State of Missouri, Single Audit Two Years Ended June 30, 1991 04/01/93 $1,048,768                        18
     Status: This is a single audit report prepared by the State Auditor of Missouri that covered two years ending June 30,
             1991. Findings require further discussions with the General Manager, Chief Operating Officer, Office of
             Postsecondary Education and Office of the Deputy Secretary.

 A07-33123 State of Missouri, Single Audit Year Ended June 30, 1992               03/07/94      $187,530             18
     Status: This is a single audit report prepared by the State Auditor of Missouri that covered the year ending June 30, 1992.
             Findings require further discussions with the General Manager, Chief Operating Officer, Office of Postsecondary
             Education and Office of the Deputy Secretary.

 A09-70015 Associated Technical College (ATC) Eligibility of Institutions to 09/09/98         $8,600,000             7
             Participate in Title IV Programs & Other Issues (SAR 37, pg. 16)
     Status: Audit was placed on administrative stay on June 29, 2000.

 A09-90011 Platt College-San Francisco Administration of Title IV Programs 02/28/00            $191,721             10
             (SAR 40, pg. 18)
     Status: Audit was placed on administrative stay on September 29, 2000.

 N06-90010 Inspection of Parks College’s Compliance with Student Financial 02/09/00            $169,390              1
             Assistance Requirements (SAR 40, pg. 18)
     Status: FSA, OGC, and OIG are working to resolve this report.

Office of Elementary and Secondary Education
 A01-90006 Puerto Rico Department of Education Needs Major                        09/27/00     $181,305             18
             Improvements in Its Administration of the Even Start Program
             (SAR 41, pg. 22)
     Status: A Department team is working on the resolution of this audit.

 A01-90007 Puerto Rico Department of Education Needs Major                        09/27/00      $82,452             17
             Improvements in Its Administration of the Governor’s Safe and
             Drug-Free School Program (SAR 41, pg. 22)
     Status: A Department team is working on the resolution of this audit.

A01-A0004 Puerto Rico Department of Education Did Not Administer            03/28/01          $7,841,493            14
            Properly a $9,700,000 Contract with National School Services of
            Puerto Rico (SAR 42, pg. 21)
    Status: A Department team is working on the resolution of this audit.




22
                  TABLE 8: Unresolved Reports Issued Prior to October 1, 2001
                                                                                                    Total
  Report                              Report Title                                    Date        Monetary          Number of
  Number           (Prior Semiannual Report (SAR) Number and Page)                   Issued       Findings       Recommendations
A02-50200 The Puerto Rico Department of Education Must Institute a Time             11/14/97           *                1
            Distribution System (SAR 36, pg.13)
    Status: A Department team is working on the resolution of this audit.

Office of English Language Acquisition, Language Enhancement, and Academic Achievement for
Limited English Proficient Students (formerly Office of Bilingual Education and Minority
Languages Affairs)
A05-A0004 Title VII Systemwide Improvement Grant Administered by              12/06/00      $684,329             2
            Community Unit School District 300, Carpentersville, Illinois
            (SAR 42, pg. 21)
    Status: The grant was terminated for non-compliance. Presently, there is an ongoing post audit review being conducted
            by the Office of Chief Financial Officer, Post Audit Review Branch, and the Office of the General Counsel. The
            unused balance of $684,329 remaining in the former applicant’s account will be returned to Treasury after this
            matter has been resolved.

Office of Postsecondary Education
A05-A0026 Audit of Richard J. Daley College’s Administration of Selected      03/30/01 $1,621,861                 2
            Aspects of Its Strengthening Institutions - Hispanic Serving
            Institution Program, Chicago, Illinois (SAR 42, pg. 21)
    Status: Program office is currently reviewing information submitted by the institution to determine whether this
            information will resolve the issues raised by the audit.


* Non-monetary findings only.
Note: Status comments reflect documents received, comments agreed to, or comments provided by the Department.



                          TABLE 9: Investigation Services Cumulative Actions
                                 (October 1, 2001 to March 31, 2002)
                                                                   Indicted/                                Civil     Adjudicated
                           Subject                               Information Convicted Sentenced           Matters      Value
Civil Cases                                                            0             0           0              2           $14,687

Preparer and Client Cases                                              1             7           17             112    $2,092,347

School Cases                                                          16            10           18             0      $1,063,796

Federal Student Aid Recipient Cases (formerly
Student Financial Assistance)                                          5            13           17             0       $109,785
Foreign Study FFEL Cases                                               0             2           6              0       $301,193

Other Cases                                                           25            12           2              0           $24,453




                                                                                                                                 23
                                             TABLE 10: Collections from Audits
                      Reports Issued with        Recommend
                         Questioned/ Questioned/ Questioned/
             Questioned/ Unsupport. Unsupport. Unsupport. Management Write-offs   Collected/
     FY      Unsupport. Recommend. Resolved       Resolved   Decision Adjustments Recovered                                         Balance
The House Report (H.R. 105-635) to accompany H.R. 4274, directs the Office of Inspector General of the Department of
Education to submit reports detailing recoveries and savings generated by its work. The following table reflects that
information.
 1998             11          $17,011,401          8              $8,390,850     $5,350,168                 $0    $1,630,691       $3,719,477
 1999             11          $69,804,793          11            $69,804,793    $38,255,609                 $0   $1,556,9251      $36,698,684
 2000             21          $72,886,717          13            $62,789,675    $62,481,614 $48,600,0002 $2,034,6373 $11,846,977
 2001             23          $82,435,089          7              $5,517,437     $5,215,567                 $0       $97,375       $5,118,192
 2002             11           $3,150,560          0                      $0               $0               $0              $0              $0
 Total            77          $245,288,560         39         $146,502,755 $111,302,958          $48,600,000      $5,319,628 $57,383,330

1 Total
          includes offset of $249,900.
2 Total   includes a settlement agreement dated March 27, 2000.
3 Total   includes two offsets totaling $130,165 ($90,600 + $39,565) and one deobligation for $77,959 for a total of $208,124.




                                         TABLE 11: Collections from Investigations
                   Number of              Fines, Restitutions,
               Investigations with         Settlements, and         Amount Collected         Amount Collected
     FY             Penalties                Judgements             (Current Period)         (Prior Period(s))         Amount Collected
The House Report (H.R. 105-635) to accompany H.R. 4274, directs the Office of Inspector General of the Department of
Education to submit reports detailing recoveries and savings generated by its work. The following table reflects that
information.
 1998                   180                   $48,208,055                    $9,461             $31,599,932               $31,609,393
 1999                   274                   $19,154,906                  $24,060                $7,140,166                $7,164,226
 2000                   119                   $37,311,157                  $33,933                  $109,681                     $143,614
 2001                   130                    $9,808,716                  $92,937                   $88,539                     $181,476
 2002                   205                    $3,536,455                        $0                        $0                         $0
 Total                  908                  $118,019,289                 $160,391              $38,938,318               $39,098,709




24
                    TABLE 12: Statistical Profile: October 1, 2001 to March 31, 2002
                                                                                                       Six-month
                                                                                                     Period Ending
                                                                                                     March 31, 2002

OIG AUDIT REPORTS ISSUED                                                                                          37

Questioned Costs                                                                                           $2,801,843
Unsupported Costs                                                                                           $348,717
Recommendations for Better Use of Funds                                                                           $0

OTHER OIG PRODUCTS                                                                                                23

(Includes Inspections, Action Memoranda, Alert Memoranda, Close-out Letters, and Special Projects)

OIG AUDIT REPORTS RESOLVED BY PROGRAM MANAGERS                                                                    29

Questioned Costs Sustained                                                                                $10,463,443
Unsupported Costs Sustained                                                                                     $361
Additional Disallowances Identified by Program Managers                                                       $20,530
Management Commitment to the Better Use of Funds                                                                  $0

INVESTIGATIVE CASE ACTIVITY
Cases Open                                                                                                       113
Cases Closed                                                                                                     209
Cases Active at End of Period                                                                                    375
Prosecutorial Decisions                                                                                           75
    -Accepted                                                                                                     57
    -Declined                                                                                                     18

INVESTIGATION RESULTS
Indictments/Information                                                                                           541
Convictions/Pleas                                                                                                 592
Fines Ordered                                                                                                 $21,725
Restitution Payments Ordered                                                                              $2,135,6503
Civil Settlements/Judgments (#)                                                                                  114
Civil Settlements/Judgments ($)                                                                            $1,379,080
Seized/Forfeited Property                                                                                    $112,104

1
    Includes 4 cases that were not reported in the last Semiannual Report.
2   Includes 11 cases that were not reported in the last Semiannual Report.
3
    Includes $244,708 that was not reported in the last Semiannual Report.




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